Monthly Archives: November 2018

Zhangzhou: China’s second (first?) food capital

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It has been a while, since I introduced Yantai (Shandong), China’s food industry capital. Somewhat later, I added a blog about the specialised food capitals. That list included Zhangzhou in Fujian province, as China’s canned food capital. However, the Zhangzhou food industry has developed so rapidly and broadly during the past few decades, that it should be regarded as China’s second food industry capital. In fact, the city already earned the title of “China’s famous food centre” from the China National Food Industry Association in 2011.

Determined to become a prestigious food production centre, Zhangzhou in Fujian Province is well-equipped to strengthen and enhance the structure and standards of its food industry. Zhangzhou continues its efforts to stimulate innovation and development in the food industry. The city’s ultimate aims are to establish a qualified and systematic food manufacturing centre with high standards and to strengthen its food-brand influence in the industry.

In 2013, there were 425 large-scale food manufacturing enterprises in Zhangzhou, accounting for 26.4% of the total numbers of significant enterprises from all industries. Food production values amounted to USD 12.08 bln, up 20.9% from the previous year. Exports of food and subsidiary agricultural products from Zhangzhou totalled USD 4.1 bln, up 47% and were responsible for 66% of Fujian Province’s total exports.

There are three main streams of revenue for Zhangzhou’s food industry, namely subsidiary agricultural food processing, food and wine manufacturing and beverage and tea production. Seafood, vegetables, oil and fertilizers are the main categories on the subsidiary agricultural food processing list, which generated a total production value of USD 7.8 bln in 2013 – an increase of 30%.

The total production value of food manufacturing, mainly canned food and biscuits, amounted to USD 3.3 bln, up 31.3%. The total beverage and tea production, with Oolong Tea and other beverages as best-sellers, had a value of USD 574.5 mln, an increase of 27.4%. The top 608 food companies in Zhangzhou generated a combined turnover of RMB 178.3 billion in the first 10 months of 2020; up 2.1%.

Speciality food

After years of development, Zhangzhou has established a firm foothold in the business of producing speciality food, such as canned fruits and vegetables, frozen vegetables and seafood and the processing of meat and preserved fruits. Of equal importance are food and food-related items such as biscuits, vegetable oil, fertilizers and tea.

Zhangzhou’s production of canned food occupies 60% of the province’s total and 11% of the nation’s total. In particular, exports of canned mushrooms represent more than 80% of China’s total. Zhangzhou also plays a significant role in many other categories. For example, it is the number one producer of canned asparagus, water chestnuts and bamboo shoots; the key production base of candied ginger, providing 80% of the European market’s supply; and the second largest exporter of processed seafood in the province.

Large-scale establishments

Among the city’s large-scale food enterprises, there are 190 (11.3% of the total) with the capacity to produce more than USD 16.1 mln worth of food. Zhangzhou’s high production capability is further proven by some impressive figures in 2012, which recorded 12 companies capable of producing more than USD 161 mln worth of food (6.3% of the total); 85 companies with a total production value of USD 32 – 161 mln (44.7%); and 48.9% of the total that could produce food with a value of USD 16 – 32 mln.

Prominent subsidiary agricultural food companies are Hongyi Grain and Oil Resources Co Ltd, Fujian Haikui Aquatic Products Group, Dabeinong Group, Fujian Dongya Aquatic Products Co Ltd and Fujian South China Sea Food Ltd.

Major food manufacturing enterprises include Fujian Zishan Group Co Ltd, China Lubao Group and Danco Group; while beverage and tea producers comprise Damin Foodstuff (Zhangzhou) Co. Ltd, Taisun Enterprise (Zhangzhou) Food Co Ltd and Tsingtao Brewery. There are two publicly listed food companies, namely the Fujian Haikui Aquatic Products Group and Tenfu Corporation. Ranli Food is a rapidly growing innovative producer of pastry, biscuits and bread.

There are 34 foreign-investment enterprises with total business values of USD 1.1 bln, representing 8% and 9.7% of the total of overseas enterprises and their value. Sixty-two companies are run by entrepreneurs from Hong Kong, Macau and Taiwan with values of USD 2.6bn, and 329 domestic companies have a total business value of USD 8.2bn.

