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MARKET ANALYSIS REPORT | APRIL 2010
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Russia, Laos, Kazakhstan, North Korea and Vietnam. Its coasts
rest on several seas, including the East China Sea, the Yellow
Sea and the South China Sea. As a result, the climate is very
diverse, ranging from tropical in the south, to sub-arctic in the
north, making the country subject to droughts, floods, and
frequent typhoons. Climate change and urban sprawl are
PAGE 2
expected to shrink crop yields and the amount of available farmland, which will in turn
reduce the country‘s domestic food supply (Reuters, August 22, 2007).
The Chinese government has encouraged investment in the rural economy and the
agricultural sector is growing at approximately 3% per year. The government growth target for
the agricultural sector is just over 5% annually. However, due to environmental challenges, such as the
desertification of arable land and drought, growth has been slower than expected.
China is a net importer of agri-food and seafood products. In 2008, its agri-food and seafood trade
deficit was over US $18 billion. China‘s agri-food and seafood imports have been growing over the past
five years at an average of 21% a year (Global Trade Atlas, 2009).
China‘s key agri-food and seafood imports in 2008 were soybeans, cotton, refined palm oil, crude
soybean oil, and wool. Key suppliers in 2008 were the United States, Brazil, Argentina, Malaysia and
Australia.
Major processed food imports in China include: palm oil, soybean oil, fish meal, beef hides and frozen
fish. Malaysia, the United States and Argentina are the largest suppliers of processed food to China,
accounting for approximately 41% of China‘s processed food imports (Global Trade Atlas 2009).
There is great growth potential for high-quality Canadian food products among discerning Chinese
consumers. China is an increasingly important trading partner of Canada and is Canada‘s fourth largest
export market for general merchandise products. In 2008, these exports totalled $10.5 billion and accounted
for over 2% of overall exports, up from $4.8 billion in 2003.
China is also an important export market for Canadian agri-food and fish and seafood. In 2008, exports to
China of agri-food products exceeded $1.5 billion, up from $400 million in 2003. China was Canada‘s fourth
largest export market for agri-food products, accounting for almost 4% of Canada‘s total agri-food exports.
Canada‘s exports of fish and seafood to China are also important but have shown less rapid growth than
exports of agri-food products. In 2008, Canada exported $258 million in fish and seafood products to China,
up from $255 million in 2003. This accounted for 7% of Canada‘s total fish and seafood exports, making
China Canada‘s third largest export market for fish and seafood products.
In 2008:
Canada‘s top agri-food and seafood exports to China were canola seeds, canola oil, snow crabs,
soybeans, and peas.
Canada registered an agri-food trade surplus of CAD $0.9 billion with China.
Canada‘s top agri-food and seafood imports from China include: apple juice, frozen fish meat, frozen
shrimp, mushrooms and sole fillets (Statistics Canada 2009).
Processed food imports continued a five year growth trend and reached US $25 billion.
Canada supplied approximately three percent of China‘s processed food imports.
PAGE 3
DEMOGRAPHICS
Population
China is the world‘s most populous country. As of July 2009, China‘s population is estimated to have
reached almost 1.34 billion, which would account for approximately one fifth of the world‘s population (The
World Fact Book, 2009).
Approximately 43% of the total population live in urban areas, and this figure continues to grow.
Furthermore, it is estimated that there are approximately 65 million young urban consumers, aged from 20
to 39, who are attracted to Western brands and can be influenced by advertising (A.T. Kearney, 2007).
Some of the world‘s most populous cities and most densely populated regions are found in China. While
the most populated cities are not always found in the most densely populated regions, four major Chinese
cities are located in densely populated regions. In 2007, there were almost a dozen cities whose total
populations numbered over 5 million, including Shanghai, Beijing, Tianjin and Chongqing. These four cities
are also located in regions considered to be among those with the highest total populations in China
(Table 1) (Economy Watch).
Total Urban
City & Corresponding Total Population
Population (in
Region (in millions)
millions)
Beijing 13.2 16.33
Tianjin 8.2 11.15
One-Child Policy
Since the 1970‘s, population growth in China has been governed by its state family planning policy which
limits each couple of marriageable age to one child, with specific exceptions for families living in rural areas
and those areas heavily populated by ethnic minority groups (White Paper on Population in China). The
one-child policy is frequently circumvented by more affluent parents, who can afford to pay penalties/fines
imposed by the state (Boumphrey, 2007).
PAGE 4
The population of children under age 14 decreased from 324 million in 1996 to 238 million in
2007. Although overall population growth has decreased, the proportion of elderly persons is
becoming an issue of concern as there will be too few workers to support the aging
population. Table 2 summarizes the breakdown of the population by gender and age group.
Source: The World Fact Book, China (June 2009), estimates for 2009
Forecast
The United Nations predicts that by 2050, China will have 101 million people aged 80 or over, compared to
43 million in India and 32 million in the US (Population Division of the Department of Economic and Social
Affairs of the United Nations Secretariat).
