With increasingly rich consumers, high population density and low distribution costs, China has all the right ingredients needed to generate serious revenue in the online shopping space.
Valeur spoke to GlobalMeatNews about the opportunity after Danish Crown, one of the world’s top pork exporters, signed a lucrative deal to sell frozen pig meat via e-commerce giant Alibaba Group.
“China, at the moment, is the most developed e-commerce market as you have this unique combination of high population density, high purchasing power and curious consumers coupled with a low distribution cost,” he said.
“When you are in Europe you tend to have a lower population density. People may not want to spend so much money on food and you have higher distribution costs, so actually in China you have the perfect combination for e-commerce.”
Chinese factory ready by 2019
As the world’s largest pork consumer, China was already a key Danish Crown market and the Alibaba deal is part of the company’s global strategy to add value to its £500m Chinese business by moving closer to the end-consumer.
Danish Crown will do this by opening a factory in Shanghai to supply retail-ready products to China’s growing middle-class.
Construction of the DKK300 million ($47m) factory will begin in the first quarter of 2018 and Valeur said it would be finished as 2019 draws to an end. He would not, however, be drawn on the number of jobs the new factory could create.
With a factory in China, Danish Crown will be uniquely positioned to manufacture retail-ready meat for China as its e-commerce market continues to grow.
Online food shopping in China is growing exponentially in highly urbanised cities such as Shanghai and Beijing with nationwide e-commerce sales expected to pass $1.1 trillion this year, according to London research outfit eMarketer.
Danish Crown has long coveted tapping into China’s booming omni-channel retail market and Valeur did not rule out exploring other e-commerce channels, such as Japan, in the future.
