ChinaNews

Transcription

ChinaNews

GIRACT
ChinaNews
FOOD & FOOD INGREDIENTS REVIEW
July/August 2013
G IRACT
24 Pré Colomb
CH-1290 Versoix-Geneva
Switzerland
Tel: +41 22 779 0500
[email protected]
www.giract.com
Table of contents
ChinaNews
Editorial
Food Industry News (Contd)
Pg1
Pg32 Worried parents drive imported milk
sales
Pg33 Baby formula gets new import rules
Pg35 Multinationals face increased scrutiny
Pg37 China implements new import and export
requirements for dairy products
Pg38 Infant formulae: market shares of
international brands
Seafood businesses flounder amid
spending cut
Pg39 Shrimp exports
Pg40 The U.S. admin ruling on Chinese canned
mushroom
Milk powder prices lowered after
government probe
Pg41 Food watchdog probes tainted egg
allegations
Pg42 Food safety official in pesticides warning
Pg43 Watchdog: Trans-fat levels meet
standards
Pg44 Three provinces establish seasoning
league
Watchdog: Trans-fat levels meet
standards
Pg45 Better times ahead for catering industry
Pg47 Top cooking oil suppliers
Domestic rapeseed oil production faces
challenges
Pg48 Major advance to halt flow of 'gutter oil'
Pg50 Detection of illegal cooking oils in China
Pg51 China’s devastated wheat crop could spur
more food deals
Pg52 Looking to find, feed new food
consumers
Pg54 China eyes food security options in
Venezuela
Pg55 Apple juice exports
Pg56 Cooperatives can ensure safe food
Pg57 China's Bad Earth
Editorial
Food Industry News
Pg3
Pg5
Pg7
Pg8
Pg9
Pg10
Pg11
Pg12
Pg14
Pg17
Pg18
Pg19
Pg21
Pg23
Pg24
Pg26
Pg 27
Pg 29
Pg30
Chinese soy stakeholders desire
cooperation on sustainable soy
GM food influx a dilemma for
consumers, farmers
China gives approval to GM soybeans
Call for cheaper wine as economy slows
Chilean investment in Chinese wine
Wine makers join forces
Beer imports
Most valuable alcohol brands
Probe into imports of EU wines
Chinese quench their thirst for French
vineyards
Bright future for white spirits
China’s grocery market to reach USD 1
trillion
Bread producers cheating customers, says
dietician
Sugar imports declining
Fast food really fast
New tech can help to keep food safe
Dairy statistics January– April 2013
Too much reconstituted milk
Baby formula industry to consolidate
NZ starts infant formula brand register
for China
Complaints spike over subpar baby
formula imports
Honey laundering: two honey processing
companies charged in anti-dumping case
Bigger concentration of infant formulae
required
Dairy measures start at source
Dairy companies become bigger
China steps up checks on milk formula
producers
China investigates Danone, Nestle on
milk-powder pricing
July/August 2013
(Table of contents continued on next page)
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Table of contents
ChinaNews
Food Industry News (Contd)
Regional News (Contd)
Pg63 Ice on the rocks as 80% from 'illegal'
factories
Pg64 A Chinese trip for foodies and scientists
Gansu
Functional and Organic Foods
Shanxi
Pg64 Malaysian bird nests allowed to enter
China again
Dupont opens probiotic facility in China
Pg73 Friends in spirits
Pg66 DuPont Sees Niche in Curing China's
Indigestion
Pg73 Huailai plans to be major wine region
Pg73 Fields of sunflowers star in Gansu
Hebei
Zhejiang
Ingredient News
Pg68 US to levy anti-dumping duty on xanthan
gum from China
Solvay to boost vanillin production with
new Chinese facility
Pg69 MSG disappearing
Pg70 Pepsi to reduce use of toxic chemical
Stevia developer GLG to team up with
COFCO
Pg71 Tate & Lyle forms food systems joint
venture in China
Regional News
Fujian
Pg72 Fujian still China’s canned food province
Fujian tea output
Xinjiang
Pg73 Aksu attracting beverage investment
Beijing
Pg73 Fangshan wine cluster
Pg77 Water grows scarce for thousands as
drought, heat blast landscape
Company News
Pg78 Desserts recalled in Taiwan, sold on
mainland
Pg80 Mengniu offers to buy Yashili
Pg81 French milk brand sets up in China to
woo worried parents
Pg82 Baby-Milk Demand Helps to Lift Danone
Pg83 Milkworld venturing into China
Pg84 Mead Johnson sees China infant nutrition
rebound
Bright Dairy keeps control of Synlait
Milk despite dilution
Pg85 How Nestlé finds clean milk in China
Pg87 Chinese dairy float for NZX
Pg89 Yili starts up new plant in Henan
FrieslandCampina cuts baby formula
prices in China as probe begins
Pg90 Fonterra reacts to China price probe
Pg91 McDonald's hopes to wow mainland
diners with rice
Pg92 Zhongyi to develop new whole grain
snacks
(Table of contents continued on next page)
July/August 2013
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Table of contents
ChinaNews
Company News (Contd)
Glossary
Pg92 Canned fish to Russia
Campbell to Acquire Kelsen Group
Pg93 New sugar plant in Shandong
Nekta enters the Chinese market
Uni-Present can start in Hainan
Pg94 Moet toasts opening of first sparkling
winery
Pg95 Hawthorn wine
Yanjing: first quarter of 2013
High-end liquor sellers take a hit
Pg97 Kraft's new plant to double output
volume
Trade agreement opens doors for Lindt
Pg99 COFCO selling plant in Xinjiang
Pg99 Wahaha enters Russian market
Mondelez International Breaks Ground to
Expand Biscuit Plant in China
Pg100 Kvass war
Smithfield shareholder still presses for
break up
Pg102 Jollibee targets 500 stores in China by
2014
Nestle’s China investment shows need to
think local
Cargill expands commitment to
responsible supply chains
Special Features
Pg106 Growing your own food: Chinese
consumers’ response to food safety issues
Pg107 Balcony farmers are taking root
Pg108 Following nature's lead on food
Pg110 People power
Pg112 Harvesting the homegrown
Upcoming events
Pg114 Upcoming events
July/August 2013
www.giract.com
mio
bio
k
t
kt
kl
lpd
klpd
tpa
ktpa
tpd
tph
tpm
cpd
JV
M&A
pa
Sensex
'000 000
'000 000 000
'000
tons
'000 tons
'000 litres
litres per day
kilo litres per day
tons per annum
kilo tons per annum
tons per day
tons per hour
tons per month
cases per day
Joint Venture
Merger & Acquisition
per annum
Stock exchange index
Editorial
ChinaNews
We would love to be original in writing this Editorial, but there is no way we can escape starting with
the obvious. After several months of keeping up the suspense, the Chinese authorities have published the
results of the investigation into illegal price fixing by infant formulae suppliers in China.
No one seems to be surprised about the findings. Almost all of the big names were found guilty. A
number of these companies have been handed out fines amounting to 3% of their 2012 turnover. The
level of those fines are the strongest indication so far of the exorbitant earnings these companies have
reaped in China lately.
However, even more interesting is that a few of the companies that have committed the same illegal
activities have not been fined, as they have ‘fully cooperated with the inquiry’. That decision reveals a
fascinating aspect of Chinese culture: once you have committed a crime and you have been found out
(when Chinese authorities start such an investigation, it means that you have been found out), you can
gain significantly from fully cooperating with the authorities, instead of making the inspectors’ lives as
difficult as possible, shredding papers, deleting emails, etc.
The big question is: did they have it coming? And our reply here is: ‘actually, they did’.
The prices of infant formulae in China have seen several hikes per year over the past few years. Chinese
parents have to pay several times more for the same formula than their counterparts in Europe, and in
any case, much more than could be justified by higher costs like transportation, import duties, or
commissions to local agents. The multinationals in this business have not just been cashing in on the
shortage of infant formula in China and the lack of trust of Chinese consumers in domestic products but
they have also greatly abused the problematic situation in China.
In addition, they have forced local agents to agree to fixed consumer prices that have made it impossible
for the agents to compete.
For some ‘business people’, this may sound like normal practice, but it makes us question the validity of
all that boasting about sustainability and corporate social responsibility that is published in the
promotional materials of these companies.
And then came Fonterra.
Disputable business practices are one thing, but that would at least not harm the high quality image of
imported infant formulae. It did so when Fonterra came with a warning that several batches of its
ingredients for infant formulae had been contaminated with botulism. This shocked China and the rest of
the world more than the 1976 earthquake. The world’s largest dairy manufacturer proved unable to
sustain a proper quality management system.
July/August 2013
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Editorial
ChinaNews
But, wait a moment; wasn’t Fonterra also involved in the melamine incident of 2008? With a 43% stake
in the main producer of melamine-stained baby formula, Fonterra then still tried to make the world
believe that it was not at all responsible for the misery caused by this formula.
Milk is a highly perishable product. The tightest quality control may not be sufficient to guarantee the
quality of 100% of the output of dairy products. However, in this case, all the signs seem to indicate that
the big names in baby formulae have been so busy cashing in on the problems of Chinese parents, that
quality control was low on their list of priorities. This is not the proper space to come up with answers,
but perhaps the fact that Fonterra is so large is part of the(ir) problem. We can imagine that total quality
control can be much more effective in smaller scale dairy operations.
If this is correct, then the same Chinese authorities who finally put an end to the price fixing are about to
commit a fatal error of their own. The Ministry of Information & Industry has announced that it will
soon publish a plan to facilitate a series of mergers in the Chinese dairy industry that should decrease the
number of dairy companies in China to 50. They believe that this will benefit quality control, and will
create opportunities for the resulting companies to become multinationals themselves. The acquisition of
Yashili by Mengniu reported in this issue could already be an early example.
Interestingly, criticism to that plan has already appeared in the Chinese media, questioning whether it is
up to the government to decide on mergers & acquisitions, instead of leaving that to the market parties.
The illustration shows a cartoon about this subject in the Chinese press.
We will wait and seen, and keep you abreast of the developments in our future issues.
ChinaNews
is published every 2 months
by:
GIRACT
24 Pré Colomb
1290 Versoix-Geneva
Switzerland
Tel +41 22 779 0500
Fax +41 22 779 0505
[email protected]
www.giract.com
July/August 2013
www.giract.com
Page 1
Food Industry News
ChinaNews
cooperation on sustainable soy
cooperation on sustainable soy (Contd)
The Round Table on Responsible Soy
Association (IRTRS) successfully concluded
RT8: The International Forum on Responsible
Development of the Soybean industry in Beijing,
China under the theme “Building Global Bridges
for Responsible Soy.”
China was the first country to cultivate soy and
produced approximately 12 mio t in 2012/13
(USDA). It is also the world’s largest importer,
having imported 59 mio t in 2012/13 (USDA).
While the purpose of the RTRS conference is to
share knowledge and dialogue about responsible
soy between all countries and regions where soy
is produced and consumed, the program has a
special focus on China as the world’s biggest
market for imported soy as well as a major
producer
Over 200 global delegates attended the
multi-stakeholder RT8, including soy industry
leaders and respected thinkers from the soy value
chain—from
China
and
around
the
world-gathered to dialogue about the responsible
development of the soybean industry and the
benefits of responsible soy.
“China plays an essential role in the international
soy industry and China is the most important
country of soy production and consumption,”
said Liu Denggao, Deputy Director, Chinese
Soybean Industry Association during Session I,
Developments in Chinese Soy Production,
Imports and Overseas Investments.
Co-hosted by the Chinese Soybean Industry
Association (CSIA), the conference is the RTRS’
8th annual conference, and the first held by the
association in the Asia-Pacific.
RTRS Executive Director Agustin Mascotena
opened the conference by expressing his thanks
to his co-host and his sincere hope for increased
cooperation and dialogue on responsible soy. “As
the global leader on responsible soy, the RTRS
welcomes the opportunity to convene a dialogue
on the solutions offered by responsible soy with
companies that produce, trade and buy soy in
Asia. RTRS soy benefits the environment
workers, and communities and helps companies
guarantee a long-term sustainable supply of
responsible soy into the future,” Mr Mascotena
said.
Soy production, especially in South America, has
been blamed for a number of issues including
environmental degradation, social breakdown
and worker exploitation. The RTRS was created
to tackle these issues and transform the soy
industry by creating demand for responsible soy
in all stages of the supply chain.