The improved life expectancy of the rapidly growing elderly population presents a challenge to the health
care system. It is expected that the average life expectancy will be 73 years by 2010, as opposed to 36.5
years in 1949, the year the People‘s Republic of China was founded (National Human Rights Action Plan of
China, 2009-2010; China.Org.Cn, January 7, 2008; People‘s Daily Online, April 13, 2009).
Given these demographics, food that is geared to maintaining healthy lifestyles can be expected to play a
greater role in the food marketplace.
Ethnicity
The Chinese population is composed of 56 ethnic groups that have been identified and recognized by the
government to date, of which the Han ethnic group is the largest. The remaining 55 groups in aggregate
form a much smaller population and are commonly referred to as ―ethnic minorities‖.
The fifth national census conducted in 2000 indicated that the combined population of the 55 ethnic
minority groups totalled 104.49 million, or approximately 8.41% of the country‘s total population
(Information Office of the State Council of the People‘s Republic of China, 2005).
PAGE 5
The official national language, Mandarin (also known as Putonghua) is the most commonly
used language in China and one of the most commonly used languages in the world.
However, there are a number of other languages spoken in China by minority groups, as all
but two have their own language.
In order to ensure equality among its ethnic groups, the Chinese government adopted special policies and
measures to recognize their unique languages and cultures. As a result, national marketing activities using
only the Mandarin language will not be effective in some areas, particularly in those rural areas which are
home to ethnic minority groups.
Education
One of the goals of the one-child policy was to improve the education system. Since 1950, China has
implemented a nine-year compulsory education program in 90% of its populated areas (Chinese
Government‘s Official Web Portal). In that time period, illiteracy in young and middle-aged people has seen
a marked decrease, from over 80% down to 5%.
The current goal is that by 2020, of every 100,000 people, 13,500 will
have had junior college education or above and 31,000 will have had
senior high school education; the rates for illiteracy and semi-literacy will
fall below 3%; and the average duration of schooling across the
population will increase from 8 years to nearly 11 (Education
Development, Chinese Government‘s Official Web Portal).
China Economic Net reports that a record 10.5 million students wrote the
national college entrance exams in 2008, however, only approximately
half will be admitted. This is a major factor contributing to the high
number of Chinese students studying abroad (Education Development,
Chinese Government‘s Official W eb Portal). This international
experience exposes students to new tastes and food products and may
foster greater acceptance of these products among the younger Source: © Bill Howe, 2005, www.billhowe.org
Furthermore, women are becoming better educated than in the past and are gaining financial
independence (The Nielsen Company). They are, therefore, a potential driving force for food product
demand in the future.
Households
Unlike the West, many unmarried children in their 20‘s and 30‘s are still living with their parents, and this
group has a significantly higher disposable income than if they were living on their own.
Since 1995, three-person households have become more popular in China. Homes shared by four or more
people have decreased, while the number of one and two-person households increased dramatically
between 1995 and 2007, by 95% and 74%, respectively. There is a trend toward young, single men and
women trying to make a living in big cities, in contrast to the traditional family lifestyle that is more the norm
in rural areas (Euromonitor, November 2008).
These changes in household composition have also created a market opportunity for premium food and
lifestyle products, and luxury designer goods that parents and these young adults living at home are more
financially able and willing to purchase.
PAGE 6
The Computer Age
Greater availability of a variety of lifestyle products is also influencing consumers. At the end
of 2007, there were, on average, 95 refrigerators, 153 microwave ovens, 38 colour
television sets, 91 telephones, 165 mobile telephone units, and 54 computers for every 100
households (National Bureau of Statistics of China).
The increasing reach of online media provides opportunities to create awareness and promote new food
product offerings.
Computer ownership in China has seen great uptake, increasing from approximately 10 per 100 urban
households in 1990, to 54 in 2007.
Internet usage in China has also increased sharply, from 1.7% of the population in 2000, to 25.3% in
2009 according to Internet World Stats.
Increased internet usage appears to be accompanied by opportunities for online sales. Taobao is
China‘s combination of eBay and Amazon, and is described in the New York Times as ―China‘s
fast-growing online shopping bazaar‖. Its popularity and free ads have helped create thriving new
online stores (Barboza, 2009).
In early 2009, China Polling‘s small study on fast moving consumer goods (FMCG) indicated that only
2.5% of internet customers refused to purchase groceries online, while 60.6% of consumers were
frequent online buyers or were willing to buy online in the future (Chou, 2009).
A 2008 consumer survey of online media vehicles, which included online advertisements, product
articles, blogs and forums, showed that the internet is increasingly being used as a marketing tool. In
fact, the study showed that blogs and online forums were seen as more credible than traditional
television advertisements (Dixit, et al, McKinsey & Company, 2008).
Credibility will be an important factor for businesses to establish brand awareness and to effectively
promote the safety and special features of their products to Chinese consumers.
