Cheese in China – a gargantuan challenge

Most Chinese believe that cheese smells like a kitchen rag, but there definitely is a future for cheese in China.

First of all, you should know that most of the Chinese do not like cheese, or at least the typical cheeses Westerners eat every day. Indeed they think it smells horrible and find hard cheeses such as Gruyere or Emmental outright disgusting. In 2017, the per-capita consumption of cheese in China was 0.1 kg a year, while it was 2.4 kg in Japan, 2.8 kg in South Korea and 18.6 kg in Europe

However, more and more Chinese people would like to try new things and to taste imported products, as is attested in many of the posts in this blog. This also includes cheese, especially in first-tier cities such as Shanghai, Beijing or Guangzhou. However, almost all cheese consumed by Chinese is processed, as this removes some of the most problematic properties (texture and odour). Reliable cheese-related statistics about China are notorious hard to get. According to a usually reliable Chinese soure, the country has produced 27,000 mt of cheese in 2016; 10,000 mt made from domestic raw milk and the remaining 17,000 mt being processed imported cheese. The OECD-FAO and USDA statistics are considerably higher, but I suspect that those figures include some yoghurt, which by some producers, in particular in the South, is named suanrulao ‘sour yoghurt’.

CnProcCheese

Government support

Chinese Vice Agriculture Minister Yu Kangzhen stated on Dec. 13, 2017, speaking at an event to encourage cheese consumption in schools, that efforts should be made to develop dry dairy products like cheese to improve dairy product structure and boost the dairy industry. Chang Yi, chairman of Beijing Sanyuan Food (see below), said at the event that China’s cheese consumption could grow by more than tenfold in future, and that he expected the cheese industry to maintain annual growth of 20% in the next five years.

Imports

While domestic production is growing, most cheese consumed in China is imported. China imported 108,300 mt of cheese in 2018, 2.8 times the volume of 2011.

Region share (%)
New Zealand 42.2
Australia 27.2
USA 18.6

The old world is obviously lagging behind, which is again a result of the Chinese dislike of unprocessed cheese.

Mozzarella is a major item in the list of imported cheese. Fonterra has recently opened a cheese plant in Australia to better supply the Chinese pizza market. According to a Fonterra spokesperson, already half of the Chinese pizzas are topped with mozzarella from Fonterra.  Mengniu and its partner Arla have launched mozzarella in 2018.

China is lowering its cheese tariffs from 12% to 8%, effective from December 1, 2017. This will certainly boost the sales of imported cheese.

Distribution Channels

93% in supermarkets and hypermarkets
4.8% in small independent grocers
1.9% in other food retailers
0.3% small outlets like hotels and upscale restaurants targeting expatriates

The supermarket is the no.1 distribution channel, because it is absolutely necessary to maintain the cold chain for cheese. Many small grocers cannot provide this quality service. With the development of the Internet and new ways of consumption, it is now possible to buy your cheese online.

Imports are still rising significantly. China has imported 16,446.9 mt of cheese during the first 4 months of 2017; up 41.25%.

Drivers for demand

Demand for cheese is driven by two factors: Chinese consumers looking for high quality dairy products and safe products prefer major western brands. Lifestyles are moving towards European standards of consumption.

The tastes of Chinese regarding cheese will develop gradually. Traditionally Chinese food is served with several dishes. And unlike us, Chinese don’t eat cold meal. However, pizza has made extremely popular in China after the arrival of Pizza Hut in the Middle Kingdom. Its success has inspired many Chinese entrepreneurs to venture into Italian restaurants, and cheese is an inalienable ingredient of Italian cuisine.

PizzaHutChina

Main brands

The site Manufacturing News has published the following list of China’s top 10 cheese brands of 2015

1 Yili
2 Bright
3 Suki
4 Milkana
5 Anchor
6 Mengniu
7 La Vache qui Rit
8 Sanyuan
9 Arla
10 Tala Eji

Half of these are indeed domestic companies, but most of them import bulk cheese and further process it into processed cheese in various shapes and flavours.

The oldest domestic cheese producer is Sanyuan (Beijing). It imported a Danish cheese production line in 1985, mainly to service the foreign diplomatic community in the Chinese capital. Sanyuan still produces this cheese under the Beijing Cheese (Beijing Ganlao) brand. It now has a capacity of 10,000 mt p.a.

Ingredients: fresh milk, non-fat milk powder, salt, calcium chlorate, rennet, lysozyme, Lactococcus lactis cremoris, Lactococcus lactis diacetyl, Leuconostoc mesenteroides

Strikingly, most domestic companies that actually produce cheese in China are small, often privately owned, enterprises. There is Qishi (Inner Mongolia), China’s first producer of Mozzarella, but the most interesting case is no doubt Le Fromager de Pekin, a company set up by a Chinese, Liu Yang, who learned making cheese in France. Liu spent 7 years in France studying the language, business administration and cheese making. Upon his return to China in 2007, he stumbled through careers in translation and IT sales before opening Le Fromager de Pekin, which sells about 5300 pounds of cheese a year. Although Liu’s mission is to promote cheese to fellow Chinese, almost all of his clients are expatriates living in Beijing. Still, he’s convinced that will change. Watch this video report about his activities.

