Canned food – a luxury item in China

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

In 2017, China produced 12,395,600 mt of canned food, up 3.75%. The industry generated a total turnover of RMB 175.387 bln; up 5.46%. In the same year, China exported 2,744,800 mt of canned food; down 3.32%. This generated an income of USD 4.66 bln; up 1.3%. 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%. China has produced 2,959,586.1 mt of canned food in the first 5 months of 2020; Fujian was the largest region good for 44.68%.

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.

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 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.

Tomatoes in the Chinese kitchen and even more for export

The tomato belongs to a large group of plants of the nightshade family. Its cousins include potatoes, aubergines and bell peppers, all popular ingredients in China.

No one can pinpoint the exact dates these vegetables were introduced to China, but the general consensus is that they came through both the overland and maritime trade routes. The national output of fresh tomatoes for 2017 is estimated at more than 56 mln mt.

There is a chicken dish cooked by the Uyghurs in the north-western entry point of Xinjiang Uygur autonomous region that combines almost all of them. Known as “big pan chicken” or dapanji, it is a rich, tomato-based stew with chunks of potatoes, lots of onions and plenty of bell peppers. That probably gives us a hint on the early beginnings.

Good ingredients are treasured by Chinese chefs who often go out of their comfort zones to seek them out. Foreign imports such as potatoes are now staples, and the chili pepper, too, has been naturalised.

The tomato’s brilliant colour and natural umami flavour have made it another essential ingredient. In fact, the classic sweet and sour dishes of southern China now depend mainly on the tomato, where it used to be the hawthorn fruit that coloured and flavoured in the past.

It used to be harvested only in summer, although it is now available all year round, thanks to bigger, better greenhouses and a countrywide logistics network that connects north to south and east to west. Xinjiang is currently by far the largest production region of tomatoes in China. This product has become so important, that China has started investing in tomato production in neighbouring Kazakhstan.

The northern Chinese mainly consume tomatoes raw, in thin slices liberally covered with caster sugar. More than a few Europeans have to grow accustomed to eating sweetened tomatoes. The most favoured hot dish with tomatoes is tomatoes with scrambled eggs (xihongshi chao jidan), which is everybody’s favourite. I used to travel in China with a Dutch client who was not a lover of Chinese stir fried dishes, but he did like scrambled eggs with tomatoes.

Tomatoes are now used to stuff dumplings, pairing with such stronger-tasting meats like beef and lamb, and is cooked down to a sauce for hand-cut noodles. It is not only used to accompany noodles, but is actually worked into the noodles themselves, like spinach.

The love of tomato-flavoured stews in north-eastern China can also be traced to the Russian influence of the past. For certain older generations, the only Western restaurants in the capital at that time served Russian food. For them, Russian food meant a strongly tomato-flavoured borscht, a hearty tomato and beef stew and minced-meat-stuffed cabbage rolls slowly stewed in a thick tomato sauce. That was the pinnacle of gourmet eating in restaurants with names like Old Moscow, or Kiev.

Times have changed. Modern Beijingers still love their tomatoes, but they are more likely to consume them as pizza sauce or over spaghetti. Modern chefs, many coming from overseas, have also introduced other new ways of eating tomatoes.

Tomato paste

The top industrial tomato product is tomato paste. If your mind connects tomato paste with Italy and Italian cuisine, you need to update your settings. China, in particular Xinjiang, has the world’s prime production region for tomato paste for a number of years. Several Italian companies import it in bulk an can the Chinese product in Italy, to export again as a ‘typically’ Italian product. However, the exports of tomato paste have been dropping, partly due to adverse weather conditions and partly to regional protectionism that is on the rise globally. China has exported appr. 852,000 mt of tomato paste in 2017. That is considerably lower than the top year 2011, when China exported 1,128,459 mt.

Tomato-based ingredients

Although exported could increase again, the Chinese tomato processing industry needs to look for tomato-based ingredients with a higher added value. One such product is lycopene. It is offered as a dietary supplement claiming to aid the prevention of cardiovascular diseases and prostate cancer.

A good indication of the current situation of any food ingredient in China is looking at the participants of the Food Ingredients China (FIC) 2018 trade fair (March 22 – 24, Shanghai). The following table shows exhibitors of various tomato-based products at that fair.

Product number
Sun-dried tomatoes 1
Dehydrated tomatoes 1
Tomato paste 3
Tomato powder 7
Lycopene 9

It seems that suppliers of tomato paste or dried tomatoes do not regard FIC as their typical trade fair. However, FIC is clearly the place to look for tomato powder and lycopene.

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 and regularly travels to the remotest corners of that vast nation.