(Continued on next page)
(Continued in next column)
July/August 2013
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Page 2
Food Industry News
ChinaNews
Being a multi-stakeholder-based initiative, the
RTRS allows stakeholders with a wide range of
roles in global soy supply chains to have a global
dialogue and reach agreement on how best to
ensure economically viable, socially equitable
and environmentally sound soy production.
RSG’s members include Ahold, Asda, Coop
(Switzerland), Delhaize, Migros, Marks &
Spencer, Sainsbury’s, The Co-operative Food
(UK) and Waitrose.
Gai Junyi, Academician of the Chinese Academy
of Engineering gave a rousing official closing
address at RT8 where he said to the packed room
that “China should take good care of its soybean
farmers and import responsible RTRS soy, while
providing more soy products as high quality
protein food for consumers worldwide.”
Other eminent speakers included Dr Cheng
Guoqiang, Secretary General and Senior
Research Fellow, Development Research Center,
of the State Council of China, Soy Market and
Policy in China. Dr Cheng told the delegates that
“Vegetable oil consumption will grow during
this period of higher income and that the policy
will remain open and supportive for the plant oil
market.”
Breakout Sessions at the Forum included such
topics as “Responsible Sourcing,” “Responsible
Soy and Food Safety Responsible Production”
and “Responsible Soy and Small Holders.”
In other RT8 highlights, a representative of the
European Retailers Soy Group (RSG) was
elected to be member of the newly formed RTRS
Executive Board at the 7th General Assembly for
members - immediately after the successful
conclusion of RTB. (Continued in next column)
July/August 2013
In addition, a representative of European animal
feed industry associations FEFAC was elected as
an RTRS Executive Board member. At the
General Assembly meeting which followed the
conference, RTRS members took the decision to
ban the use of Paraquat and Carbofuran
pesticides by 2017.
The RTRS membership includes large soy
producers as well as small farmers from
South America, India and China. Major global
traders like Wilmar, Cargill, Bunge and ADM
are also members, as well as consumer brands
like Unilever and Nestlé, global retailers
including Carrefour and Marks & Spencer,
NGOs including WWF, The Nature Conservancy
and Solidaridad, and financial institutions
including Rabobank and the International
Finance Corporation (IFC).
In addition to the organizations listed above,
other participants
in
Beijing included
representatives from FEFAC (European Feed
Association), MPRESID (Argentinean No Till
Producer Association), André Maggi, RSPO,
GMP International and the European Retailers
Group.
www.giract.com
Page 3
Food Industry News
ChinaNews
consumers, farmers (Contd)
Speaking at the conference included such
respected people as His Excellency AarI Jacobi
Ambassador of the Netherlands to China,
Benjamin Ware, Sustainability Manager for
Nestlé, Daniel Nepstad from IPAM and Henk
Flipsen, Dutch Feed Industry Association.
He grows corn instead, which yields much more
than soybean and brings more income. "The
price of soybeans has kept almost unchanged
while the prices of corn and rice have been rising
in recent years," says Liu. In Keshan County, the
plantation area of soybeans nearly halved from
2007 to 2012, showing farmers having less
interest in planting the crop, a trend that is
playing out in many other rural areas.
On the Chinese side some of the key speakers
were Mr. Yang Shaopin, Chief Economist,
Chinese Ministry of Agriculture, and President of
the China Soybean Industry Association,
Liu Denggao,
Vice President of the China Soybean Industry
Association, and Hu Junlie, President of the
ChongQing Grain Group. (fif 3/6/2013)
consumers, farmers
Liu You, a farmer in Keshan (Heilongjiang) [1],
stopped planting soybeans last year, due to the
crop's low yield and economic return.
July/August 2013
The root for the decisions taken by Liu and his
peers can be found in China's rising imports of
genetically modified (GM) soybeans. By virtue
of the modifications, GM soybeans are more
economical
to
produce
than
their
conventionally-farmed
equivalents.
With
large-scale production of GM crops not yet
approved in China, domestic farmers of soybean
are being priced out of the market as the country
proves happy to look to imports for this most
quintessential of Chinese foodstuffs.
www.giract.com
Page 4
Food Industry News
ChinaNews
However, this is far from the only troubling
aspect of imported GM food. GM remains
controversial over doubts as to its safety. As it
flows into China, the country has to face up to
such questions.
Although edible soybean oil made from GM
produce is common in Chinese supermarkets,
most citizens worry about its safety despite
relatively lower prices than equivalents such as
peanut oil.
Last week, China's Ministry of Agriculture
announced the approval of three varieties of GM
soybeans to be imported as processing materials.
"When I buy edible oil, I will make sure whether
they have GM marks. After all, there is no final
conclusion as to the safety of GM products," says
a lady surnamed Zheng in Guangzhou, capital of
south China's Guangdong Province.
The news triggered fresh domestic concerns
about safety, although there has been large-scale
commercial plantation of GM crops for years in
the United States and many other countries.
China began to import GM soybeans in 1997 to
meet surging domestic demand, according to
Peng Yufa, a senior member of the country's GM
crop bio-safety committee and a researcher at the
Chinese Academy of Agricultural Sciences.
Last year, China imported 58.38 mio t of
soybeans while the country's own soybean
production was about 13 mio t, official statistics
showed. For Chinese farmers, the plantation of
corn per mu, a Chinese measurement which
equals about 667 sq.m., can earn them about
RMB 300 to RMB 400 more in revenue than that
of soybeans on average.
This has prompted more farmers to stop planting
soybeans. In Heilongjiang, a major soybean
producer in China, the area used for plantations
of this legume reduced to about 40 mio mu last
year from about 70 mio mu in 2009.
Results of an online survey conducted by
Chinese news portal sina.com showed on
Wednesday that about 85% of the 30 000 voting
netizens said they would not buy GM products
and 78% believed GM is harmful to people's
health.
To woo consumers, some companies in
Heilongjiang have tried to highlight their
non-GM soybeans.
For example, the Heilongjiang Jiusan Non-GM
Soybean Trade Centre was set up last September.
"The key is to allow and encourage Chinese
scientists to catch up with others and come up
with quality products, including safe GM
products. Only in this way can we change the
status quo of China's soybean products," says
Rao Yi, Dean of the School of Life Sciences at
Peking University. (cd 20/6/2013)
July/August 2013
www.giract.com
Page 5
Food Industry News
ChinaNews
China's agricultural authorities issued biosafety
certificates to three new overseas varieties of
genetically modified soybeans on Thursday,
allowing them to be imported as raw materials
for domestic processing.
According to a statement from the country's
biosafety committee in charge of agricultural
genetically modified organisms, the newly
approved genetically modified soybeans included
CV127 from German chemical producer BASF
and MON87701 and MON87701 x MON89788
from Monsanto Far East Ltd.
The three new varieties of genetically modified
soybeans, which fare better against insect attacks
and herbicide, have been approved for
commercial planting or consumption in many
countries, it said.
The news follows Monday's statement from
Brazil's agriculture ministry, which said on its
website that China had approved imports of three
varieties of Brazilian genetically modified
soybeans.
Antonio Adrade, Brazil's minister of agriculture,
livestock and food supply, participated in the
China-Latin America and Caribbean Agricultural
Ministers' Forum in Beijing on Sunday and
confirmed the information the next day.
Imports of Brazil's genetically modified soybeans
to China had previously been discussed by
Agricultural Minister Han Changfu and Andrade.
July/August 2013
(Contd)
The approved soybeans include RR2 PRO, which
is resistant to caterpillars, a main threat to bean
crops in Brazil. The other two are CV127 and
Liberty Link, which have a better resistance
against herbicide.
As of April, Brazil had exported 7154 mio t of
soybeans valued at around USD 3797 bio —
5604 mio t were exported to China. "This
decision is very timely for Brazilian soybean
farmers," Andrade said, "because the companies
will have a few weeks to expand their
plantations."
Huang Dafang, a researcher from the
Biotechnology Research Institute at the Chinese
Academy of Agricultural Sciences, said on
Thursday that China began to import some
varieties of genetically modified agricultural
products as early as 2003 or 2004 to satisfy
domestic demand.
"At present, besides the United States, a
substantial proportion of genetically modified
agricultural products such as soybeans and corn
have been imported from Brazil and Argentina,"
he said, without providing specific data. Local
demand is mainly driven by increasing domestic
need for fodder and food processing, Huang said.
"Besides meeting domestic needs in terms of
quantity,
imported
genetically
modified
agricultural products are always better than
domestic traditional varieties in terms of
quality," he said. (Continued on next page)
www.giract.com
Page 6
Food Industry News
ChinaNews
(Contd)
(Contd)
For instance, compared with domestic soybeans,
imported genetically modified crops have higher
oil and protein content, he said. (cd 14/6/2013)
There is no industry definition for entry-level
wine or affordable wine. However, industry
industry experts said wine priced below
RMB 200 could be defined as entry-level wine.
There is no industry definition for entry-level
wine or affordable wine. However, industry
industry experts said wine priced below
RMB 200 could be defined as entry-level wine
(Provided to China Daily). The wine industry in
China is paying more attention to less expensive
brands as an increasing number of Chinese
people seek more affordable imported bottles to
enjoy socially rather than for business purposes.
The figures from Wine Intelligence, a
London-based consulting firm specializing in the
wine business, show that in the first quarter of
2013, 69% of 1024 people surveyed aged
between 18 and 50 in China said they usually
spent less than RMB 200 on imported wine for a
casual occasion. Wine Intelligence did not
provide figures for previous years because there
was a change to its survey methodology.
However, Wine Intelligence said there is
growing demand for less expensive wine in
China. "There is a growing trend of drinking
wine for pleasure rather than buying it primarily
as a gift or serving it at banquets as a status
symbol and, along with this growth in more
casual drinking, there's also a higher demand for
wine at more affordable price points," said
Maria Troein, China country manager of Wine
Intelligence. (Continued in next column)
July/August 2013
"The Chinese, as in other mature markets, are
showing more interest in wine and getting to
know more about it. This has created new market
segments of young drinkers who like to drink
wine and that fits their lifestyles - whether it is in
restaurants, bars or even at home," said Joao
Gago, managing director of Boutique Wine Asia.
BwA is an imported-wine trading company in
China with annual trading volume of 20
containers of wine from more than 10 countries.
Gago said 50% of BwA sales are made up of
wine priced around RMB 90, an increase from
25% in 2012.
"Before it was not common to see a Chinese
person order a bottle of wine in a restaurant or
buy wine to share with friends at home. Now it is
becoming better appreciated. It has become part
of daily life, especially in bigger and more
sophisticated cities such as Shanghai," said
Gago. "Wine is said to be good for the health and
a bottle of wine might provoke more topics to
talk about in one's leisure time," said Wang Yue,
a white-collar worker in Shanghai.
The gradually maturing wine market in China
has made wine businesses in Bordeaux, France,
keen to introduce more affordable varieties to the
Chinese market to capture demand from ordinary
people. (Continued on next page)
www.giract.com
Page 7
Food Industry News
ChinaNews
(Contd)
(Contd)
In previous years, Bordeaux wine was considered
to be a symbol of social status and only suitable
for high-end business banquets. Bordeaux wine
traders are trying to change that image.
The Hong Kong-listed consumer food arm of the
country's largest State-owned food conglomerate
China National Cereals, Oils and Foodstuffs
Corp Industry experts believe more affordable
wine will help cultivate a wine culture in China
and boost market demand in the long run.
Every year, the Bordeaux Wine Council (Conseil
Interprofessionnel du Vin de Bordeaux, or CIVB
in French), a French group that represents more
than 10 000 Bordeaux wine producers and vine
growers, recommends to Chinese wine lovers a
selection of 100 Bordeaux wines that are best
adapted to the Chinese market and are priced at
the entry and medium levels (RMB 100 to 350 a
bottle).
"We want the customers to know that not all
Bordeaux wines are expensive. Some of them are
but there are also some that are affordable and of
good quality," said Thomas Jullien, Asia
Manager of the CIVB.
