China market evaluation and validation

Summary

With the rapid development of the Chinese economy, beef consumption in China has increased substantially. Simultaneously, the volume of domestic beef production in China has not kept pace with growth in consumption (Xiang, Z.L. et al., 2018). These two factors have led to a substantial increase in the quantity of beef imported by China in recent years (MLA, 2018), which has provided a significant opportunity for Australian beef exporters. Australian beef exports to China rose from 32,906t in 2012 to 110,059t in 2017 (MLA, 2018b).

MLA previously supported research conducted by Canadean to identify 15 attractive cities in China for red meat (beef, lamb, goat) export (Hendry, 2016), herein referred to as the ‘MLA Attractive Cities’ project. Cities were assessed using criteria in the areas of market demographics, consumer preferences and Market compliance ability, with data drawn from primary and secondary data sources. The MLA Attractive Cities project produced databases of information which could be further mined for insights specifically relevant for Australian beef producers.

A new project was initiated, which is the subject of this report, to review the MLA Attractive Cities project findings, extract data from these databases relevant to beef export (rather than red meat in general) and synthesise the information to address the question of where and how to expand sales of beef into China, for both retail and food service sectors.

The project focused on four regions containing seven cities, which were identified as the most promising growth markets for Australian beef exporters, based on the knowledge and expertise of project collaborators, Teys Australia. The regions analysed were:

• Beijing;
• Shanghai;
• Chengdu; and Chongqing which were combined into a single region for analysis referred to as the Western Region
• Guangzhou, Shenzhen and Xiamen, which were combined into a single region for analysis referred to as the Southern Region.

In response to the question of where Australian beef producers should expand beef sales in China, this projected has concluded that Shanghai should be a priority location for further consideration. The reasons for this were:

• Shanghai is likely to have one of the largest total addressable markets of Australian beef consumers. 
• Shanghai has the strongest projected growth in beef sales to 2020
• Shanghai performs better than other locations on most supply chain indicators.