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Conference navigates Chinese food ingredients sector

By Anthony Fletcher , 05-Jul-2006

The Chinese ingredients industry, which is bursting with potential, remains a confusing place. An IFT seminar provided the opportunity for businesses to navigate this key market.

The Chinese food ingredients sector has seen a ten-fold increase in business in the past decade. All the top flavour and ingredient firms are now operating in China, which has made the sector highly competitive.

"This is driving the whole food industry," said Danisco China's Yongjung Li.

 

"For example, the functional food industry in China is now turning over $200 million a year."

 

This underlines the increasing globalisation of the food industry. There is growing pressure to take products into the global market. But difficulties, of course, still remain.

 

Claire Kruger from Environ International pointed out at another IFT seminar that although there are similarities between countries and blocs, regulatory differences persist.

 

"In the global market place, there are four universal points to think about when introducing a new ingredient - safety, benefit, legality and economic viability. The processes might be different between countries, but the goals are the same.

 

"Therefore, you need to think about these different processes."

 

Nowhere more so, perhaps, than China. The country is spurring growth in the Asia Pacific region, which is slated to achieve economic growth of around 7.3 per cent, year on year, until 2008.

 

This compares to western Europe and the US with 3.7 and 3.3 per cent growth respectively. And the country, with its 1.3 billion population, is slowly shifting towards processed foods, throwing up untold opportunities for western food firms faced with saturated sales in home markets.

 

Food regulations in China started in the 1950s. In the last few years however, there has been a great deal of change, largely due to this process of globalisation.

 

"The industry is much safer than yesterday," said Li. "Standards are going up. But the bureaucracy in China is complex."

 

Things are beginning to change. The Chinese general food law GB2760 is being completely overhauled, with the proposed introduction of a new law.

 

Li says that things are already improving - if an ingredient has EU or FDA approval, the approval process in China can be fast.

 

The problem however remains enforcement, and functional food remains a complicated issue. Last year for example there were a number of arrests over false claims made on various products.

 

The procedure now is that you need to prove any claim made on a functional food. In addition, this data must come from a certified institute.

 

"In addition, global trends differ, and you need to bear in mind the different emphasis paced on concerns such as weight or gastro health," said Kruger.

 

For example, GM is not a big issue in China. Li suggests that it may become a major issue, but with such a huge population that remains relatively uneducated, this is unlikely.

 

"In Asia, there is a specific emphasis on intestinal problems," he said. "This is a key market. The function focus varies for each country, so before introducing a new ingredient, you need to assess the market potential - is this suitable for China?"

 

China's per capita GDP is approximately $1,100 USD, and the economy, currently the sixth in the world, has been growing at a staggering 9 per cent annually.

 

In 2003 the value of all exports came in at $436.1 billion and the value of imports hit $397.4 billion. Major agricultural products include rice, wheat, potatoes, sorghum, peanuts, tea, millet, barley, cotton, oilseed, pork, and fish.

 

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