Chinese consumers are becoming more affluent and this is influencing both lifestyle and diet in China. In
2007, the population of High Net Worth Individuals 1 (HNWI) in China grew by 20.3%, the second-highest
rate of growth in the Asia-Pacific region. India had the highest rate of growth at 22.7%, followed closely by
South Korea in third place at 18.9% (Merrill Lynch/Capgemini, 2008).
This rapidly-growing level of affluence provides consumers with the
means, and often the desire, to purchase a wider variety of foods and
consumer goods—a marked change from only decades ago when
availability and supply were controlled by government.
1
Capgemini defines HWNIs as those holding at least $1M US in financial assets while Ultra-HWNIs hold at least $30M US,
excluding primary residences, collectibles, consumables and consumer durables.
PAGE 7
The increasing usage of refrigerators and microwave ovens, along with the increasing
popularity of international food brands such as Kraft and Nestlé, indicates the potential for a
growing acceptance of convenience and ready-to-eat foods. The increasing popularity of
refrigerators and microwave ovens has made it easier to store and prepare frozen or ready-
to-eat convenience foods.
Similar to developed countries, the increasing affluence of China‘s population, accompanied by the
increased availability of fast food, appears to be leading to rising rates of obesity and overweight (Zhang et
al, 2008). Today, almost one in five children under age seven is overweight, and more than 7% are obese.
Among Chinese adults, more than 25% are now considered to be overweight or obese (AFP, May 2008;
Hepeng, July 2008), compared to 7% in the early 1990s, as noted by the Chinese Health and Nutrition
Surveys 1993 (cited by Youfa Wang, International Journal of Epidemiology 2001;30:1129-1136).
The traditional Chinese image of prosperity and wealth has been associated with a plump physique, which
in ancient times could only be achieved through an abundance of food, made possible by a good income.
Much to the detriment of the ―little emperors‖ and ―little empresses‖ (see section on page 10), this belief is
still prevalent among many of their grandparents‘ generation. As a result, some of these children are
consuming much more food than would have been possible in the past.
Growing rates of obesity cannot be attributed solely to the increased consumption of western or fast food. In
the wake of the economic boom, Chinese consumers are enjoying a wider variety of both fresh and
processed foods of domestic and international origins. Changes in the traditional diet, such as the
increased consumption of fats, oils, and meat products, and decreased consumption of grains, have been
accompanied by an increasingly sedentary lifestyle.
In the long term, obesity and poor diet will increase pressure on the health
system, as obesity-related health problems, such as hypertension, stroke and
adult-onset diabetes, emerge among the aging Chinese population.
Despite this, the Chinese have a long history of being health conscious and the
aging population tends to eat for health. Medicinal cooking and diet have long
been used to prevent or heal illness, and maintain or enhance health. However,
some of these dishes require extended cooking times. As time is in short
supply in modern life, many households do not or cannot take the time required
to prepare such meals. Health-oriented food products that are more convenient
to prepare or that can reduce cooking times could find acceptance with
consumers.
Economy
China is one of the fastest growing economies in the world. In June 2009, the World Bank raised its
estimate for the growth of China‘s gross domestic product from its March estimate of 6.5% to 7.2% (World
Bank, June 2009).
Faced with a global economic downturn, China‘s State Council approved a plan to invest four trillion yuan
(approximately US $570 billion) in domestic infrastructure and social welfare in 2009 and 2010 (Xinhuanet,
November 2008). This domestic stimulus package was announced in November 2008 and was intended to
help maintain domestic financial stability, capital market stability and economic growth as China‘s
contribution toward alleviating the international financial crisis (Foreign Ministry Spokesperson Qin Gang,
Press Conference, November 11, 2008).
PAGE 8
The stimulus plan would finance programs in 10 major areas, such as housing, rural
infrastructure, water, electricity, transportation, environment, health and education, industry,
and disaster rebuilding (e.g., the May 12 earthquake), as well as cutting taxes and loosening
credit conditions (Xinhuanet, November 2008; China Economic Net, November 2008).
The continued growth of China‘s economy is expected to translate into continued increasing purchasing
power of Chinese consumers. A.T. Kearney (2007) estimates that the growing middle class spends an
increasing amount on food, with annual sales of branded food products expected to grow from US $150
billion to US $650 billion by 2017. This growth is anticipated to be in traditional areas such as baked goods,
soft drinks, fast food, and alcohol, as well as from the introduction of new areas that may be found in larger
retail establishments and not in local markets and smaller retail outlets. This would provide
opportunities for both food manufacturers and retailers.
Political Environment
In an effort to raise quality and safety standards, given recent food safety issues, the State Council
Information Office published a White Paper entitled, ―The Quality and Safety of Food in China‖. Released in
2007, this document outlines the initiatives being undertaken to improve and maintain the quality and safety
of food produced for domestic and international consumption.