Brands and awards

A dramatic increase in the number of food brands can be seen in Zhangzhou, a result of the city’s great enthusiasm for product innovation and the city government’s aggressive brand name strategy. By the end of 2013, there were 292 brands awarded “provincial-level status”. Among these, 25 are famous food names in China, one being “national-level status” and 266 are classified as the province’s “prestigious brands and products”. In 2013, seven new brands reached “national-level” and 26 new labels were awarded “provincial-level status”.

Zhangzhou’s ultimate aims are to establish a qualified and systematic food manufacturing centre with high standards and to strengthen its food-brand influence in the industry.

City by the sea

Zhangzhou is a renowned coastal city in Fujian Province with a surrounding sea area of 18,600 square kilometres and 112,300 hectares of shoal area. The 715-kilometre-long coastline starts in the north at the Jiulong River Estuary and continues down to the south to the Tielu Gang of Zhao’an County in Guangdong Province, featuring a coastal tortuous rate of 1:4.12. There are more than 20 natural harbours in the city, such as Xiamen Bay, Futan Bay, Jiuzhen Bay, Dongshan Bay and the Zhaoan Bayand Gongkou Gang. The city also has 232 islands with a 2,098-kilometre-long island shoreline, plus 36,000 hectares of usable sea area.

All of these favourable coastal landscapes have enabled Zhangzhou’s fishery industry to develop into a fully-fledged sector, producing 1.54 mln mt of seafood worth USD 2.9 bln, representing an economic value of USD 6 bln. There are more than 300 companies involved in seafood processing — producing 723,000 mt of products (25% of the province’s total), worth more than USD 2.5 bln.

Zhangzhou also exports 383,700 mt of seafood with a total value of USD 2.62 bln, registering an increase of 33.13% and 39.5% respectively. There are five enterprises that can produce seafood worth more than USD 161 mln, and 34 companies with a value of more than USD 16 mln. The city produces five of China’s most famous brands in addition to seven “provincial level labels” and 24 “prestigious” products.

The area has recently accelerated its pace of becoming a key producer of grouper fish. It is determined to accomplish the goal of being the “capital of grouper” and set a record for producing 15,000 mt of grouper, worth USD 241 mln, by 2015. The goal can only be achieved by means of continuously nurturing juvenile grouper, in addition to developing a healthy and standardised rearing system plus a commercialised strategy for fish farms.

For many years, Zhangzhou’s seafood has been exported to the US, Japan, Korea and Southeast Asia. Export markets are now expanding to countries and regions such as the EU, Russia and South America. In 2011, the city’s seafood products were exported to almost 80 countries and regions, with more than USD 100 mln worth of produce for sale to Taiwan, the US, Vietnam and Hong Kong. Presently, Zhangzhou, compared with other cities in the province, has gained the largest number of registered import permits to various countries and regions across the globe. For example, 45 companies are registered to be allowed to import seafood to Indonesia, 35 to Vietnam, 35 to Korea, 25 to the US, 11 to Russia and seven to the EU.

There are 97 large companies with annual production values of more than USD 805,000, and 21 of more than USD 16.1 mln. The number of export companies is increasing. There are 29 companies that export products worth more than USD 10 mln and seven companies at more than USD 50 mln. Among all, Fujian Dongshan Haikui Aquatic Products Group Co Ltd exports seafood products worth USD 200m, one of the top 10 companies in the city. Above all, there are 13 standardised fish farms in the city, three healthy breeding model farms, 20 non-hazardous production bases and 59 export centres.

Special regions

A number of sub-regions of the Zhangzhou Municipal Area have taken up the food image of Zhangzhou in their own regional marketing.

Longhai for leisure food

Within the larger Zhangzhou area there is a city called Longhai. While for Zhangzhou the food industry is regarded as a pillar of the regional economy, for Longhai it is the nr.1 industrial sector. The Municipality of Longhai has started profiling itself nationally as the ‘capital of leisure food‘ in 2019. The region is home for 605 food companies certified by the State Food and Drug Agency, covering a broad range of products. The Longhai government claims that about one third of the Zhangzhou food industry is concentrate in their region. Longhai is closer to the sea than the Zhangzhou municipal area.