"China's market is growing very fast but people
are still less familiar with the wine culture than
they are in Western countries. The most
important thing right now is to bring wine into
households as well as people's daily lives," said
Ma Wenfeng, a Senior Analyst at Beijing Orient
Agribusiness Consultant. (cd 3/6/2013)
This figure was only 4.4 litres in 1994. So,
although the average consumption is still
relatively low, the increase has been
considerable during the past decade.
Chilean investment in Chinese wine
China has become the first export destination for
Bordeaux wine. In 2012, China imported a total
of 64 mio liters of Bordeaux wines, twice the
volume sent to Germany, its closest rival,
according to CIVB data. Changing market
conditions are also pushing Chinese wine makers
to develop less expensive brands to better fit
market demand.
A spokesperson of the Chilean Embassy in
Beijing has announced that the Chilean
government is considering to invest in a winery
in China. A company may be established in
Shanghai to determine the proper location and
other issues to prepare for such an investment.
(tjkx 23/7/2013)
"Our new products will be priced between
RMB 50 to 100 a bottle, affordable for ordinary
folk. This is in line with the relatively slower
economic growth this year," said Luan Xiuju,
Managing Director of China Foods Ltd.
China is already one of the largest destinations
for Chilean wines, so it makes sense that Chilean
investors are looking at the domestic industry as
well. However, it is unorthodox that the Chilean
government, rather than a commercial enterprise
is taking the lead in this matter.
July/August 2013
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Page 8
Food Industry News
ChinaNews
Wine makers join forces
Most valuable alcohol brands (Contd)
Against the background of possible anti-dumping
measures against wine imported from the EU, a
number of Chinese wineries in North and
Northeast China (including ones from Ningxia,
Shanxi, Henan and Hebei) have formed a league
to jointly develop the domestic market.
Rank
One of their joint endeavours is staring a web
shop for selling their products. (tjkx 24/7/2013)
Brand
Type
Value (RMB bio)
1
Maotai
distilled
58.0
2
Wuliangye
distilled
29.0
3
Yanghe
distilled
16.0
4
Qingdao
beer
14.0
5
Luzhou Laojiao
distilled
10.0
6
Fenjiu
distilled
5.9
7
Zhangyu
wine
4.4
8
Jiannanchun
distilled
3.6
9
Snowflake
beer
3.6
10
Langjiu
distilled
3.2
11
Yanjing
beer
2.7
12
Harbin
beer
2.5
13
Gujinggong
distilled
2.2
14
Jiuguijiu
distilled
2.1
It is interesting to see that these companies have
not taken this step earlier to join ranks in dealing
with the threat from abroad.
15
Chongqing
beer
2.0
16
Guyue Longshan rice wine
1.7
17
Shuijingfang
distilled
1.7
Beer imports
18
Zhujiang
beer
1.4
19
Tuopai
distilled
1.2
China imported 490 620 hls of beer in the first 5
months of 2013, an increase of 37.8% compared
to the same period of 2012. (tjkx 24/6/2013)
Most valuable alcohol brands
Hurun, the Chinese section of Fortune has
published the following list of the Chinese
alcohol brands with a value exceeded
RMB 1 bio.
(hurun 24/7/2013)
The distilleries are still the leading players in the
Chinese alcoholic beverage market. This list only
includes 5 breweries, 1 winery, Zhangyu and 1
rice wine producer, Guyue Longshan, as
opposed to 11 distilleries. This indicates that
there is ample space for growth for the newer
types of alcoholic beverages: beer and wine.
July/August 2013
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ChinaNews
Probe into imports of EU wines
Probe into imports of EU wines (Contd)
On Tuesday, the EU announced provisional
anti-dumping duties on imports of solar panels,
cells and wafers from China following a
nine-month investigation. China is firmly
opposed to the European Union's 11.8% tariffs
on the country's solar panel products, officials
said.
Colin Yang, vice-president of public affairs of
Trina Solar, said: "Our sales in Europe have
already been affected, because many local
partners are worrying about our price after the
investigation. Before the decision, the business
of our European partners and ourselves has
already been hurt."
China's wine imports rose by 8.9% to 430 mio
litres in 2012, according to the General
Administration of Customs. The imports were
valued at about USD 2.57 bio.
Ministry
of
Commerce
spokesman
Shen Danyang said the reduced tariffs show the
flexibility of the EU, and the temporary tariff of
11.8% instead of 47.6% shows the dispute
between China and the EU can be solved through
negotiation.
The EU accounted for more than two-thirds of
the imports, with France being the biggest export
country. According to the 27-country bloc, the
duties on China's solar panel companies will be
imposed in two stages, starting at 11.8% for the
first two months, followed by 47.6% for another
four months.
"Overall, the duties will range from 37.2% to
67.9% at that stage. Those Chinese companies
which have cooperated will face lower tariffs.
Those which have not cooperated will face
higher tariffs," said EU Trade Commissioner
Karel De Gucht. Most Chinese solar panel
companies
have encountered difficulties
continuing doing business in the European
market since the investigation.
"If the EU adopts the anti-dumping taxes on
Chinese companies, most of our export
companies will not be able to sell a single
product there," said Wang Donghong, publicity
officer at Jingwei Electronic Material.
July/August 2013
The ministry said that the trade relationship
between the two sides is an important foundation
for China-EU ties, and China doesn't want to see
the solar dispute affect the broader relationship.
Shen also said that Chinese solar products are
less expensive because of cheaper raw materials
and the Chinese solar panel industry's
technological improvements, not because of the
so-called dumping subsidy. The ministry said
trade protectionism will bring damage to both
sides. (Continued on next page)
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Probe into imports of EU wines (Contd)
However, De Gucht said at the European
Commission that the United States also applies
duties to Chinese exports. "This is not
protectionism," he said. Some experts worry that
other economies may follow the EU's action and
start similar investigations.
Cui Hongjian, director of European Studies at the
China Institute of International Studies, said that
the China-EU relationship may face a
"cooling-down" period. Eighteen EU members
have voted against the solar panel case. Even
though this vote does not prevent the EU
Commission
from
imposing
provisional
anti-dumping duties, member states will vote
again by the end of this year to decide if the EU's
final conclusion can be enacted or not.
(cd 6/6/2013)
vineyards
The attack on Chinese students in Hostens, a
small town in the South-west of France,
allegedly by a group of French youngsters,
followed by the largest international wine fair,
Vinexpo, in Bordeaux, where Chinese investors
were very much present -- and active -- have
triggered much talk in France about Chinese
investment in the country's vineyards and a
backlash against it. Over the past couple of years,
there has been a significant rise of Chinese
investment in French wines, notably Bordeaux
wines. In line with this, China has recently
become the first export market for Bordeaux
wines. (Continued in next column)
July/August 2013
vineyards (Contd)
But Chinese investors seem to want more than
being simple buyers. Many want wines to match
their tastes and those of their fellow citizens.
That's why they have started to invest in the
well-known Chateaux brands, wine domains or
wine trading companies.
Whether they are buying the entire vineyard or
only part of it, Chinese investors want to hold
greater control over the final product.
"There are two groups of Chinese buyers," says
Michael Baynes, an estate agent in Bordeaux.
One is typically from Hong Kong where the
people look "for something smaller, something
that is more for the passion of wine. And,
although they are commercially minded, they are
more interested in the wine product itself."
Baynes, co-founder of Maxwell-Storrie-Baynes
(affiliate of Christie's International Real Estate),
talks a bit differently about the mainland Chinese
who "will be thinking about all aspects of using
the resource to make some maximized returns."
Peter Kwok fits almost perfectly in Bayne's first
description. This businessman from Hong Kong
bought the Chateau Haut-Brisson in 1997, in the
Bordeaux village of Saint-Emilion. He has since
then "invested more and more to increase the
quality and the size of the vineyard," says
Charles Lemoine, in charge of wine marketing
for Kwok.
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ChinaNews
vineyards (Contd)
vineyards (Contd)
"He comes three to five times a year," adds
Lemoine, who describes Kwok as having a real
passion for French wine. Indeed Kwok is not just
a distant vineyard owner: his love for wine has
become a family matter and his children are now
very much involved in the business.
There are even investors who seem to
specifically target the Chateaux brands which
sound very French such as the "Lafite" or the
"Latour" names that are recognizable symbols of
French culture.
So does this trend really come as a big surprise?
French wine has always appealed to foreigners.
The Belgians, Dutch, English, Americans,
Swedes, etc. have been buying French vineyards
for decades, if not centuries.
Surely the fact that the Chinese are also starting
to invest in these same lands should be a
reflection of the global era, nothing more than
that.
For Jean-Pierre Rousseau, whose wine trading
company Diva Bordeaux was the subject of a
70% investment purchase by Shanghai Sugar
Cigarette and Wine, a subsidiary of Bright Food,
a state-owned food group, the Chinese are
looking for a sense of "recognition", one which
he describes as "social."
"They are attracted to a European lifestyle, they
are of course looking for expensive stuff and
wine is part of that lifestyle", he adds.
Undoubtedly, the Chinese seek to invest in
French vineyards for the reputation of the wines
and their quality. In a way, owning French
vineyards gives them credibility.
What would the Chinese say if Europeans started
buying 10 or 20 meters of the Great Wall of
China?
And the French appear receptive to Chinese
investment in their wine, particularly in the
Bordeaux region. Rousseau is himself
enthusiastic about the Chinese coming to
Bordeaux, "they come here to learn, they come
here to understand and when they bought some
chateaux; they were rather positive in improving
the quality."
The businessman also likes to wittingly remind
people that "in Bordeaux, we welcome them
much better than (if) they are in Burgundy."
In fact, he has a point. When Chateau
Gevrey-Chambertin was sold to a Chinese
investor, the winegrowers of Burgundy were not
impressed by the transaction and the manner in
which it was handled.
The head of the wine syndicate of
Gevrey-Chambertin,
Jean-Michel
Guillon,
expressed his disappointment saying that he and
his winegrower colleagues were "really sad to
see that the only chateau of the 12th century -with the Clos de Vougeot- will be acquired by a
person foreign to the job."
July/August 2013
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vineyards (Contd)
Jean-Michel Guillon, who's been in the wine
business for more than 30 years, explains that the
purchase of this chateau may cause future and
significant financial difficulties for the remaining
winegrowers of the region.
As the Chinese investor outbid local vintners to
pay EUR 8 mio -- more than double the
estimated value of the property -- this will
change the market prices for vineyards and, as
Guillon indicates, taxes on succession rights to
these properties will also rise significantly.
Bright future for white spirits
The Chinese liquor industry is expected to have
impressive growth potential in the future despite
the present downturns caused by the
government's crackdown on luxury banquets,
said Frost & Sullivan, a US-based market
consultancy. According to a recent report by the
consultancy, the white spirit production will
reach 17.05 bio litres in 2016 from 4.94 bio litres
in 2007 with a compound annual growth rate of
14.8%. Sales revenue from white spirits is
expected to grow from RMB 110.9 bio in 2007
to RMB 926.5 bio in 2016, with a compound
annual growth rate of 26.6%.
But the selling of Gevrey-Chamberton has also
caused discontent among local growers because
of the nature of the region itself. Burgundy is a
lot smaller in comparison to the Bordeaux wine
region.
So any purchase of a significant vineyard in
Burgundy has a much greater impact on the
region. Domains are very often a family affair;
"each winegrower is also a winemaker," says
Guillon with a wholehearted voice.
"What would the Chinese say if Europeans
started buying 10 or 20 meters of the Great Wall
of China?" asks the Burgundian, semi-smiling,
semi-serious.
But ultimately French wine inspires admiration
among the Chinese, and the French have
something to gain out of this. Plus, the Chinese
are not "buying everything"; in Bordeaux, where
they invest the most, they have only acquired 1%
of the whole wine lands. It is not exactly a huge
loss. (cnn 27/6/2013)
July/August 2013
The report attributed the robust growth potential
to the following factors. First, the white spirit
industry is closely associated with the
macroeconomy and currently China is still at a
stage of rapid economic development as well as
rising disposable incomes.
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Food Industry News
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Bright future for white spirits (Contd)
Second,
multi-sales-channels
marketing
strategies have been vigorously used by domestic
alcohol makers, such as group purchases and
online sales, which have been greatly welcomed
by younger customers.
But, there are also some restraints on the
industry, said Frost & Sullivan, such as local
governments' protection of local brands, which
jeopardizes fair competition in the market, as
well as a lack of product research and innovation
capabilities, as the new generation of young
customers seek personalized and diversified
products. Other major obstacles also exist, said
the consultancy.