The nature of the food supply is also evolving. In the past, food and its distribution was the subject of strict
central planning. Today, the food supply is being influenced by ―markets and private enterprise intent on
satisfying the increasingly discerning and sophisticated tastes of Chinese consumers‖ (Gale, June 2003).
In 1992, the China Green Food Development Centre was created as a specialized agency of the Ministry of
Agriculture to oversee the national development and production of ―Green Food‖.
Green Food includes edible produce and processed goods. The production, processing, packing,
storage, and transportation of these goods are strictly controlled and regulated.
The Green Food program represents the first steps in the evolution of organic agriculture practices in
China. The resulting products are characterized as being safe and of good quality, as well as having
been produced in a sustainable and non-polluting manner.
These products are identified by a special logo which is managed by the Trademark Law of The
People‘s Republic of China (China Green Food Development Center).
Today‘s Chinese consumer is more aware of trends and new products and
is more willing to experiment with new tastes and foods. A Datamonitor
study found that 83% of Chinese consumers felt that it was important to find
more excitement and sensations in life, compared to a global average of
64%. Furthermore, 44% of Chinese consumers had tried food and drinks
with new and exotic flavours within the six months leading up to the study,
as opposed to 30% of global consumers (Datamonitor, DMCM4693, July
2009).
PAGE 9
Consumers in the highest income groups are willing to spend more on higher quality food
products and so the growing middle and upper classes are a potential market for premium
food products. Datamonitor found that 67% of those surveyed had purchased higher quality
food and beverages than their normal choices in the previous six months. This trading up of
food and beverage purchases seems to indicate good growth prospects for such products.
Chinese women are an important demographic group as far as food consumption is concerned. It is
estimated that women in China hold about 60% of spending power and that they determine 78% of daily
purchases in households (Zamchek, 2008). The influence of female
consumers is being felt not only in their own homes, but also in the
homes of their parents when they live in the same house or
neighbourhood (Rein, 2009).
The widespread poverty of the past stands in stark contrast to the increasing number of high -income
individuals in China today. These consumers have the means and desire for the best foods and consumer
goods. Furthermore, parents are increasingly able to indulge their children in a wide variety of high quality
goods, and in great quantities. As a result of its rapidly
improving economy, this situation has created a generation of
indulged only-children, commonly referred to in China as little
emperors‖ and ―little empresses,‖ as their demands greatly
impact the household.
The Nielsen Company has noted a global convergence of teen values with respect to consumerism,
materialism, openness to new ideas and cultures, and enjoyment of life, and China is no exception (The
Nielsen Company). As the ―little emperors‖/ ―little empresses‖ grow up, these tweens and young adults
constitute an emerging consumer group that is young, educated, increasingly sophisticated and
technologically savvy. They also possess the financial means and desire to indulge in new products and
experiences. More and more, these consumers use the internet and mobile devices to find product
information, discounts and coupons, providing marketing opportunities that may have more resonance than
PAGE 10
traditional advertising media. This younger generation is looking for new and innovative
products and taste experiences, as well as healthy and affordable food offerings (Chandler,
2004; Zamchek, 2008).
The shopping influence of adult women who grew up as ―little empresses‖ now extends
further than in previous generations. With the benefits of better education, women‘s contribution to
household income has increased from approximately 20% in the 1950s to about 50% today. In addition, as
the sole care-providers for aging parents, their influence is often felt in the purchasing decisions of their
parents, when they live in the same house or neighbourhood (Rein, 2009).
Expenditures Overview
In general, urban residents have higher disposable incomes and living standards, spending more on
packaged and branded food (Li & Fung Research Centre, 2005).
Changes in consumption of traditional staple foods (grains and vegetable oils) have accompanied
changes in consumer spending power. As household income increases, the percentage of income spent
on food decreases. On average, 36% of household income is spent on food, but this can range from
47%, for the lowest income group, to 28% for the highest (National Bureau of Statistics of China).
Chinese consumers are highly focused on value. That is to say, that value -for-money is a very
important factor in purchasing decisions. Despite increases in incomes and the desire for premium
products, the quality of these products must merit the price in the consumer‘s mind for a sale to occur
(AP-Food Technology.com, April 2004).
In 2008, there was significant growth in packaged food sales at 11%, based on current prices. The
growth rates for the next two years are forecasted to be 14.5% in 2009 and 13.7% in 2010
(Euromonitor).
The proportion of income spent on clothing (10%), residence (10%), household facilities, articles and
services (6%), health care and medical services (7%) and miscellaneous goods and services (4%) is
relatively consistent across all income groups (Figure 1). In addition to food (36%), spending on
transportation and communications (14%) and education, cultural and recreation services (13%), tends
to vary more widely as income changes. However, spending in these latter categories tends to
increase with higher income levels (Figure 2).