Zhao’an green plum land

Zhangzhou’s Zhao’an County has been famous since ancient times as a production region of green plums. The region produces 105,000 mt p.a. of these fruits. The local government decided in 2017 to actively support the growing of plums for 5 years, investing RMB 15 mln each year. Plum exports generated over USD 50 mln in 2018. Plums are not only sold as primary produce, but also processed into various products. 38 of the major plum growing and processing companies of Zhao’an organised themselves into a Zhao’an Green Plum Industry Promotion Association in March 2019.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation.

Canned food – a luxury item in China

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In Western households, canned food is kept for when you have little time to prepare a meal. In China it is regarded as a luxury food

A major production and export country

The canned food industry is one of China’s earliest food industries with a good foundation and fast development. The above photo was taken in 1957. As the opening text of this post already states, canned food used to be regarded as a luxury product. As a result, canned food was mainly positioned as export product. And indeed, those exports have made a great contribution in generating hard currency over the decades. China has been able to stay in the ranks as a processor and exporter of canned food such as tomatoes, asparagus, bamboo shoots, yellow peach, orange, etc. The world’s largest canned food producers are also located in China.

The following table shows that the Chinese canned food industry has seen a turbulent development since China opened up its economy in the late 1970s.

Year Canneries

nr

 Turnover

mln RMB
1978 150 1,485
1995 1775 14,592
2017 892 175,387

This table shows that the industry first grew through an increasing number of companies, followed by a period in which the worst performers had to leave the business, while the best performers grew in size.

Where are the canneries?

Canned food is produced all over China and food is usually canned near the place where the fruits and vegetables are grown and the animals are raised. E.g., Zhejiang province has been the largest export region for canned tangerines for decades. The top region is Fujian province and Zhangzhou in particular. In a previous post I already reported that Zhangzhou is often mentioned as the ‘Capital of Canned Food’ in China. A top product in this respect is canned mushrooms. 80% of the canned mushrooms exported from China leave the country via Zhangzhou. The above map shows the location of canneries in various regions of China in 2012.

Some figures

China has produced 8.317 mln mt of canned food in 2021; up 0.09%. In 2022, China exported 3.125 mln mt of canned food; up 12%%. This generated an income of USD 6.89 bln; up 22%. In 2017, canned seafood was the largest export product with a volume of 336,400 mt. The USA and Japan were the main recipients of Chinese canned food with a rate of 14% each, followed by the EU with 11% and Russia with 5%. Fujian was the largest region export region in 2020, good for 44.68%. China has exported 478,500 mt of canned fruit in 2021; up 41%.

Domestic consumption of canned food

The canned food market in China is not plain sailing. Especially in recent years, with the increasing concern for healthy food among Chinese consumers, the image of canned food has suffered due to the long shelf life, adding preservatives and other misunderstandings, but the industry as a whole has so far withstood the test. At present, China’s canned food consumption level is still very low with only 6 kg per capita while the consumption is at 92 kg in the United States, 56 kg for the EU, and 30 kg for Japan.

Issues

China’s canned food industry is coping with problems of overcapacity, disorderly competition, unfortunate product structure and lack of innovation, while there is a huge potential market to be stimulated.  In recent years, the international market competitiveness has declined as the cost has been rising. Especially adjusting the product structure has become a priority. In fact, the changing lifestyle of the younger generation, with a busier pace of life, is posing a new market opportunity for the canned food industry in China. To cash in on that, innovation is imperative.

Nostalgia as marketing proposition

Linjia Puzi (Dalian, Liaoning) has launched canned fruit in a rather nostalgic packaging in 2020. The design resembles the style of that popular in the interbellum. The photo shows the peaches on syrup, with ‘imported arabinose’.

Strong association

As is emerging from several posts in this blog, associations are a strong influencing factor in the Chinese food industry. This also applies to the China Canned Food Industry Association (CCFIA). Established in Aug. 28, 1995, the CCFIA is the only national wide legal organization entrusted by the Chinese Government. Its members include canned food producing enterprises, sale companies, research, inspecting, detecting units, equipment manufacturers, raw material providing companies and management departments and units. The CCFIA is the representative of the common interests of the members. Its aim is to promote the development in canned food industry in China and provide high quality services to all the members.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success.