Belt and Road – Wheat and Yeast, and more

By now, the new motto of the Chinese government, the Belt and Road Initiative (BRI) aka One Belt One Road (OBOR), is known all over the world. Not only the national government, but also local governments in China, enterprises, and universities are rephrasing their goals and strategies in terms of OBOR. The Chinese food industry cannot escape this trend either, witness a conference held in October, 2018.

I have already posted a number of stories featuring wheat flour in this blog, including texts focusing on flour improvers, bread, and steamed bread (mantou). This is certainly not overkill. China has been the world’s largest importer of wheat for a number of years. The import volume in the 2015-16 season is estimated at 2 mln mt, an increase of almost a third compared to the previous season.

An important reason for that increase is the growing consumption of bread in China. Chinese domestic wheat is relatively low in gluten, which is fine for traditional Chinese products like steamed bread, dumplings or noodles. Bread, however, requires wheat with a higher gluten content. China used to import such wheat from Australia, the USA and Canada, but an emerging source of high gluten wheat for China is Kazakhstan. Chinese wheat imports from Kazakhstan increased from 40,000 mt in 2010 to 250,000 mt in 2014.

KazakhFlour

The fact that China and Kazakhstan are neighbours makes them more obvious trading partners than those faraway Western nations. However, the story is more complicated, more related products are involved, in particular another essential ingredient of bread: yeast. The favourite staple of Central Asia, the nan, is also a baked product using yeast.

Yeast feeds on molasses and Xinjiang, the Chinese border region with Kazakhstan, is an important sugar region in China with 14 sugar plants producing 250,000 mt of molasses p.a. Along the region’s Uighur majority, Xinjiang is also the home of a considerable Kazakh minority. Moreover, Kazakhs and Uighurs share the same Muslim religion, so there is a mutual understanding regarding Halal food regulations. This motivated China’s top yeast producer Angel (Yichang, Hubei) to establish a subsidiary in Yining, a city in Xinjiang close the border with Kazakhstan. A considerable part of the produce of that plant is exported to Kazakhstan. According to one source, ‘Chinese yeast is a famous in Kazakhstan as Coca Cola or Marlborough’.

Angel

Meanwhile, China has started investing in the continuous supply of high gluten wheat from Kazakhstan through an intensive aid program. The country’s wheat output in 2011 was 26.9 mln mt, but was almost halved in the following year, due to severe drought. The average wheat output per hectare in Kazakhstan is about 1/5 of that in China. The Chinese authorities have organized a number of government agencies and companies to combine their expertise in helping Kazakhs to improve their wheat production. One tractor maker in Shandong has developed tractors specially geared to the conditions in Kazakhstan. Chinese experts believe that this development aid can unlock the potential of another 20 mln mt of high gluten wheat p.a. And yes, much of that will find its way to China.

Oil from Kazakhstan – from buying to producing

The Aiju Grain and Oil Industry Group (Xi’an, Shaanxi) imports cooking oil, wheat and flour from Kazakhstan. Aiju’s Chairman noted during his visit of a trade fair in Almaty in 2015 that a considerable acreage of rich arable land is left unused in Kazakhstan. Aiju is now building two factories in the region, which will process up to 1000 mt of wheat and 1000 mt of sunflower oil a day, as well as a base to plant wheat and sunflower seeds over 33 hectares. The base will be finished by 2020 and create 300 jobs. Aiju intends to bring high-efficiency planting and processing technologies to Kazakhstan, which will help with local economic development. The company also plans to start importing beef, mutton, honey and milk from Central Asia too. This includes other countries besides Kazakhstan. Bai Qinbin, deputy director of port management for the Xi’an International Trade and Logistics Park, said the city’s large transportation network can help boost trade and investment between China and countries involved in the Belt and Road Initiative. “We are working on starting a service between Xi’an to Teheran this year, as the Middle East is in great need of Chinese goods, especially food and commodities for daily use.” Xi’an is one of the most important multimodal infrastructure hubs in China.

Tomatoes and more

The role of Xinjiang in the development of Kazakhstan’s food industry does not stop at wheat and yeast. Xinjiang is already the world’s largest supplier of tomato paste. One of these companies has invested in a tomato processing plant in Almaty. Chinese companies have so far offered to invest USD 1.9 bn to upgrade Kazakh food processing industry with 19 projects such as tomato, chicken and meat processing plants. According to Gulmira Isayeva, Kazakhstan’s deputy agriculture minister, Beijing’s USD 40 bn Silk Road Fund is planning investments in three projects, including one to move three tomato processing plants from China to Kazakhstan. Investments under consideration in Kazakhstan’s agriculture sector include USD 1.2 bn by Zhongfu Investment Group into oilseed processing; USD 200 mln into beef, lamb and horsemeat production by Rifa Investment; and USD 80 mln into the production of tomatoes and tomato paste by COFCO, China’s state agriculture conglomerate.