M iscellaneo us
Go o ds and
Educatio n, Services
Cultural and 4%
Recreatio n
Services Fo o d
13% 36%
Transpo rt &
Co mmuni-
catio ns
14%
Health Care
and M edical
Services Clo thing
Ho useho ld 10%
7%
Facilities, Residence
A rticles and 10%
Services
6%
Data: China Statistical Yearbook 2008
PAGE 11
Figure 2: Percentage of Annual Food Expenditures by Urban Households, by Income,
2007
HighestIncome HH
(10th decile group)
High Income HH
(9th decile group)
Middle Income HH
Income Group
Low Income HH
(2nd decile group)
Poor HH
(1st 5% group)
Average
0 5 10 15 20 25 30 35 40 45 50
Percentage of Total HH Annual Expenditures
Data: China Statistical Yearbook 2008
China‘s rapid economic growth, the growing affluence of its consumers and increased urbanization are
driving the country‘s changing consumption patterns. Diets appear to be shifting away from staples and
are broadening to include more poultry, eggs, dairy products, fruits, vegetables, fish, and fats and oils
(Figures 3 and 4) (Pingali, 2004; Gale, June 2003).
Consumers are demanding a wider variety of food products, more processed food and more
convenient food, in addition to eating out more often.
As a result, food retailing is moving from small traditional farmers‘ markets and corner kiosks to modern
―hypermarkets‖, convenience stores and fast-food restaurants (Gale, 2006).
Figures 3 and 4: Per-capita Annual Purchases of Major Commodities by Urban Households (kg),
1990 and 2007
1990 Grain
2007 Fresh
Fresh Vegetables
19%
Vegetables 30%
Grain
24%
23%
Edible
Vegetable Oil
Pork Fresh Edible
1%
Fresh M elons M ilk M elo ns and M ilk Vegetable Oil
3% P o rk
and Fruits 1% Poultry Fruits 4% Fresh Eggs 2%
5%
7% Aquatic 1% 3% P o ultry
Beef and 15%
Products Fresh Eggs M utton A quatic B eef and
2%
1% 1% 1% P ro ducts M utto n
4% 1%
PAGE 12
According to a Datamonitor study, Chinese consumers viewed saving money, lower prices
and overall product quality to be of significant or high importance in grocery shopping.
However, product quality was viewed to be of higher importance than lower prices or saving
money (67%, 46% and 52%, respectively). Overall global results appeared to rank all three
factors to be of similar importance, although lower prices in general ranked slightly lower than saving
money or product quality (62%, 73% and 72%, respectively).
Just as quality is of high importance, it is interesting to note that 89% of the consumers surveyed in China
viewed the accumulation of material possessions or wealth to be important or very important. This
contrasts sharply with 48% of global consumers. After years of famine and rationing, material possessions
are viewed as evidence of high social status and, as such, are very highly sought after (Datamonitor,
DMCM 4693, July 2009).
Influence of Brand
While being seen wearing brand name clothing is important, the importance
of brand extends to shopping for food products. In its Global Consumer
Trends 2009: Sensory report, Datamonitor found that Chinese consumers
were highly influenced by habit or their preferred brand when shopping for
food or beverage products. Brand loyalty or brand image scored much higher
(4th of 14 factors evaluated) versus the global average (12th of 14 factors).
The influence of habit extends to the choice of shopping venue. The majority
of consumers in the study showed that habit plays an important role in the
Source: Mintel
choice of grocery store—84% admitted that habit had a high or medium
influence in this choice.
After much effort, international food companies such as Kraft, Heinz, and Nestlé have achieved success in
the Chinese market. Although these brand names are well-known in the Western world, the journey into the
Chinese market has not been easy due to consumer loyalty to domestic brands. However, as a result of
past food safety and quality issues related to some domestic brands, Chinese consumers are now more
inclined to purchase imported goods as they are perceived to be of higher quality and safety.
Chinese consumers, although accepting of foreign brand name products, have not extended this
acceptance to private label products. A Nielsen Company study showed that 8 of the bottom 10 markets for
private label products were Asian countries. Consumers surveyed in these countries were least likely to
agree that ‗supermarket own‘ labels were a good alternative to other brands. Major well -known
multinational and local brands with strong brand recognition, supported by heavy advertising, have made
successful inroads with Chinese consumers. However, this is not the case for private label products, as
consumers seem to doubt their quality, safety and value-for-money. Consumer education and advertising
that stresses the high quality and safety of private label products may help to gain public support and
increase their sales.
A Matter of Taste
PAGE 13
For example, according to the Wall Street Journal, Oreo cookies are the top-selling cookie in
the US market. However, the introduction of Oreo cookies to China was initially lacklustre.
The taste so familiar to North Americans was considered too sweet by most Chinese
consumers. After reformulating the cookie, Kraft embarked on a marketing campaign to
introduce the concept of pairing cookies with milk to consumers, and handing out samples of
Oreos by students on bicycle or at Oreo-themed basketball games (Jargon, May 2008).
Grocery Shopping
PAGE 14
For small purchases, convenience stores are still a popular choice for many Chinese
consumers. Longer business hours and proximity to residential areas appeal to many, along
with the availability of snack foods, drinks, ready-to-eat food, and lunch boxes, as well as a
wide variety of fresh and packaged food (Li & Fung Research Centre).