According to the report, Chinese white spirit is
one of the seven renowned distilled spirits in the
world. Sichuan, Guizhou, Shaanxi, Anhui and
Shanxi provinces are the most recognized origins
of it in China.
Each province has its own special drinking habits
and brands. There is Wuliangye in Sichuan,
Moutai in Guizhou, Xifeng in Shaanxi, Gujing in
Anhui and Fenjiu in Shanxi.
Sichuan is the most high-yielding province in
China. In 2011, white spirit output in Sichuan
made up around 30% of total output in China and
has maintained a compound annual growth rate
of 38% for nearly five years.
There are numerous famous white spirit brands
in Sichuan, including Wuliangye, Luzhoulaojiao
and Swellfun (Shuijingfang).
Shandong is anther traditional high-yielding
province, said Frost & Sullivan. In 2011, the
output of baijiu in Shandong made up around
10% of the total output in China, with stunning
revenue of around RMB 30 bio.
Taking Confucian Family Liquor (Kongfujiajiu)
as an example, since 2007, its sales volume has
maintained an annual growth rate of 100%.
July/August 2013
At the end of last year, the central government
unveiled a series of anti-graft rules called "The
Limitation of the Three kinds of Government
Consumption". They include the regulation that
receptions for high-ranking military officials
should no longer include liquor or luxurious
banquets, which has led to a sharp decrease in
the purchase of white spirit by government and
business organizations. Some high-end white
spirit brands have faced a sharp decrease in
demand and sales volume. It did not take long for
the stock market to feel the effects.
Just two days after the announcement, shares in
Chinese distillers such as Wuliangye Yibin Co
and Kweichow Moutai Co fell. Shares in Moutai
fell 5.55% on the Shanghai Stock Exchange,
while shares in Wuliangye slid 3.02% on the
Shenzhen stock market. Moutai's market value
shrank by RMB 12.5 bio on the same day.
"Moutai and another two high-level alcohol
brands, which are popular with government
officials and military officers, account for 20%
of the total liquor market," said Jian Aihua, a
researcher with CIConsulting, a leading industry
research institution. (Continued on next page)
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Food Industry News
ChinaNews
Yuan Renguo, Kweichow Moutai's Chairman,
said recently that the company will slow its
growth rate to reach an 18% year-on-year rise by
the end of this year.
Jiugui products were taken from shelves and
shares in the Shenzhen-listed company were
suspended when the scandal broke.
"There has been a slump in Chinese liquor sales
and in the catering industry since late last year,
mainly caused by the government's anticorruption calls," said Su Qiucheng, head of the
China Cuisine Association. "Restaurant sales in
some big cities even posted negative growth,
such as Beijing and cities in Jiangsu and
Zhejiang provinces."
Duan Kaiyun, Assistant Secretary-General of
Beijing Cuisine Association, said: "The difficult
time will last for a long time because it is a key
part of the new government's vow to curb
corruption."
But Bian Jiang, Assistant Director of the China
Cuisine Association, said the habit of pleasing
business clients with extravagant banquets has
been deeply rooted in Chinese culture and will
not be reversed overnight. In addition to
government's anti-graft calls, food safety
scandals have also damaged development of the
industry.
Last year, the Hunan Provincial Administration
of Quality and Technological Supervision said
liquor samples from Jiugui Liquor Co contained
1.04 mg of plasticizer per kg, higher than the
0.3 mg per kg standard set by the Ministry of
Health.
July/August 2013
According to a statement released in March by
the Hunan-based liquor maker, its first quarter
profits plummeted 90% year-on-year and it
expects its first quarter profits to be RMB 8 mio
to RMB 12 mio compared with RMB 119 mio
during the same quarter last year. The China
Alcoholic Drinks Association said earlier this
month large-scale tests on China's liquor
products show that almost all alcohol products
contain plasticizers, with an average level of
0.537 mg/kg. They are used to thicken liquids.
"Although some alcohol brands are facing
difficulties in the short term, the Chinese liquor
industry is expected to have impressive growth
potential in the future because the post-80
generation will gradually become major
consumers," Frost & Sullivan forecast.
"The drinking habits of the post-80 population
will determine the future of the Chinese white
spirit market. The industry players who
strengthen their marketing efforts toward the
post-80 generation, such as their drinking habits
and culture, will eventually win more market
share," said Bian, of the China Cuisine
Association.
According to the association, in 2015, the
number of primary white spirit customers who
are between the ages of 30 and 49 will be 441
mio. (Continued on next page)
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ChinaNews
The post-80 generation will make up 22% of
them. In 2010, primary white spirit drinkers will
number 444 mio and the post-80 will make up
48.5% of them.
"The growth rate of high-end white spirits such
as Moutai and Wuliangye might slide in the short
term but, in the long run, the two brands,
especially Wuliangye, will rebound quickly. The
sales growth of middle or moderate high-level
brands such as Yanghe and Langjiu will rapidly
speed up. And the distiller that is successful in
the middle to high-end white spirit market will
be the ultimate winner," research and investing
firm Rising Securities Co said in a report.
(cd 17/6/2013)
China’s grocery market to reach USD 1
trillion
China, the world’s biggest food and grocery
market, is now valued at more than
USD 1 trillion and is forecast to be worth
USD 1.5 trillion in 2016, according to latest
figures published by lGD.
IGD research also found:
The US grocery market will remain the
second largest globally and is predicted to be
worth USD 1.5 trillion in 2016. IGD expects
growth to accelerate from a compound annual
growth rate (CAGR) of 3.6% between 2010 and
2012, to 4.7% between 2013 and 2016;
China’s grocery market to reach
USD 1 trillion (Contd)
By 2016, the Indian grocery market will
have overtaken Japan to become the world’s
third largest grocery market valued at
USD 566 bio;
The gap between Russia and Brazil is fast
narrowing. By 2016, the Brazilian and Russian
grocery markets are projected to be worth
USD 468 bio and USD 467 bio respectively, with
Brazil set to climb to fourth position with a
CAGR of 9.1% between 2013 and 2016
All of the BRIC (Brazil, Russia, India,
China) nations will be in the top five grocery
markets by 2016, worth just over USD 3 trillion
in total.
Joanne Denney-Finch, chief executive, IGD,
said: “For food and consumer goods companies,
the Asia-Pacific and Latin American grocery
markets offer long-term growth opportunities,
with many businesses already profiting from
entering them.
“The Chinese grocery market in particular, has
been growing at a rapid pace for several years.
Representing one fifth (20%) of the world’s
population, China has had a surge in the number
of higher-income earners, benefiting from a
significant rise in wages.
This has resulted in a soaring demand for new
products, brands and concepts — all of which
have helped fuel its growth.
July/August 2013
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Food Industry News
ChinaNews
China’s grocery market to reach
USD 1 trillion (Contd)
Bread producers cheating customers,
says dietician (Contd)
“International and domestic grocery retailers are
expanding quickly in China with diverse formats
and entering new regions. This not only creates
new
supply
chain
opportunities
for
manufacturers, but also presents a wealth of
choice for Chinese shoppers.
"Some whole wheat bread sold in the city is
made with common grains, not whole wheat, and
producers dye them with caramel pigment to
make them look brown to cheat consumers," said
Wang Xingguo, a clinical dietician. "The
common grains also provide a smoother texture,
which is preferred by most Chinese customers."
In Latin America, Brazil is also an attractive
growth market for global grocery players. Over
the next few years, Brazil will be hosting big
sporting events such as the World Cup and
Summer Olympic Games, presenting a further
boost for its economy and for the performance of
retailers and manufacturers operating in the
region.
“By 2016, the top 15 global grocery markets will
have a total value of USD 6.5 trillion. The top
five - US and BRIC - will increase their share to
65% - compared to 60% in 2012 - with a
combined value of USD 4.2 trillion.
“This offers plenty of scope for food and
consumer goods companies seeking international
growth and paints a positive picture for the
industry globally.”
says dietician
Most whole wheat bread sold in the city doesn't
contain whole wheat flour due to a lack of
national standards, a clinical dietician told
Shanghai Daily.
He added some consumers don't like the coarse
texture of genuine whole wheat bread, thus some
businesses have cut costs by eliminating the use
of whole grains.
At a Hualian chain store on Dagu Road, a
Shanghai Daily reporter found a package of socalled whole wheat bread priced at RMB 10
made by Shanghai Taoli Food Co Ltd. It didn't
contain whole wheat flour. The listed ingredients
were wheat meal flour, milk powder, cream,
sugar, salt, water, yeast and additives.
Whole wheat foods are becoming more popular
among residents as they contain a variety of
vitamins, minerals, along with fiber and
phytochemicals.
Nutritionists say whole wheat bread is healthier
because it can help prevent cardiovascular and
cerebrovascular diseases and diabetes.
Wang said the amount of whole wheat used to
make bread is determined by producers because
there is no national standard. Some businesses
add bran or wheat germ instead of whole wheat,
he said.
July/August 2013
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Food Industry News
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says dietician (Contd)
Whole-wheat bread is made using flour that is
partly or entirely milled from whole or almostwhole wheat grains. Recipes for whole wheat
breads vary considerably. (sd 6/6/2013)
Sugar imports declining
According to the China Customs, China has
imported 1.268 mio t of sugar during the first
half of 2013, down 12.22% compared to the
same period of 2012. (tjkx 23/7/2013)
Vice-Premier Wang Yang urged public and civil
groups to help supervise food safety, particularly
through modern technology.
"Given major challenges facing the nation's food
safety, like the colossal number of small
businesses and a decentralized food production
and processing model, a supervisory net
highlighting the general public is essential to
help ensure food safety," he said at the fifth
China food safety forum as national food safety
week kicked off on Monday.
Non-government industry associations of food
producers should also play a role in enhancing
food safety and quality, he said. Wang cited
practices in Guangdong province as an example.
"I regularly get text messages sent by the
Guangdong food safety authority asking mobile
subscribers, including me, to report any related
irregularities or even crimes," he said.
Fast food really fast
Industry experts estimate that the value of the
Chinese fast food and food delivery market will
be RMB 1.8 trillion in 2017.
Although this includes major chains like KFC
and Pizza Hut, more than 99% of this value is
generated by Chinese style fast food.
(tjkx 6/6/2013)
July/August 2013
New-technology tools like text messaging should
be widely used to facilitate public involvement in
food safety supervision, he said. The forum was
held by government agencies including the food
safety committee under the State Council, the
Ministry of Public Security, China Food and
Drug Administration and the National Health and
Family Planning Commission.
Xu Jinghe, director of the legal affairs
department under the China Food and Drug
Administration, said that more public supervision
is being considered in the ongoing revision to the
country's Food Safety Law.
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Food Industry News
ChinaNews
(Contd)
(Contd)
"The revised law will better encourage and
facilitate that," he said. Previous reports said the
revision was expected to be finished by the end
of the year.
Zhang Yong, chief of the China Food and Drug
Administration, said that regulation of food
safety is part of social management, so it requires
participation of all stakeholders including
government agencies, the public and the food
industry.
Specific items like rewarding tips and reports
from the public, corporate insurance or
self-insurance programs, online food trading, and
a food safety tracing mechanism are being
considered, Xu said.
Special funds have been established in some
regions to reward useful public reports of food
safety scandals. But "few worked well to
encourage public involvement", he said.
If it was included in the food safety law,
however, "the situation would be largely
different", said Li Shichun, a law expert
specializing in food safety with the China Law
Society.
"The feasibility of the new legal articles should
be carefully studied to help with enforcement,"
he said.
For example, the public should at least have easy
and wide access to report food safety problems,
he said, adding that measures like introducing a
third party channel to receive public reports
should be considered.
"Many people are now reluctant to report for fear
of leakage of private information and potential
revenge by those breaking the law," he said.
"Government supervision and law enforcement
alone can hardly ensure food safety given its
great variety and complexity," he said. However,
"industry practitioners should be first in line to
ensure and be accountable for food safety and
quality," he said.
Zong Qinghou, chairman of beverage giant
Wahaha, said: "To ensure food safety, all those
involved in the food chain, including farmers,
producers and sellers, must maintain credibility
and be honest to consumers, and provide safe and
healthy food." A fair distribution of profits
among producers and sellers is also important for
food safety, he said.