OBOR as milky way

Yili (Huhhot, Inner Mongolia; aka China’s Dairy Capital) has broken into the ranks of the world’s top 10 dairy makers in 2016, ranking 8th. The company is advertising its global strategy in terms of OBOR.

YiliOBOR

So OBOR really can create win-win situations.

Jiangnan University joins in

A founding ceremony of the  was held by Jiangnan University in Wuxi, East China’s Jiangsu province on Nov 16, 2018. Hong Liu, deputy director of the Jiangsu Provincial Department of Education, Liu Xia, deputy mayor of Wuxi, as well as presidents, experts and scholars from 49 universities in 27 countries involved in the Belt and Road Initiative (BRI) attended the ceremony (including the University of California, Davis (UC Davis), the University of Queensland, the University of Reading, Massey University and the National University of Singapore). During the ceremony, general secretary of the alliance, Liu Yuanfa announced the Taihu Lake Declaration, aiming to pool together the wisdom and strengths of the member universities to strengthen strategic communication and coordination in the food industry.

Shared Chinese and Kazakh interests in the agri-food industry

In May 2016, Gulmira Isayeva, Kazakhstan’s deputy agriculture minister, announced that Chinese companies were in talks to invest USD 1.9 billion in 19 agricultural projects as part of the BRI. According to a list of prospective investments that Isayeva showed to the Financial Times and statements from the project planners, agricultural investments under consideration include: USD 1.2 billion by Zhongfu Investment Group in oilseed processing; USD 200 million in beef, lamb, and horsemeat production by Rifa Investment; USD 80 million in the production of tomatoes and tomato paste by Chinese agriculture conglomerate COFCO and Evraziya Agroholding; and USD 58 million in a grain processing venture between China’s Aiji and Kazakhstan’s Total Imepx in northern Kazakhstan. Other projects include the establishment of feed lots and broiler poultry farms by CITIC and Kazakhstan’s Baiterek and an approximately USD 500 million investment by a finance group from Hong-Kong Oriental Patron in the development of “Kazexportastyk” for deep processing of agricultural products in Kazakhstan for export to the Chinese market.

In the future, Kazakhstan might also become a platform for certification and export of Central Asian agricultural products to China. According to Isayeva, laboratories are currently being established in the East Kazakhstan and Almaty oblasts. These labs will have technical equipment that meets the requirements of the General Administration of Quality Supervision, Inspection and Quarantine of China, a Chinese government body that will have the final say over whether or not to accredit enterprises. Using these laboratories, farmers from across Central Asia will be able to certify their products to be exported to China. China will trust the laboratory test results and will not re-examine the goods. Between December 14, 2015 and June 8, 2017, the Ministry of Agriculture of Kazakhstan and the General Administration of Quality Supervision, Inspection and Quarantine of China signed 6 protocols on phytosanitary requirements for export of wheat, horses, soy beans, wheat bran, honey, and the frozen meat of small cattle from Kazakhstan to China.

On July 11, 2017, Kazakhstan and China signed seven agreements worth a total of USD 160 mln at the Kazakh-Chinese Agriculture Investment Forum in Astana. Kazakhstan’s National Company Food Contract Corporation signed agreements with Xi’an Aijugrain & Oil Industry Group Co Ltd, Xinjiang Zhaofenghe Bio-technology Co., LTD, and Zhongxinjian LLC to supply 200,000 mt of grain and 100,000 mt of oil-producing crops to China, as well as construct a grain and oil-producing crops terminal at the Kazakh-Chinese border. Furthermore, Zhannur-Astana and Tianyang Yinhai Seed Co. agreed on the establishment of a seed cluster with a full grain processing cycle, including the transfer of advanced practices in seed production. The two countries also signed a memorandum of understanding aimed at the establishment of a model zone of agricultural cooperation on the basis of the National Agricultural Research and Education Centre, which will contribute to the establishment of joint processing plants and the introduction of new innovations in agricultural production.

Finally, Kazakh Agro-Technical University signed an agreement with China’s Northwest University of Agriculture and Forestry to create a joint agricultural technology park and with Chinese potato company XISEN on a joint experimental demonstration lab for growing potatoes.

BRI and Halal

Among the 65 BRI countries, 31 are Muslim countries, and Muslims account for more than half of the total population of BRI nations. Halal food is therefore an important factor in the relationship between BRI and the Chinese food industry. China has advanced technology and huge capacity to produce Halal food on a large scale, but this potential is far from being developed. In 2019, the world’s Halal food sales reached USD 3.2 trillion, while China’s export value was only USD 100 million. There are great opportunities for future development.

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 and regularly travels to the remotest corners of that vast nation.