As this poem suggests, food plays an important role in the culture of the Chinese people. Even the most
basic of dishes can be elevated in the eyes of the consumer through the use of higher quality ingredients
that are not normally eaten throughout the year.
For special occasions, the courses of a meal or the ingredients used in the dishes often take on special
significance by the use of word play in their names, or the symbolism of dishes served. For example, a New
Year‘s meal commonly includes a dish featuring a seaweed called fa cai or ‗Black Moss‘. The name
fa cai sounds similar to some of the words in the traditional New Year‘s greeting, Gong Xi Fa Cai, which is
a wish for good fortune and prosperity. A New Year‘s meal may also include a whole fish, which
symbolizes prosperity or abundance, as well as dried oysters, which represent good business—qualities
that are seen as essential for the coming year.
Chinese Cuisine
Chinese belief is based on the idea of balance—balance between yin and yang, light and dark, and hot and
cold. This principle applies to life and health in general, thus it also applies to Chinese cooking which
strives to achieve balance in its cuisine.
PAGE 15
For example, the city of Guangzhou, the home of Cantonese cooking, is located in a warm
region of China. For this reason, Cantonese food is not overly yang or ―warm‖, so as not to
upset the delicate balance of one‘s body. It tends to be lighter in flavour and substance in
the summer and autumn when the weather is warmest, and of slightly more substance in the
winter and spring when temperatures are cooler. Hot and spicy foods, on the other hand, are
commonly consumed in the northern region of China, as well as in the west, where the cold, humid weather
and high altitude warrant more warmth in the cuisine.
Cantonese cuisine is characterized by its use of a wide variety of fresh ingredients available in its mild
climate. Fresh produce is available throughout the year, and its position on the southern coast of China
supplies a wide variety of fish and shellfish.
Fresh, tender, light and crisp textures, as well as natural flavours, form the basis of each dish.
Basic cooking techniques employed include roasting, stir-frying, deep-frying, braising, stewing, and
steaming. Stir-frying and steaming are most frequently used to preserve the natural flavours of the
ingredients.
Sichuan cuisine
Sichuan cuisine is world-renowned for its spicy-hot taste and the flavour of Chinese prickly ash
(Sichuan pepper). The distinctive spicy taste is achieved through the generous use of chillies, hot
peppers, and heavy aromatic and spicy sauces. Garlic, ginger and fermented soybean are also
popular seasonings.
Frying, frying without oil, pickling and braising are among the basic cooking techniques employed.
Shandong cuisine
Shallots and garlic provide the pungent flavours that characterize these dishes.
Jinan chefs employ deep-frying, grilling, pan-frying, and stir-frying techniques, while chefs on the
Jiaodong peninsula emphasize fresh and light flavours, particularly with seafood.
Shandong cuisine is clean, pure and not greasy. It emphasizes aroma, freshness, crispness, and
tenderness.
Hunan cuisine
This cuisine stresses the use of oil and dense colour. It contrasts the textures of crispness, softness,
and tenderness.
PAGE 16
Hunan dishes are known for their thick, pungent, savoury, flavours and for the use of
chili, pepper, and shallots.
Jiangsu cuisine
Zhejiang cuisine
Zhejiang cuisine is characterized by the influences of its main cities—including, Ningbo‘s softness and
originality and Hangzhou‘s custom of naming dishes in honour of places known for their beauty.
A variety of cooking techniques are used, such as frying, stir-frying, braising, and steaming. Dishes are
not greasy, and are known for freshness, tenderness, softness, and smoothness, as well as a mellow
fragrance.
Fujian cuisine
Fine cutting techniques, dishes served in soup, unique seasonings, and the exquisite cooking of dishes
are characteristics of Fujian cuisine (What‘s On Xiamen, 2008).
Anhui cuisine
Cooking techniques favour braising and stewing over Source: © Bill Howe, 2007, www.billhowe.org
frying or quick-frying.
Ham is a popular seasoning, and candied sugar is often added for freshness.
Vegetarian diets also play a role in Chinese food culture. Two religions with long histories in China,
Buddhism and Taoism, remain strong influences in the area of vegetarian dining. Rice, noodles, and
vegetables are well suited to meatless cooking. Ironically, many famous vegetarian dishes are prepared
with gluten pieces that are often cooked and flavoured to resemble meat. Chinese vegetarian cuisine also
often features vegetables, fruits, edible fungi, and bean products.
There are other religious groups in China that observe dietary restrictions as well. Chinese Muslims in the
western and northern areas of China have developed a unique cuisine, with bread and noodles preferred
over ric e. W hile por k is not a llo wed f or reli gious reas ons , lam b i s c om m onl y eate n as
instant-boiled mutton, fried mutton pieces, and fried rice with mutton (Embassy).