"A prominent problem for the food industry is
that most profits have been taken away by
retailers, such as big shopping malls, forcing
food producers to keep agricultural products that
they buy from farmers at a very low price," he
said. "This results in little profit for farmers,
forcing them to ignore the quality of agricultural
products or even adulterate them."
Fair prices should be ensured for farmers to sell
agricultural products to improve food safety, he
said. (cd 18/6/2013)
July/August 2013
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ChinaNews
Dairy statistics January– April 2013
Too much reconstituted milk
The Dairy Association of China (DAC) has
published a number of figures related to the first
4 months of 2013. 649 producers were active in
that period (7 more than in the same period of
2012). The following table lists their main
products, volumes and growth compared to the
same period of 2011.
The CEOs of two dairy companies have recently
stated that they believe that up to 60% of
drinking milk sold in China could be
reconstituted from milk powder. They derive this
conclusion from the rapidly increasing imports of
milk powder in China, suggesting that many
producers of ‘fresh milk’ are actually literally
manufacturing it from imported milk powder,
because this is lower in cost than using domestic
raw milk. (tjkx 22/7/2013)
Product
Drinking milk
Volume (t)
Growth (%)
7 215 000
13.45
Milk powder
459 000
-3.54
Other
652 000
-
Imports continued to grow, as is shown in the
following table.
Product
Imports (t)
Growth (%)
Milk powder
Whey
Lactose
Whey protein
Infant formulae
298 700
122 000
24 600
4 600
38 900
28.61
24.63
6.39
-1.27
37.24
Drinking milk
63 700
164.69
This statement has aroused opposition from
many parties in the market. However, a
considerable number of industry experts,
including officials of the Dairy Association of
China (DAC) are calling for more transparency
in this matter. They are also proposing to
gradually reduce the ratio of reconstituted milk.
This discussion resembles that of a few years
ago, when the top Chinese dairy makers called
for stricter criteria for what can be sold as ‘pure
milk’. That proposition also met with violent
opposition. It will not be feasible to ban all
reconstituted milk in China any time soon.
(hcfood 18/6/2013)
The illustration shows the development of
Chinese imports of drinking milk during the past
3 years.
Move meant to revive sector, raise consumer
confidence
About a third of the country's baby formula
businesses will be axed, in what experts are
calling a major consolidation of the industry. The
government has been trying to revive the
industry since the 2008 melamine scandal, but
consumer confidence is still lacking.
July/August 2013
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Food Industry News
ChinaNews
(Contd)
(Contd)
The move is part of a campaign to scrutinize
dairy businesses in the next three months to
improve the quality of milk powder products and
boost confidence in the industry, the Ministry of
Industry and Information Technology announced
in Beijing on Tuesday. "Of the 127 licensed
dairy businesses that produce baby formula
products, 25% to 35% will be cut. They are not
necessarily unqualified, but the country needs
more powerful alliances," Zhuang Pei, Deputy
Director of the metropolitan industry division of
the Shanghai Municipal Commission of
Economy and Information, said on Tuesday.
Sales in the domestic dairy industry slumped in
2008 when a scandal broke out over baby
formula that was tainted with melamine, an
industrial compound that can cause kidney
ailments but was added to milk to make it appear
to have a higher protein content. Six children
died from drinking the milk, and at least 300 000
others became ill.
Only 30 of the licensed producers are active in
the market and have a stable sales volume, he
added. Industry industry experts said small-scale
enterprises, especially private ones, are likely to
be eliminated by the regulation, and more
mergers and acquisitions led by domestic giants
are expected. "The quality and safety of dairy
products has notably improved in recent years,
but they still require further improvements to
make local brands more competitive," said
Zhu Hongren, Chief Engineer of the Ministry of
Industry and Information Technology.
In addition to the requirement that every batch of
raw milk be tested for melamine after the
scandal, the government also demanded quality
supervisors stationed at factories to oversee the
whole process from raw materials to end product.
Song Kungang, Secretary-General of the China
Dairy Industry Association, said more than 60kt
of liquid milk for babies were imported in the
first four months of the year, a year-on-year rise
of more than 164%, and a total of nearly 600kt of
dairy products were imported, an increase of
nearly 25% from last year.
July/August 2013
In the next two years, China's quality watchdogs
carried out a tough battle to clean up the sector,
which saw the closure of nearly 70 baby formula
producers.
The baby formula businesses also made huge
investments to ensure and improve product
quality, according to industry experts.
Chenguan, one of the four dairy businesses that
specialize in baby formula production in
Shanghai, said in addition to the 64 items that are
required to be tested, it tests more than 20 other
items, such as the level of lutein.
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Food Industry News
ChinaNews
(Contd)
for China
"The national standard says the tested amount of
melamine in baby formula should not exceed
1 mg per kg, while our ceiling is 0.01 mg per
kg," said Sun Jing, brand manager of Shanghai
Chenguan Dairy Co Ltd.
New Zealand's Ministry for Primary Industries
(MPI) is expected to publish this month a list of
registered brand names of New Zealand infant
formula products exported to China, Radio
New Zealand reported Monday.
Each of the businesses have established credit
and traceability systems, said Gu Zhenhua,
Deputy Director of Shanghai Municipal Food
Safety Commission Office.
The list would be made available to consumers
as well as Chinese authorities so they could
check that formulas carrying New Zealand labels
were valid. MPI introduced the new infant
formula brand register, which requires
companies exporting to China to have the
specific brand name included on the export
certificate, last month.
"According to official test reports, dairy products
in Shanghai, especially baby formula, are 100%
reliable, but consumers don't think this way. One
of the popular goods residents buy from overseas
is baby formula," he said.
Due to excessive consumption, on March 1
Hong Kong put a regulation in place, limiting the
amount of baby formula people from the Chinese
mainland can carry when they depart to two cans.
One way to narrow the gap between the
government's guarantee and the reaction from
society is to further improve information
disclosure, Gu said.
"If consumers buy a product and they can check
its test reports online, they'll feel more
reassured," he said.
"We're urging businesses to display the test
results of every batch of product on their
websites." (cd 19/6/2013)
July/August 2013
China had asked for brand information to be
added to export certificates as part of its efforts
to crack down on false labelling. MPI said 30
exporters had registered their brands last month,
and they were required to provide more detailed
information by July 6, including copies of actual
labels approved by Chinese regulators with
translations
and
associated
formulation
information, said the report.
The main opposition Labour Party claimed
Monday that the new labelling requirements
would mean Chinese parents would receive more
information about what they were feeding their
babies than New Zealand parents. It was time for
the government to protect domestic consumers in
the same way by making Country of Origin
Labeling mandatory, Labour primary industries
and food safety spokesperson Damien O' Connor
said in a statement. (Continued on next page)
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for China (Contd)
formula imports
"That would provide the same level of
information and protection for Kiwi parents as
these latest changes will mean for Chinese ones,"
said O'Connor.
Having low confidence in domestic baby formula
brands, Chinese consumers have turned to
imported formula but are finding a growing
number of problems with those products, too.
New Zealand authorities are tightening
regulations on infant formula exporters after
concerns raised in China about the reliability of
some brands and products appearing in the
Chinese market, and as Chinese authorities
conduct their own investigations into infant
formula companies.
Consumers' low confidence in domestic baby
formula has led to a surge in complaints against
imported baby formulas as some businesses turn
to inferior foreign brands, experts said.
In June, New Zealand Food Safety Minister
Nikki Kaye said she had asked the MPI to
undertake an audit to identify any areas for
improvement, including verification, compliance
and testing regimes.
She had also ordered a check that New Zealand's
Overseas Market Access Requirements were in
line with changes being introduced in China's
regulations for infant formula.
New Zealand's infant formula exports are
estimated at about NZD 600 mio a year, with
approximately NZD 170 mio of that going to
China.
Cans of imported formula reportedly fetch up to
NZD 70 each in China and more than 200 brands
are estimated to be produced in New Zealand,
but most of them are produced at contract
manufacturing plants. (cd 23/7/2013)
July/August 2013
Nearly two-thirds of the complaints that the
China Consumers' Association received about
baby formula in the first half of the year were
about foreign brands.
The association received 744 complaints about
infant formula in the last six months, double the
number in the same period last year.
The association declined China Daily's request
on Sunday to say which brands got the most
complaints.
Nearly 90% of the complaints were over quality
issues, such as finding foreign objects - including
worms and iron wire - in the cans.
Some infants suffered adverse effects such as
diarrhoea and allergic reactions, and some
products were found being sold after their
expiration dates.
Industry experts said that one reason for the rise
in complaints against imported brands is that
some Chinese businesspeople have been taking
advantage of consumers' blind trust in such
brands. (Continued on next page)
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formula imports (Contd)
Heitiki, a milk powder brand which its
distributor in Shenzhen claims is "a top brand" in
New Zealand, was discovered in 2011 to be
registered by Chinese businesspeople and
unknown to New Zealanders. "Some so-called
foreign brands are not really worthy of the name.
They're high in price but inferior in quality," said
Qiu Baochang, head of the legal team of the
China Consumers' Association.
"In addition to self-inspections and tests
conducted by Sutton Group, which would weed
out any batch that fails to meet standards,
New Zealand authorities test to see whether the
baby formulas meet the national standards there,
which allows the products to be shipped
overseas," Lin added.
Xile Lier, the Suzhou partner of the Swiss baby
formula manufacturer Hero Group, was accused
of deliberately mislabelling milk powder in
March. The company changed the expiration
dates and relabelled formula for older babies as
the pricier ones for younger babies. The infant
formula is sold on the Chinese mainland under
the label "Hero Nutradefense".
"Customers turned to foreign brands, especially
when it came to baby formula, after 2008 (when
the melamine-contaminated baby formula
scandal occurred)," said Wang Dingmian,
Chairman of the Guangzhou Dairy Association.
"Some Chinese people have sniffed out a
business opportunity."
Products manufactured and imported from
overseas but targeted solely at China have taken
root in recent years, Wang said. Dairy companies
should be cautious about quality issues to prevent
a crisis in brand trust, said Lin Jun, Director of a
dairy company that registers and imports milk
products from New Zealand but sells solely in
China. (Continued in next column)
July/August 2013
The products also need to pass all nutrition and
bacterial-residual tests to attain approval from
China's Entry-Exit Inspection and Quarantine
Bureau to enter the country, he said.
Because some complaints involved sales
practices of brick-and-mortar and online stores,
experts urged efforts be made to close legal
loopholes that overseas purchasing agents take
advantage of.
Cao Mingshi, Deputy Secretary-General of
Shanghai Dairy Association, said online sales are
a problem as well.
"Many people have joined overseas purchasing
of infant formula in recent years to grab a share
of the booming business, but most of them sell
online and don't hold certificates of food
circulation permits as regular food sellers do,"
Cao said.
More than 133 000 baby formula products
labelled "purchased overseas" were found on
Taobao, China's leading e-commerce platform,
on Sunday.
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ChinaNews
Zhang Qing, the father of a 3-year-old girl in
Shanghai, said regulation of the industry should
be tightened.
"To echo Premier Li Keqiang's requirement of
ensuring supervision of baby formula be as strict
as it is for medicine, the country should regulate
the online market of baby formula as much as it
does for medicine," he said.
Drug makers and drugstores can sell medicines
online only with the approval of the China Food
and Drug Administration. (cd 29/7/2013)
Honey laundering: two
honey-processing companies charged in
anti-dumping case
In February, the U.S. Immigration and Customs
Enforcement agency (ICE) reported that five
individuals and two domestic honey-processing
companies, Groeb Farms and Honey Solutions,
have been charged for illegal importation of
honey from China. This indictment follows a
similar case in 2010, in which 11 individuals and
six corporations were charged with the same
crime, and is indicative of a federal crack-down
on honey laundering.
anti-dumping case (Contd)
The intent of an import duty is to protect
domestic producers from international product
being sold at less than fair market value, a
practice called “dumping.” In 2001, the
United States imposed a duty on honey imported
from China after finding them in violation of
anti-dumping policies.
The criminal actions led to a predicted loss of
over USD 80 mio in tax dollars, and reduced the
intended protection effects on domestic honey
producers. However, the evasion also has safety
implications, because contaminants have been
found in honey from China.