Case study: Yellow Valley: Gouda as only a Dutchman can make it

When Marc de Ruiter’s Yellow Valley business opened up in 2004, it was the first fair trade Gouda cheese producer in China. Known by almost half the expat population in Beijing. Here is a video impression from 2009.

Yellow Valley is located near Taiyuan (Shanxi). It is a small production facility on the premises of a dairy farm. Here, Marc de Ruiter, a Dutch agriculturist, produces his original Gouda cheeses. He is supported by two full-time employees – one cheese maker and one who handles marketing and sales. Two part-time employees take care of the online sales activities via China’s e-commerce platforms. The small Gouda cheese making business grew more successful over the years and the Yellow Valley products were widely known in China’s largest cities. After China was hit by the melamine milk scandal, Yellow Valley had to close down, like many small dairy-processing businesses.

YV

After the close-down from 2011 to 2015, Marc found a way to restart. “Producing ‘farmhouse based cheese’ was the loophole I needed. It requires a lot less licences and permits. The cheese can only be sold directly and online – not in stores.” The Yellow Valley ‘new style’ offers a wide range of traditional and special products, like the original Cheese, the Aged, Herbs de Provence and Cumin varieties and even with local cheese favourites with onions and garlic. There is even a spicy variation red Currently, nearly 90% of its sales go through WeChat, Weidian and Taobao channels.

After the reopening of Yellow Valley in mid-2015, Marc aims to increase production. The company is expanding its facilities to 65+ square metres of production space, a ripening chamber and an exhibition space.

Cheese as flavouring ingredient

So the Chinese are surely developing a taste for cheese, but what would it take to bring this market to maturation? One problem is that cheese is hard to integrate in Chinese cuisine. You can try to design a recipe for cheese-filled dumplings, but this may make them taste more like an Italian dish than a Chinese snack. The same would happen, if you would sprinkle grated cheese over a bowl of Sichuan-style dandan noodles. It may actually be tasty, but I wonder if it would ever become a hit. One solution could be to do tests with adding molds like those used to produce furu (fermented bean curd) to cheese and develop an indigenous moldy cheese. Huangshan Tianfeng Foods Co. produces a version of the traditional Chinese rice cake niangao flavoured with cheese. Sailor Foods (Fujian) has launched a Cod & Cheese Sausage in 2019. It is a steamed cod-based sausage, with chunks of cheese to add a new flavour, while avoiding a strong cheese taste.

Another problem is that the little natural cheese that is actually produced on Chinese soil is not linked to the local food tradition, the local terroir. When I first lived in China in the 1970s, we could buy cheese from Heilongjiang province (the home region of Mr Liu Yang), close to the Russian border. That was real natural cheese. However, production seems to have halted; pushed from the market by imported cheese and locally produced processed cheese. An idea for Mr Liu Yang would be to promote his Beijing-produced cheese as the ideal companion of Beijing’s famous baijiu (distilled liquor): Erguotou; a beautiful marriage between the old and new local tradition.

Cheese has set a firm foot on Chinese soil and it certainly there to stay and to grow.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975.

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Train food in China

Trains are a vital means of transportation in China. Although air travel is as common as in China the US nowadays, the Chinese government keeps investing huge amounts of money in updating the railroad system and new trains. China already has the world’s largest high speed rail system.

Heavily packed

Chinese train travelers are without exception heavily packed. However, at least half the load they carry onto the train is not their actual luggage, but food, and drinks. Entire loaves of bread and hole packs of sausages, cartons of hard boiled eggs and instant noodles, obviously, baskets with apples, and other fruits; and tea.

The tea comes in the form dried leaves. You bring your own mug as well and as soon as you have settled in, you place your mug with a handful of tea leaves on the small table in each compartment. Every Chinese train comes with a number of boilers. A train attendant will pass by about every half hour with a thermos flask with boiling water to fill your mug, again and again. If that is still not enough to satisfy your thirst, you can go to the boiler yourself to fill your mug, or perhaps your own small vacuum flask. One helping of tea leaves is usually enough to get you through the day.

After settling in on their seats or berths, and after getting their first infusion of tea, the next collective activity of Chinese train travelers is unpacking. No, not their pyjamas or playing cards, or whatever they could use for entertainment, but food. In no time, the small tables almost collapse under the heavy load of ham sausages, eggs, water melons, fried chickens, biscuits, tangerines. Every food you can name is there, as well as a few items you may not be able to name.

One of the Mongolian's cabins. Smelly mongolian food strewn about. Gross.