PAGE 17
Eating for Health
Health has long been an important factor influencing Chinese cooking. Chinese Medicinal
Cuisine, also known as therapeutic food, is a long-standing tradition, wherein food is
prepared with medicinal ingredients, following the theory of Chinese medicine. This cuisine
is eaten for therapeutic reasons or eaten in the belief that it will protect, prevent or heal disease. Food
therapies have been developed by master chefs over the years by combining basic cooking techniques
with traditional Chinese medicinal ingredients. One basic therapy that is shared by many other cultures is
that of treating colds or fevers with soup (TravelChinaGuide.com). The use of chicken soup as a folk
remedy is known around the world, albeit anecdotally. Some of the more frequently-used ingredients of
Chinese Medicinal Cuisine are becoming increasingly popular in other parts of the world, such as goji
berries, ginseng, gingko nuts, and tofu.
Consistent with this concept, some people in China consume foods with specific health and wellness
objectives in mind. Chinese women, particularly in Shanghai, are very cognizant of the reputed health
benefits of certain foods. Some common health objectives linked to food choices are:
Meals
Meals are often enjoyed ―family style‖, where courses are served from communal dishes in the centre of the
table, and everyone helps themselves. Steamed white rice is often the main staple food, accompanying all
the courses. The rice also helps absorb the flavourful sauces of the accompanying dishes for the diner‘s
enjoyment.
In historic times of famine or food shortages, rice was often the only food available. The poor could not buy
meat or vegetables and so would eat rice to fill the belly, if they could afford it. Only the rich had the means
to dine on meat and vegetables in addition to rice. As a reminder of these harsher times, some people have
adopted a cooking ritual wherein they cook a small piece of meat or vegetable with the steamed rice. This
is a symbolic gesture suggesting that there will always be enough food to have an accompanying dish with
their rice.
With respect to food ingredients, statistics show an overall decrease in purchases of grains and fresh
vegetables from 1990 to 2007 (Figure 5). However, the purchases of fresh fruits and vegetables have
increased for urban households over the same time period (Curtis, McCluskey, and Wahl, 2007).
Figure 5: Annual Per-capita Purchases of Grain and Fresh Vegetables (kg), 1990 and 2007
160
138.70
140 130.72
117.80
120
Kg Purchased
100
77.60 1990
80
2007
60
40
20
0
Grain Fresh Vegetables
PAGE 18
Gale and Huang also found that the consumption of meats, poultry, fish, dairy products, and
fruit increased as incomes rose, however, consumption of traditional staple grains remained
stable or declined (Figure 6). In the case of meats, the demand would increase to a certain
point beyond which it remained relatively stable. This is likely the result of consumer
demand for premium products–higher prices and better quality–not necessarily more
quantity. While this is true for consumers in the top income brackets, those at the lower income levels do
show a corresponding increase in their purchase of meat, dairy products, and beer (Gale & Huang, 2007).
Figure 6: Annual Per-capita Purchases of Selected Products (kg), 1990 and 2007
80
1990 2007
Kg Purchased
60
40
20
0
Edible Pork Beef and Poultry Fresh Aquatic Milk Fresh
Vegetable Mutton Eggs Products Melons
Oil and Fruits
TRENDS
Snack Foods
As noted by Marr and Hatfield (2004), the popularity of snacking has increased greatly. Meals are
rarely skipped, and snack foods are usually eaten on impulse. Snacking and eating on -the-go is
increasingly popular among younger consumers, particularly in Shanghai, which is reputed to have the
greatest density of convenience stores in the world, with one 24-hour convenience store for every
2,600 residents, compared to one per 3,045 people in Japan and one per 2,940 people in the US
(Zamchek, 2008). In Shanghai alone, consumers spend approximately 9% of their total grocery bill on
snack foods (Marr and Hatfield, 2004).
As with other premium food products, the Shanghainese, in Source: © Planet Retail Ltd., www.planetretail.net
particular, are interested in value for their money, preferring well-
known brand names and smaller packages, except for gift items (Marr and Hatfield, 2004).
Furthermore, as for all food purchasing, the desire for healthier snacking options is also on the rise.
PAGE 19
Foodservice
In urban China, the vast number of small restaurants and road-side food kiosks are
evidence of the consumers‘ love of dining out. It is estimated that Chinese people eat at
least a third of their meals outside of their homes.
According to a 2007 report from Beijing Zikoo Consulting, as reported in China International Business,
turnover in the food and beverage sector exceeded RMB 1.2 trillion (USD 175 billion) in 2007 and
restaurant sales have grown by double-digit percentages from 1991 to 2007, mostly to the benefit of
foreign chains.
While the largest international restaurant chains have all established a presence in China–McDonald‘s,
KFC, Pizza Hut–there appears to be a growing demand for home-grown fast food. Yum Brands‘ 2009
Q1 report shows international growth of 256 new restaurants, including a record 98 new units in
mainland China. Yum Brands is the China parent company of KFC
and Pizza Hut (Yum Brands, April 2009).