Honey is traceable to its source by examining the
types of pollen found in it. But filtration methods
are able to eliminate pollen in honey, making it
impossible to tell where it from. In a statement
given to Food Safety News, President of the
American
Honey Producers
Association
Mark Jensen said, “Elimination of all pollen can
only be achieved by ultra-filtering and these
filtration processes do nothing but cost money,
and diminish the quality of the honey.”
CEO Bruce Boynton of the National Honey
Board, a federal research and promotion board
under U.S. Department of Agriculture (USDA)
oversight, would argue otherwise; consumers
prefer honey without particles, and particulate
and air bubbles lead to faster crystallization.
July/August 2013
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Food Industry News
ChinaNews
anti-dumping case (Contd)
He has also contested the use of the term
“ultra-filtration,” which is a technical term
referring to a specific type of filtration resulting
in a product that all parties concede is no longer
honey.
Regardless of misnomers, it is true that pollen
can be removed through filtration, and that the
absence of pollen makes the honey untraceable.
The incentive exists to do so because it caters to
consumer preference, but it also makes easier to
launder.
The primary health concern of unregulated honey
is that antibiotics and toxins not approved by the
U.S. Food and Drug Administration (FDA) go
undetected. In particular, chloramphenicol – an
antibiotic linked to DNA damage and
carcinogenicity in children - has been used to
fight disease outbreaks in hives, and can be
detected in trace amounts in some honeys.
Additionally, toxins from lead contamination
may be present, and given its accumulative
nature,
poses
a
larger
threat
then
chloramphenicol. (foodtank 18/6/2013)
required
The Ministry of Industry and Information has
announced that it plans to increase the intensity
of the of the Chinese infant formulae industry in
the coming years.
required (Contd)
Within 2 years, the country must have 10
companies with an annual turnover exceeded
RMB 2 bio. (tjkx 20/6/2013)
Mengniu’s recent acquisition of Yashili can be
seen as part of this endeavour. However,
although in theory the Chinese government can
‘further’ such a development, it will not be able
to do so by a simple ukaze. It will be interesting
to see to what extent it can be realised within that
time span.
Dairy measures start at source
Increased supervision to improve food safety and
consumer trust
Companies that produce baby formula will be
required to have their own dairy farms, according
to measures released by nine ministries on
Thursday. The move is designed to allow greater
supervision of the production process, help
ensure food safety and restore consumer
confidence in the industry, officials said.
Other measures include adopting stricter
management standards to supervise the baby
formula industry and registering all foreign
producers.
The measures were drafted by central
government departments including the China
Food and Drug Administration and the Ministry
of Industry and Information Technology.
July/August 2013
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ChinaNews
Dairy measures start at source (Contd)
"A quality gap in the source of dairy does exist
between Chinese and foreign baby formula
products," said Teng Jiacai, deputy head of the
China Food and Drug Administration, "though
ours could match foreign counterparts in formula
design and production technology".
Several major dairy enterprises in China have
gradually stopped buying milk from individual
farms or milk sheds, and have turned to their
own farms, Chen said.
Chen Junshi, a member of the Chinese Academy
of Engineering at the China National Centre for
Food Safety Risk Assessment, said: "It would be
very difficult to ensure the quality and safety of a
company's source of milk if it does not have its
own farms".
Industry industry experts blamed milk sources as
the major reason behind a major dairy scandal in
2008, when excessive melamine was added to
milk to make protein content appear higher. At
least 300 000 babies were sickened and six died.
According to Wang Dingmian, executive council
member of the Dairy Association of China, most
milk sheds — which act as middlemen between
dairy farmers and producers — operated under
almost no supervision before 2008, resulting in
quality risks.
In response, agricultural authorities have
intensified supervision of dairy sources, and the
number of certified milk sheds has decreased
34% to 13 000, said Wang Feng, an official at
the Ministry of Agriculture's animal husbandry
department. Large dairy farms are also
expanding, and the number of farms with more
than 100 cows accounted for 35% of those, an
increase of 15.5% age points over 2008.
"But safety risks still exist for some small dairy
producers that rely on milk sheds for milk
sources," he said.
Chen Fuquan, vice-president of Yili Industrial
Group, one of China's largest dairy producers,
said the company had invested about RMB 9 bio
by the end of last year to build cow farms, which
ensure stable and high-quality sources.
Another major dairy producer, Yashili
International Holdings, will open a new factory
in Waikato, New Zealand, with an investment of
RMB 1.1 bio, to produce infant formula.
Lin Jinlin, spokesman for Yashili International
Holdings Ltd, said quality dairy sources are
important.
On Tuesday, China Mengniu Dairy, the country's
largest dairy producer, acquired more than 75%
of Yashili. Industry analysts expect more
mergers in the industry.
Gao Fu, an official with the Ministry of Industry
and Information Technology, said such
integration would enhance industrial resources,
consolidate brands and improve competitiveness.
The ministry has pushed domestic dairy
producers to "get married".
July/August 2013
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Food Industry News
ChinaNews
Gao hopes to see about 10 companies, with
annual revenues exceeding RMB 2 bio in two
years, taking up 70% of the industry.
The notion of "too big to fail" is becoming
prevalent in the Chinese dairy industry. Pushed
by increasing demands for quality and safe baby
food, the government and industry members have
encouraged mergers and acquisitions to create
dairy giants, who are pressuring their foreign
rivals in pricing power and market
competitiveness.
"Out of about 120 baby formula producers in
China, only 15% have their own cow farms,"
said Wang Dingmian. "Many of these enterprises
that don't have financial capabilities to run cow
farms may have to quit."
It takes time to restore consumer confidence in
domestic milk powder as many consumers have
turned to foreign producers, Wang Dingmian
said. According to him, public confidence in
domestic dairy products hit a low after the 2008
incident, resulting in soaring sales of foreign
brand milk, which has accounted for 85% of the
market in some major cities.
However, a number of low quality foreign
formula milk brands also entered the Chinese
market, according to Xiang Jianjun, a researcher
with CIConsulting, a leading industry research
institution.
The General Administration of Quality
Supervision, Inspection and Quarantine said on
Thursday it would take stricter measures, such as
requiring all overseas dairy producers to register
in China before they can export to the country,
and banning companies from outsourcing baby
formula production.
Imported baby formula must arrive in packages
for retail to avoid repackaging and redistribution,
during which imported goods are sometimes
adulterated. (cd 21/6/2013)
July/August 2013
On Tuesday, China Mengniu Dairy Co Ltd
agreed to acquire privately owned Yashili
International, one of the country's leading makers
of infant milk formula and baby food, for
USD 1.6 bio, making it the largest merger in the
domestic dairy industry.
The merger unveils the beginning of a series of
consolidations in an attempt to revive the
troubled industry.
An industry industry experts told China Daily the
Yili Industrial Group (Huhhot, Inner Mongolia)
[2] also intends to acquire Feihe Dairy
(Heilongjiang) [1] and Wondersun (Wandashan)
Dairy Inc. (Heilongjiang) [1] The three
companies have denied the rumour, but the
industry expert said the offer is to secure milk
suppliers of the latter two companies who have
quality dairy farms in Northeastern China.
After such mergers and acquisitions, the line
between Chinese and foreign brands is blurring,
said Song Liang, a dairy industry analyst at the
Distribution Productivity Promotion Centre of
China Commerce.
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Food Industry News
ChinaNews
(Contd)
producers (Contd)
"The integration with international standards and
levels will greatly improve the quality and safety
of domestic milk powder," he said.
In a similar overhaul in 2011, the General
Administration
of
Quality
Supervision,
Inspection and Quarantine shut down 475 milk
enterprises.
A number of small producers are expected to be
axed in such moves. Cheng Qunshi, a nutrition
and food safety expert, said that of about 120
milk powder manufacturers in China, some small
enterprises
have
found
loopholes
in
implementing industrial standards. Many without
fresh milk suppliers and farms have difficulty in
controlling the quality and safety of the raw milk
they use.
However, industry analysts said making the
country's dairy industry bigger does not
necessarily make it stronger. Stricter quality
control and supervision are keys to improving the
dairy industry, Song said. (cd 21/6/2013)
producers
China will step up checks on infant milk formula
producers and eliminate sub-standard ones, a
government statement said on Thursday.
The China Food and Drug Administration will
consult the Good Manufacturing Practices
certification system used by drug producers to
improve standards in baby milk formula
production, said Teng Jiacai, Deputy Head of the
administration. Companies using sub-standard
technology and equipment shall be shut down,
the statement said. (Continued in next column)
July/August 2013
China now has 127 infant formula producers and
manufactured about 600kt of the product in
2012.
Demand for infant formula is booming in China,
but confidence in domestic products was badly
hit after a milk scandal in 2008, which killed six
infants
and
sickened
300 000
over
melamine-tainting. (cd 21/6/2013)
milk-powder pricing
China is probing foreign milk-powder companies
including Danone and Nestle SA for possibly
violating anti-monopoly laws and setting prices
too high, the official People’s Daily reported,
citing a government agency.
The National Development and Reform
Commission, the country’s top economic
planning agency, started an investigation into the
pricing of infant formula sold by companies also
including Mead Johnson Nutrition Co., Abbott
Laboratories,
Dutch
producer
Royal
FrieslandCampina NV, and local firm Biostime
International Holdings Ltd., the newspaper
reported today.
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Food Industry News
ChinaNews
milk-powder pricing (Contd)
The NDRC has evidence the companies sold
products at high prices in China and their pricing
increased about 30% since 2008, according to
today’s report, which cited the agency.
China targets creating 10 large companies in the
industry within two years, each with annual
revenue of more than RMB 2 bio, China National
Radio reported last month, citing Gao Fu, an
official at the Ministry of Industry and
Information.
Safety scares such as a melamine-tainted milk
powder scandal in 2008 which killed at least six
infants have increased Chinese consumers’
distrust of local milk and driven up their
purchases of foreign brands at home and
overseas.
The NDRC carried out a review of documents
related to product pricing at Glenview,
Illinois-based Mead Johnson’s China unit
recently, the company said in an e-mailed
statement.
The U.S. company said it is providing “full”
cooperation. Jonathan Dong, a Beijing-based
spokesman for Nestle, said the company is
working with the government on the matter.
Agnes Berthet-d’Anthonay, a Paris-based
spokeswoman for Danone, said the company is
“fully” cooperating with the authorities.
Jan-Willem ter Avest, a spokesman from Royal
FrieslandCampina, said he has no information on
the probe and will look into the matter. Biostime
said in a statement today that the company hasn’t
raised prices since 2008. Abbott couldn’t be
reached immediately for comment. The
investigation follows China’s attempt to
consolidate its milk-formula industry and create
strong domestic brands. (Continued in next column)
Danone shares slipped 1.6% to EUR 56.57 at
1:13 p.m. in Paris. Nestle fell 0.6% to 62.20
Swiss francs in Zurich.
China Mengniu Dairy Co., the country’s largest
dairy producer, led gains by domestic dairy
companies after the report from the newspaper,
which is published by the Chinese Communist
Party.
Mengniu shares surged 4.1% to HKD 28.90 in
Hong Kong trading today, the biggest gain since
June 19. Inner Mongolia Yili Industrial Group
Co. rose 1.7% in Shanghai trading.
Biostime’s Hong Kong-listed shares declined the
most in almost two years on June 28 after the
baby-care products provider said one of its units
was under investigation for alleged antimonopoly law violations.
The company said last week that it will “actively
cooperate” with the investigation. The shares fell
1% to HKD 43.05 in Hong Kong today.
Mengniu Dairy offered HKD 12.5 bio to buy
local infant-formula maker Yashili International
Holdings Ltd. on June 18.
July/August 2013
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ChinaNews
Worried parents drive imported milk
sales (Contd)
The acquisition was part of the government-led
push for consolidation, Mengniu Chief Executive
Officer Sun Yiping has said. COFCO, the
state-backed agricultural and food industry
supplier, owns 19% of Mengniu, according to
data compiled by Bloomberg.
Liu said she knows the imported milk, with its
five-month shelf time and long shipping distance,
may not be as good as local fresh milk but
"safety is my top concern".