All that eating is bound to create waste: sausage skins, eggshells, watermelon seeds, and skins, chicken bones. A lot of that ends up on the floor. However, the train attendants will take care of that as well. After a round with the thermos flasks, they soon return with their brooms, to sweep the leftovers of their hungry guests to a waste bin at the end of each wagon. It takes getting used to for the beginning Western train traveler in China.

Train food

All this long distance train travelling has affected the Chinese food industry. I dedicated an earlier post in this blog to ‘leisure food’, a typical Chinese food category. Of course, these foods are consumed in all means of transportation, but trains certainly have the edge.

Instant noodles have risen to top position. They are cheap, convenient and tasty. As all trains in China provide hot water, instant noodles have become the most popular hot food on a train, because they can be made anytime.

While instant noodles are the typical staple foods during long haul train rides in China, snack food in small packs are the ideal dishes to add some flavour to the relatively bland noodles. Beef jerky, various parts of the duck, steamed chicken feet, dried bean curd, any nut or seed you can think of, pickled vegetables like zhacai, as long as it comes in a palm-size pack, it works for train travelers.

TrainFoodVar

If soaking noodles in hot water is too time consuming for you, you can opt for a liquid staple. Canned porridge in China usually contains nuts, dried fruits and grains, and is sweet flavoured. Young passengers will like it and adults can take it as dessert.

The second favourite activity of Chinese train travelers is sleeping. A full belly makes you sleepy. However, the refreshing activity of tea can be a spoilsport here. A good alternative for train travelers who want to kill a few hours by sleeping is beer. You will find a few cans of beer in the luggage of many Chinese train passengers. And when your last can is empty, you can usually buy more in the dining carriage.

Other moments to replenish your food and drink stock are the stops at stations. Trains will stop for a few up to ten minutes, which usually gives you just enough time to buy a few cans of beer, some freshly steamed buns (mantou), or a bag of peanuts.

Frui for sale on the platform

Dining carriage

Spending such a long time in a restricted space, is bound to become tedious sooner or later. You can chat with your travel companions, but the moment will come that you have exhausted all topics you may want to discuss. You can play cards, read, listen to music, but it all will become repetitive.

There are three peak events to look forward to on long Chinese train rides: breakfast, lunch, and dinner. This is not because they are such a culinary tour de force. Neither is it because you are hungry. You have spent most of the time that you are awake eating, and there are few opportunities to burn calories. Still, few people skip a meal, simply because meals are served in the diner, so you finally have an occasion to walk and get some exercise. And you can sit on a chair, instead of a berth, or one of the small fold out chairs in the corridors.

TrainDiner

A typical train meal consists of a bowl of lukewarm rice and a couple of greasy dishes. You usually get more flavour from the foods that you brought yourself than from what you get served in the diner. However, with the modernisation of the Chinese railway system towards the world’s largest high speed train network, the production of train food is also updated. The following picture shows a cold-chain packed meal produced by the Beijing Railway Service Company, with an expiry time of 72 hours.

RailFoodBox

The following video gives an impression about how train meals are served in China.

To summarise: eating and drinking on Chinese trains is not a haut cuisine experience, but it is one of the best occasions to experience a symphony of all aspects of Chinese food and culture.

High speed trains driving change

As of late july 2018, 27 high-speed train stations are providing a pilot food-on-demand service to passengers, who can pre-order food from a selection of the outlets at the stations. The service serves as an apt response to the meal box monopoly. Complaints about the expensive, tasteless meal boxes offered on high-speed trains are not rare, and many passengers prefer to take instant noodles with them or else not eat at all while traveling by train. So the takeouts-on-demand that can be ordered via China Railway Corp’s website or its app two hours before the train is scheduled to arrive at a selected station could be a savior to those hungry travelers who have no interest in the meal boxes. The pre-order service costs as much as that offered by popular food delivery apps like Eleme, except the delivery fee is around RMB 8, which is slightly higher than in cities.

High speed trains continue to change the relationship between trains and food in China. The top season is undoubtedly the period before and after Chinese New Year, when migrant workers in big cities are returning home to celebrate China’s main festival with their close relatives. A dining carriage director with the China Railway Nanchang Group recalls the changes during the past few decades. In the early 1980s, flavoured peanuts and lard cakes were among the very few snacks sold on trains, and they were highly sought-after. Trolleys were introduced in the 1990s and it became a booming business thanks to the large volumes of passengers. One trolley could sell RMB 10,000 worth of goods during one train trip, though most passengers still favoured cheap snacks. Now Starbucks coffee and Haagen-Dazs ice cream sold on high-speed trains are also welcomed by passengers, though their prices are much higher than traditional snacks like melon seeds. Bottled mineral water is also best-seller, at least on slower trains, and passengers are willing to dig deeper into their wallets for better brands. Water priced at  RMB 5 sells better than the RMB 2 ones.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975.