Although domestic entrepreneurs have been modestly successful in emulating foreign fast food
restaurant concepts to provide food offerings more suited to local tastes, the vice chairman of the China
Cuisine Association noted that there is no globally competitive restaurant chain. Regional taste
differences are major challenges for all foodservice entrepreneurs. As earlier noted, the regional
cuisines vary widely and successful menus would need to accommodate the different taste preferences
of the local regions. However, this challenge may diminish as mobility and living standards continue to
improve (Chao and Ding, August 2008).
The White Paper on ―China‘s food quality and safety‖ notes that China has developed 28,600 kinds of
hazard-free agricultural products and set up 24,600 hazard-free production bases to date. In addition,
HACCP (Hazard Analysis Critical Control Point) certification has been received by 2,675 food
producing enterprises.
China‘s organic standard is considered to be one of the most stringent in the world (IFOAM, China
Case Studies). The Organic Food Development Centre of China (OFDC) of the State Environmental
Protection Administration (SEPA) was established in 1994 and is the only organic certifier in China that
has been accredited by the International Federation of Organic Agriculture Movements (IFOAM) and
ISO65 (OFDC, SEPA).
PAGE 20
China‘s organic sector has seen rapid growth over the last decade. In 2006, China
ranked second in the world for total hectares of land under organic cultivation, with 2.3
million hectares, accounting for 0.4% of the total agricultural area. This growth is fuelled
in part by the increasing availability of Organic products and rising consumer awareness
(The World of Organic Agriculture: Statistics & Emerging Trends 2008).
The market for Organic products is small in relation to the overall size of China‘s population, but there
is a steadily-growing consumer interest and demand, as a result of a number of recent food safety and
quality issues, such as:
Melamine contamination of wheat gluten used in pet food, dairy products, baby formula and eggs
(from hens fed contaminated feed);
Mooncake fillings reused from previous year‘s unsold product (China Daily/China Economic.Net,
October 2003)
Pig organs contaminated with a banned metabolism accelerator, clenbuterol, which was illegally
used to produce animals with more and leaner meat (Wines, February 2009);
Malachite green, a chemical primarily used as a dye, used as a topical antiseptic or parasitic
treatment in fish (Barboza, June 2007).
The demand for Green Food and Organic products can be seen in the results of Green—National
Geographic Greendex 2009: Consumer Choice and the Environment.
Countries are ranked on how environmentally friendly their consumers‘ lifestyle choices are. This
includes:
Use of energy-saving activities, such as adjusting thermostat settings, minimizing the use of
fresh water, washing laundry in cold water to save energy
Walking, cycling, use of public transportation, or living close to their most common destination
Eating the least amount of meat and seafood
Being most likely to say they buy environmentally friendly products all the time.
Organic food products are in higher demand among higher income families, but demand is small
among middle income families due to income constraints. However, as the Chinese economy grows,
demand is also expected to grow, as a result of food safety and health concerns.
PAGE 21
Recessionary Spending
The global recession has affected consumers to varying degrees. While the majority of
consumers around the globe believe that they are living in a recession (69%), a smaller
proportion of Chinese consumers would agree (23%), according to Datamonitor (July 2009).
This may be due to the efforts of the domestic economic stimulus initiatives being undertaken by the
Chinese Government, nevertheless the recession does not appear to have had much negative impact on
the lifestyles and incomes, according to most of the consumers surveyed. Still, Chinese consumers overall
have admitted to adjusting their spending priorities.
While Chinese consumers are very conscious of value-for-money, price alone is not the main consideration
determining purchases. Chinese consumers are increasingly turning to the internet to research products,
prices and applicable promotions, all of which are factors in determining whether or not a product is better
value for money. According to Datamonitor, 67% of Chinese consumers placed a high or very high level of
importance on the overall quality of products sold. Lower prices in general and the store running a lot of
promotions and regular price discounts were also considered to be important factors at 52% and 50%
consumer agreement, respectively. Almost one-third of those surveyed indicated that they had, in the past,
changed where they shopped in order to save money. They also indicated a willingness to shop around in
order to maintain consumption standards. However, 16% of consumers surveyed said that saving money
when you buy groceries is less important than it was 2 years ago, as opposed to 5% globally.
CONCLUSION
China is a complex country with a booming economy. Ever-changing demographics and a high level of
economic growth have combined to form a challenging market that mixes old and new. Traditional cooking
and food preferences remain important, while trends like fast food, convenience foods, premium food
products, and a taste for international food gain popularity and influence.
While food preferences for many Chinese consumers will remain rooted in traditional tastes, the younger
generation will continue to evolve and are expected to provide opportunities for innovative new food
products that are not limited to traditional cultural tastes. The latest generation of Chinese consumers is
better educated and more affluent than previous generations, and is increasingly willing to try new
products.
At the same time, food safety and quality are very important to Chinese consumers, in light of the serious
food safety issues encountered in recent years.
PAGE 22
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