Mead Johnson had a 14% share of China’s
RMB 77.9 bio milk-formula market last year,
according to industry researcher Euromonitor
International. Hangzhou Beingmate Group Co.
was second with a 10% share, followed by
Danone’s
9.2%
and
Yili’s
7.8%.
(theglobaldairy 2/7/2013)
sales
The first thing customers see as they enter the
basement of the Wal-Mart Qinghe store in
Beijing is a mountain of imported milk cartons.
Half a large stack of Euro-fit whole milk from
Germany, selling at RMB 9.9 per box, is almost
gone.
"My girl is going to stop taking formula milk, so
I have to get her some good quality milk," said
Liu Ying, a 30-year-old mother, carrying a
shopping basket filled with a range of imported
milk.
"I don't know which brand to take. Maybe I will
just take some from world-renowned dairy
production places, such as the Netherlands,
Australia or New Zealand."
According to Tesco Plc, the world's third-largest
retailer by revenue, imported milk is one of the
fastest-growing categories in their 132 Chinese
stores, with year-on-year sales gains of about
30%.
The United Kingdom-based retail giant said
Chinese like milk from New Zealand above all
and many young parents buy several cartons at a
time.
Imported milk is Chinese shoppers' favorite
choice on the Internet, too.
On the home page of Yihaodian, a major online
grocery store, imported milk is listed as the third
top category. Ads flash for promotion deals such
as buy one, get one free.
"Room temperature imported milk has been
available on Yihaodian.com since 2012," said
Viki Yang, a public relations executive at
Yihaodian,
which
is
backed
by
United States-based Wal-Mart Stores Inc.
"We sold around one container (around 30 t) per
month at the beginning and now we deal with
more than four containers per day."
July/August 2013
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Food Industry News
ChinaNews
sales (Contd)
sales (Contd)
Yang said Yihaodian has 74 milk brands from 21
foreign countries. The best-selling products are
Oldenburger, from Germany and Devondale,
from Australia. The e-commerce retailer said it
will greatly expand the sourcing of imported
milk to a wide range of countries, such as
Uruguay, to meet different taste demands.
A series of milk safety scandals, involving milk
and infant formula have been exposed since
2008. Toxic chemicals were added to dairy
products to yield higher protein content. The
practice killed at least six infants.
According to the China Dairy Industry
Association, in the first four months of this year,
China imported dairy products amounting to
596 200 t, up 24.6% year-on-year. Imports are
being driven by infant formula milk, which
totalled 38 900 t in the first four months, up
37.2%, as well as liquid milk, which hit 63 700 t
in the first four months, a year-on-year surge of
164.7%.
"Domestic milk consumption has been increasing
for years, lifted by rising personal incomes and a
soaring
milk-drinking
population,"
said
Wang Dingmian, a Consultant with the
Guangdong Provincial Dairy Association. He
added that besides liquid milk, milk-based
beverages, imported cheese and yogurt may
become popular.
Lao Bing, general manager and industry expert
of the Shanghai-based Mental Marketing Dairy
Consulting, said: "Surging imported milk
consumption will have a negative impact on
domestic dairy industry chains" in light of
foreign products' allegedly competitive prices
and good reputations. But Lao said brisker sales
of imports are largely due to domestic milk
scares. (Continued in next column)
July/August 2013
The State Council, the country's cabinet, said it
will take effective measures to ensure the safety
of baby milk products. "Food safety is not simply
a food problem, it has become a social problem,
or even a national image-related problem," said
Ning Gaoning, board chairman of the China
National Cereals, Oils and Foodstuffs Corp, at
the Fifth China Food Safety Forum. "Large
Chinese food producers should play a leading
role in food safety and product quality, while
their mid-sized and small counterparts strongly
need self-discipline." (cd 3/7/2013)
Baby formula gets new import rules
China’s authorities released a policy Thursday to
further strengthen the quality and safety of baby
milk products, a move intended to restore
consumer confidence in the domestic dairy
sector.
The policy, released by nine ministries and
commissions including the China Food and Drug
Administration (CFDA) and the Ministry of
Industry and Information Technology (MIIT),
prohibits repackaging imported baby formula
from large bulk packages into small packages
and says that baby formula must be labelled in
Chinese before being imported to the mainland.
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ChinaNews
(Contd)
(Contd)
Companies exporting baby formula to the
mainland must register with the authorities
before May 1, 2014, Lin Wei, an official with the
Administration
of
Quality
Supervision,
Inspection and Quarantine, told a media briefing
Thursday.
The newly released policy also requires that baby
formula be managed in accordance with
pharmaceutical rules, and that baby formula
producers own and control their own milk
sources.
The strict rules for imported baby formula
products are the highlight of the new policy,
which targets a market that is currently in chaos,
Song Liang, an analyst with the Distribution
Productivity Promotion Centre of China
Commerce, told the Global Times Thursday.
The moves, which aim to enhance the safety of
domestic baby formula products and promote
scaled production, came after the MIIT said
Tuesday it expects that within two years, 70% of
the sector will be dominated by 10 large
domestic baby formula producers with revenues
exceeding RMB 2 bio.
Because the profit margin on baby formula is
high, many domestic firms repackage imported
products into smaller sizes or produce goods in
their own overseas plants and claim they are
imported.
Song Kungang, Secretary-General of the China
Dairy Industry Association, suggested Thursday
that the CFDA rule out producers with quality
problems and tighten verification for baby
formula production licenses.
Only 20 out of the 200 “New Zealand” baby
formula brands sold in China are genuine, the
New Zealand Infant Formula Exporters
Association said in April.
China Mengniu Dairy Co announced Tuesday
that it will acquire milk powder firm Yashili
International Holdings Ltd, and analysts said the
sector would see an increasing number of
takeovers in the near future due to government
policies and market competition.
Online purchases of imported products are also
growing quickly, which can lead to quality
problems as the sector has yet to see any
regulatory laws, Wang Dingmian, former
director of the Dairy Association of China, told
the Global Times Thursday.
China has 127 baby formula producers, but more
than half the market is held by foreign brands,
Wang said.
Song said there are currently over 120 domestic
baby formula brands, but two-thirds will exit the
market in three to five years.
However, Wang said that because milk products
have a short shelf life, it is better to use local
resources to make it (theglobaldairy 3/7/2013)
July/August 2013
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Food Industry News
ChinaNews
Multinationals face increased scrutiny
China is expanding its investigations into the
food, dairy and pharmaceutical industries, raising
questions about whether the days of
"supranational treatment" for multinationals have
ended.
(Contd)
The investigations signal that these companies
face increased scrutiny of their operations in the
country.
The State Administration for Industry &
Commerce is investigating the food processing
and packaging company Tetra Pak International
SA for possible abuse of market dominance.
The SAIC has organized more than 20 of its
regional agencies to investigate the allegations,
Zhang Mao, head of the market regulator, said on
Friday. It is also investigating 23 cases of
possible monopoly violations.
Tetra Pak China said in a statement that it has
received requests from the SAIC and will
provide relevant information about its operations
in China to fully cooperate with the government's
investigation.
Earlier, the National Development and Reform
Commission, the top economic planning agency,
started an investigation into the pricing of infant
formula sold by Switzerland-based Nestle's
Wyeth and other foreign companies, including
Mead Johnson Nutrition Co, Abbott Laboratories
and Dutch producer Royal FrieslandCampina
NV.
Nestle SA and Danone's infant-nutrition units cut
some prices after the government started looking
into possible price-fixing by global producers of
infant formula.
Domestic company Biostime International
Holdings Ltd, whose net profit rose 40%
year-on-year in 2012, is also being investigated.
The NDRC has evidence showing that the
companies' prices have increased about 30%
since 2008.
The world's largest dairy exporter, Fonterra
Cooperative Group Ltd in New Zealand, was
contacted on a "broad-ranging investigation of
consumer dairy products in China", and it is
cooperating
with
the
authorities,
the
Auckland-based company said.
Wyeth said this week it would lower the prices of
some baby-formula products by as much as 20%.
It said the reductions will save consumers an
estimated RMB 450 mio in the next 12 months.
Danone said its Dumex unit is preparing a price
cut, and it will disclose details later.
July/August 2013
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Page 34
Food Industry News
ChinaNews
(Contd)
(Contd)
Some
industry
industry
experts
said
investigations might exert temporary limits on
milk powder prices, but Chinese parents' demand
for foreign brands would drive prices back up
again.
According to an e-mail response from MSD
China, a unit of international drug maker Merck
& Co, said the NDRC announced cost and price
surveys on July 2.
Wang Dingmian, an executive council member
of the Dairy Association of China, said
entrenched preferences for foreign brands would
not easily change.
As for domestic milk powder brands, the
government's actions would also have a limited
impact if the problems involving product quality,
milk sources and trust issues were not resolved,
he said.
Chinese consumers' loyalty to foreign brands is
thought to be pushing up their prices over the
long run. Guo Yuanyuan, the mother of a
2-year-old, buys high-end milk powder produced
by Wyeth regularly. Each can costs about
RMB 400.
"When I encounter piles of imported milk
powder at the supermarket, the price is the only
factor that matters to me," Guo said. "I believe
the more expensive the product, the better the
quality and thus the safety for children."
The government is also examining the costs and
prices
of
international
pharmaceutical
companies, including GlaxoSmithKline Plc,
Merck & Co, Novartis AG and Baxter
International Inc, with the aim of improving the
pricing system for medicines.
MSD said it is a routine cost and price data
collection spanning the entire healthcare
industry, including local and multinational
pharmaceutical manufacturers.
The company said such surveys are carried out
on a random basis.
For example, this month, 27 drug companies,
including Boehringer Ingelheim GmbH, Astellas
Pharma Inc, GSK, Baxter and MSD, have been
chosen for the survey, together with large
domestic pharmaceutical and medical device
companies.
Wang Zhile, president of the Beijing New
Century Academy on Transnational Corporations
and a senior researcher on foreign direct
investment, said that an anti-monopoly
investigation is necessary to build up a healthier
market.
He said the move encourages all companies —
local or foreign — to play by the rules.
He said it is vital for the government to adopt
proper and internationally recognized methods in
investigations to yield a fair result. (cd 6/2013)
July/August 2013
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Food Industry News
ChinaNews
China implements new import and
export requirements for dairy products
On January 24, 2013, the State General
Administration
of
Quality
Supervision,
Inspection and Quarantine (AQSIQ) announced
the "Supervision and Administration of
Inspection and Quarantine of Imported and
Exported Dairy Products" (AQSIQ Decree No.
152, hereinafter referred to as the "measures"),
which were implemented starting May 1, 2013.
This announcement extends on the Relevant
Requirements for Implementing the Measures for
the Supervision and Administration of Inspection
and Quarantine of Imported and Exported Dairy
Products by AQSIQ Announcement No. 53,
which was released on April 15, 2013.
The "measures" refer to:
-
The People's Republic of China Food
Safety Law and its implementing
regulations;
-
The Import and Export Commodity
Inspection Law of P.R.C. and its
implementing regulations;
-
The Entry and Exit Animal and Plant
Quarantine Act and its implementing
regulations;
-
The State Council on Strengthening Food
and Product Safety Supervision and
Management of Special Provisions;
-
The Dairy Quality and Safety Supervision
and Management Regulations and other
laws, regulations
China implements new import and
export requirements for dairy products
(Contd)
The "measures" cover the contents of the dairy
classifications
and
definitions,
detailed
regulations on the contents of dairy imports,
exports products, risk warning, liability,
implementing the supervision and management.
Meanwhile, if the dairy importers and exporters
have objections on the inspection and quarantine
results, retesting can be applied for via the
Provisions of the Import and Export Commodity
Re-inspection Management Approach.
A further clarification of the contents and the
scope of application have been described in the
Implementation Requirements of “measures”.
Businesses exporting dairy products to China
should register in the registration system. For the
first import of dairy products, the importer or
agent should provide a testing report following
the national food safety product standard,
including the requirements of GB 2761 and
GB 2762.
For subsequent imports of dairy product, the
implementation requirements of “measures” are
shown in a recent SGS SafeGuards article in
Table 1.
According to the Implementation Requirements
of “measures” testing organizations are required
to obtain the China Metrology Accreditation of
Food (CMAF). The SGS China Agriculture &
Food Unit has 10 laboratories, which all hold
CMAF accreditation. (afj 6/6/2013)
July/August 2013
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Food Industry News
ChinaNews
Infant formulae: market shares of
international brands
spending cut (Contd)
A survey conducted in June 2013 showed that
the four leading infant formula brands in China
were foreign. The following tables list the brands
and their current market shares.
