The second leg of the Nuffield Scholarship Global Focus Programme (GFP) took our group to Hong Kong and then onto China, taking us to Shanghai, Jinan in Shang Dong Province and finally to Beijing. Here is a brief summary of the travels and what we experienced during our time in China.
China is regarded as the up and coming economic powerhouse in the world, and in the not so distant future will become the number one. Although China’s GDP growth has dropped to 6.5% in 2016, which is seen as a slowdown in its economy, their economy now is 3 times the size it was 10 years ago. China is a vast country with a population of 1.4 billion people, there are huge potential markets for agricultural products through different regions of the country. From the tier 1 cities of Beijing and Shanghai who have a higher standard of living, to the rural provinces where the GDP is much lower but are showing growth, the demand for protein within these regions will increase.
China was the focus point of our whole GFP, and was the country that I was most looking forward to visiting; their culture and history intrigued me. I was also looking forward to learning of potential new markets for the UK, and what the farming practices were like in rural China.
Due to Hong Kong’s history with the UK, it remains much more of a Western province and, due to its links with the West, acts as a financial hub for trade and a gateway into mainland China. The three days in the city gave me a great insight into the challenges of getting into the Chinese market and keeping that relationship. During our time there we met businesses which are currently trying and also those which had broken into the Chinese market.
From all the companies and people we spoke to and visited, it was established that building relationships and networking with the Chinese people was essential to developing a market in China. Known as ‘Guanxi’ by the locals, socialising, having meals out, meeting family and drinking was a huge part of their culture. This meant it was essential to have an office and people on the ground either in China or alternatively Hong Kong.
The first thing that stood out when I arrived in China was the new infrastructure that was in place. The Chinese love to lay down concrete and they have used as much concrete in the past 3 years as the US have used in the last century!
During our time in Shanghai we visited SIAL China 2017 Food and Innovation Expo, this was a great experience and enabled us to see who is competing for the Chinese Market. There were companies there from Australia, Brazil, Argentina, Uruguay, The Netherlands, Spain, Ireland and many more. It was great to see AHDB Exports with a presence representing the UK, although pork was the main focus as we already have access to the market, with beef and lamb being seen as a key for the future. Speaking to the majority of stands, they saw China as such a big market with plenty of opportunity for everyone to have a slice of the cake. 130 countries describe China as their biggest market for exports.
As the Chinese economy continues to grow, Western food and diets are becoming increasingly popular. Also, with food safety scandals from the domestic Chinese market, such as the 2008 melamine scandal, imported products are seen as being more desirable.
Australia and New Zealand are in a prime location to provide and feed this market and, with their free trade agreements, are the front runners to maintain and grow this market. But what is the opportunity for us?
A trade agreement between China and the US means that US beef will start entering China in the Autumn and it was said that Ireland are likely to gain access to export beef and lamb into China later this year. As Ireland have similar standards and traceability to the UK, it is hoped that the UK will gain access to this market in the near future. With the current uncertainty over the lamb export market (due to Brexit) this would be a welcome market however it would probably only target the premium cuts into high end retailers and restaurants, as they have done with British pork.
In terms of dairy produce, the Chinese are changing their regulation on infant formula which could mean an opening in the market for the UK. France, The Netherlands, Ireland, Australia and New Zealand have already established themselves well in this market.
In terms of the UK market, the opportunity to send produce over is probably limited, however it was good to see Arla produce on the shelves in China. Worryingly, the opinion of the market seemed to be that Arla weren’t doing enough to establish a strong position for themselves which is a definite missed opportunity considering the organic nature of the produce. The next 18 months could be crucial.
During our time we travelled to Jinjan, Shangdong Province (one of the most polluted cities in the world) where air quality is always hazardous. From there we travelled to Qihe in rural China, where we had an opportunity to experience the real Chinese culture outside of the
big cities. The people were very welcoming and had probably never stumbled across 9 western people before! We had a great reception at a street barbecue where the locals would all bought us some beer!
In 1978, after periods of long famine and starvation in China, the Mao Government divided up the land and gave individual families from the villages farming rights to grow crops that the government wanted to grow. Land is measured in Mu which is 660m² (15mu = 1ha), and fields
are split up into long strips, where each one belongs to a different farmer. This is very inefficient and leaves farmers unable to grow the required food for the huge population of China. Over the last couple of years the government have encouraged the consolidation of farms, especially dairy, with large scale units being built.
We met up with a large scale dairy farm which was a joint venture between foreign companies. They spoke of their challenges of building dairies in the area and negotiating with the villagers to lease their plots to grow maize and wheat. In their diets they could buy or grow maize and wheat and harvest as grain or forage. They purchased cottonseed on the domestic market as a protein source and imported Lucerne from the west coast of the United States.
We had some fantastic visits and meetings set up for us in China, however we did find some time to relax and see a few sights. We visited The Forbidden City in Beijing and the highlight of the whole trip must be walking along a small part of the Great Wall of China!!
Next we head to Germany!
Senior Dairy Specialist
Follow Iwan on Twitter @maesmochnant for live updates during his travels as a Nuffield Scholar.