A kg of abalone now costs around RMB 80,
against RMB 140 a year ago, and a lobster can be
bought for less than RMB 100, according to
Li Jianchao, a restaurant owner in Beijing.
Brand
Abalone and lobster account for the majority of
high-end seafood dishes in luxury restaurants.
Share (%)
Mead Johnson
12.3
Dumex
11.7
Wyeth
11.0
Abbot
7.7
Sales of imported dried seafood being sold in
Jingshen Seafood Market in southern Beijing, for
instance, have dropped two-thirds with almost
zero demand from high-end restaurants,
according to a report in China Securities Journal.
(cftn 11/6/2013)
spending cut
Piles of high-end seafood — including lobsters,
crabs and abalone — sat quietly in the small
tanks of various vendors, during a visit to one of
the largest aquatics markets in northern Beijing
this week.
Store owners at the market, a major wholesaler
for restaurants in the area, said they were
disappointed by the sluggish levels of business
for expensive aquatic products in recent months,
the result of the ongoing decline in luxury
catering across the nation.
"Top restaurants have cut their demands for
high-end products," said one shop owner
surnamed Lin. "Expensive seafood such as
abalone and lobsters are difficult to sell, despite
prices dropping 30% compared with last year."
In such a depressed market, many high-end
seafood traders have been forced to quit the
businesses altogether, the journal added.
High-end seafood products at lower prices have
lured many individual customers, however, while
some medium and lower priced seafood remains
popular, with some prices even rising, said Lin.
Bian Jiang, Assistant Director of the China
Cuisine Association, said a decline in retail and
wholesale seafood sales is inevitable, as the
catering industry slows, and the effects are also
hitting other related sectors of the industry, from
breeding, to feeding, fishing, and seafood
imports and exports.
"It has been the worst time for seafood-related
industries in a decade," Bian said.
July/August 2013
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Food Industry News
ChinaNews
spending cut (Contd)
Shrimp exports (Contd)
Region
Homey Group of Shandong province, a listed
food processing, aquaculture and ocean fishing
company with more than 30 subsidiary
companies, including 10 food processing plants,
said it expects to see a reduction in its first
quarter sales, according to China Investment
Securities.
In December, the government launched a
nationwide
crackdown
on
graft
and
extravagance, which is now being blamed for
what experts suggest is the biggest slowdown in
the catering industry in a decade.
Revenues of high-end restaurants in Beijing,
Shanghai and Chengdu were down at least 20%
during this year's Spring Festival.
In the first quarter of the year, many top catering
companies had to close branches or change their
menus. However, large chain restaurants have a
different view on seafood sales.
Jingya Group, for instance, reported its seafood
businesses have not been affected by the
government policies yet and its seafood buying
from suppliers in Shandong is little changed,
according to Ma Yuming, a Marketing Executive
at the company. (cd 14/6/2013)
Shrimp exports
The following table shows the region breakdown
of the exports of shrimps in the first 4 months of
2013 and the same period of 2012.
2013 1-4 2012 1-4
(t)
(t)
Growth
(%)
Beijing
13.9
5.7
146.9
Tianjin
163.1
293.7
-44.5
Hebei
248.2
272.0
-8.7
3 517.9
3 634.7
-3.2
4.5
26.3
-82.8
Shanghai
1 818.9
3 079.5
-40.9
Jiangsu
1 538.7
2 036.3
-24.4
Zhejiang
13 627.3
17 698.9
-23.0
Anhui
323.0
195.4
65.3
Fujian
19 767.4
12 766.5
54.8
0.0
12.4
-100.0
5 759.5
9 108.2
-36.8
Henan
10.1
251.7
-96.0
Hubei
1 489.8
836.6
78.1
Hunan
0.0
67.2
-100.0
32 718.3
25 787.9
26.9
Guangxi
2 530.4
1 978.5
27.9
Hainan
1 381.2
1 688.4
-18.2
Yunnan
11.6
37.6
-69.2
Liaoning
Jilin
Jiangxi
Shandong
Guangdong
(Mofcon 27/7/2013)
When we compare this table with that about
apple juice exports in this section, we once more
see a sharp increase in the exports from Beijing,
an inland city located in a water deficient region.
It seems that Beijing is growing as an export hub.
July/August 2013
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Food Industry News
ChinaNews
The U.S. admin ruling on Chinese
canned mushroom
government probe (Contd)
On March 12, the U.S. Department of Commerce
announced its preliminary ruling of anti-dumping
administrative review on canned mushrooms
from China, affirming that the dumping margin
of China's Blue Field (Sichuan) Food Industrial
Co., Ltd. was 102.11%, Chinese general
dumping margin was 308.33% covering
enterprises Dujiangyan Xingda Foodstuffs Co.,
Ltd. (Sichuan) [3], Ayecue (Liaocheng) [4]
Foodstuff Co.,Ltd. (Shandong) [4], Jiufa Edible
Fungus Corporation (Shandong) [4], Ltd., and
Iceman Group Co., Ltd. (Zhejiang) [5].
However, the moves have also raised worries
that domestic brands might be further squeezed
out of the market.
On February 2, 1998, the Department of
Commerce started the anti-dumping investigation
under HS Codes 20031027, 20031031,
20031037, 20031043, 20031047, 20031053 and
0711904000. On December 18, 1998, the
Department ruled the Chinese dumping margins
from 123.16% to 198.63%. On March 30, 2012,
the Department made the 13th administrative
review on this case. (etochina 1/4/2013)
By taking the initiative to cut prices as a way of
showing that they are cooperating with the
government's probe, the move is also expected to
soothe consumers who have suffered from
increasing prices for years, and to get lighter
fines if the probe finds them guilty of any
irregularities, said Song Liang, a Chinese dairy
expert.
government probe
An increasing number of foreign and domestic
milk powder companies have cut the prices of
their products after the government launched an
anti-monopoly probe earlier this month.
The price cuts are considered an attempt to get
lighter fines if the companies are found guilty of
any wrongdoing, experts said.
On Monday, Chinese infant formula maker
Beingmate Group Co., Ltd. (Hangzhou,
Zhejiang) [5] said it will lower its prices by 5 to
20% starting on July 10, in a bid to boost its
competitiveness and grab more market share.
Also on Monday, Dutch dairy producer Royal
FrieslandCampina NV has notified its retailers in
China that it will reduce its prices by 5%.
Xiang Jianjun, a researcher with CIConsulting - a
major industry research firm - said the
anti-monopoly probe is targeting foreign brands,
which are allegedly taking advantage of the
consumers' distrust of domestic brands to raise
prices frequently and are hurting consumer
interests.
Foreign brands, which have a market share of
more than 70%, are a major threat to local
brands, Xiang said.
July/August 2013
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Food Industry News
ChinaNews
On July 1, the National Development and
Reform Commission started an investigation into
the prices of infant formula products sold by
foreign companies, including Switzerland-based
Nestlé SA's Wyeth, Mead Johnson Nutrition Co,
Abbott
Laboratories
and
Royal
FrieslandCampina NV.
Wang Jing, 34, welcomes the reduced price of
foreign milk powder brands, which she purchases
two or three cans of per month for her 2-year-old
child.
The NDRC has evidence showing that prices
have increased about 30% since 2008.
Domestic company Biostime International
Holdings Ltd, which saw its net profit increase
40% year-on-year in 2012, is also being
investigated.
Nestle SA and Groupe Danone SA
infant-nutrition units cut some prices after the
probe was launched.
Leyou, a leading retailer of milk powder in
Beijing, said that Wyeth lowered the prices of its
products by 10% on average, with the highest
reduction at 20%. But all of the products for
which Wyeth lowered prices are domestically
produced, said Gong Dingyu, Chief Operating
Officer of Leyou.
Gong doesn't believe that the price cuts by
foreign brands will hit the market share of
domestic brands because brand loyalty among
milk-powder buyers is high. Mothers who
purchase domestic brands will not easily shift to
foreign brands as a result of the cuts, he said.
Wang, who sometimes relies on supplies from
her friends in Australia, added parents don't
choose brands based on price, but quality and
safety. "Baby food is the only thing that we don't
take price into consideration," she said.
Dairy industry analyst Song said that first-tier
foreign brands in China have the capacity to
control the pricing structure. Also, the price cuts
will likely start a series of price decreases in the
industry and will have a chain effect, he added.
"The anti-monopoly investigation will burst the
price bubble and make prices return to their real
value," Song said. But he doubts that the cuts
will have a major impact on domestic brands.
"Most domestic milk-powder brands have their
markets in third-tier cities or even in smaller
regions," Song said. "They have no direct
conflicts in the market with their foreign
competitors." (cd 9/7/2013)
Food watchdog probes tainted egg
allegations
China's State Food and Drug Administration, or
SFDA, on Sunday began to check for food
companies processing lime-preserved eggs with
copper sulphate, following a scandal highlighted
in a media report.
July/August 2013
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Food Industry News
ChinaNews
Food watchdog probes tainted egg
allegations (Contd)
Food safety official in pesticides
warning (Contd)
On Friday, China Central Television reported
that some egg processing plants are suspected of
using copper sulphate in the pickling of
lime-preserved eggs, a black-colored cold dish
popular around the country. Copper Sulphate can
be poisonous if swallowed.
China's mainland has limits on residue from 667
pesticides, while Japan has limits on some
62 000, said Xu Minghuan, of the General
Administration
of
Quality
Supervision,
Inspection and Quarantine.
The SFDA ordered the Jiangxi provincial food
and drug administration to investigate the issue
immediately, and required industrial and
commercial administrative departments, quality
supervision departments as well as food and drug
administrative departments nationwide to
supervise and examine all producers of
lime-preserved eggs.
Food additives and processing aid will be the
focus of the supervision, said the SFDA, adding
that companies found using copper sulphate to
process preserved eggs will have their production
licenses suspended and be punished strictly
according to law.
People suspected of violating the criminal law
will be transferred to the police, said the SFDA.
(cd 17/6/2013)
warning
State standards for pesticide residue lag far
behind those of developed countries and are
putting health at risk, according to a senior
official with China's food safety watchdog.
July/August 2013
He said the mainland's residue standards were
also lower than those in Hong Kong which has
limits on some 6100 pesticides, Xinhua news
agency reported. Meanwhile, the amount of
fertilizer and other additives allowed on farm
produce were about two times higher than
international standards.
Tests for pesticide residue on the mainland were
also failing as nearly 60% of 2200 food additives
and residues that pose a risk to health could not
be detected, Xu said. Low standards and poor
detection technology had a huge impact on
exports, he added.
Japan, for example, had increased the number of
banned pesticides and additives to 797 from the
former 63 on vegetables from the Chinese
mainland. It also set some 50 000 standards on
all kinds of chemical residue. Residue must be no
more than 0.01 mg per kg on produce. Xu said
such strict stipulations had affected some 30% of
China's agricultural exports, or about 6000
Chinese companies and the income of Chinese
farmers, he said. To solve the problem, Xu said
the country should first improve its detection
technology.
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Food Industry News
ChinaNews
warning (Contd)
standards (Contd)
He said the country's land resources authority
had begun monitoring soil quality to curb the
amount of polluted farmland, but an evaluation
mechanism should also be set up to monitor and
record all potential sources of pollution.
"Meanwhile, tests have found trans-fatty acids in
all the 197 samples of imported baby formula
and the value detected was 0.024 to 0.367 g per
100 g of the product," the notice said.
Last year, it was reported that red wine from
three domestic makers contained excessive levels
of two pesticides, carbendazim and metalaxyl.
But the Ministry of Health later said the amount
was below the country's limits. (sd 17/6/2013)
standards
China's top food watchdog said the content of
trans fat in homemade baby formula abides by
national and international standards, contrary to a
media report claiming that some milk powder
contains too much of the substance.
"Test results showed the value of trans-fatty
acids in domestic baby formula products was
0.019 to 0.574 g per 100 g of milk powder,
which conforms to national and international
standards," said a notice that the China Food and
Drug Administration posted on its website on
Tuesday.
Tests of fatty acids and trans-fatty acids were
performed on 10 187 samples of baby formula
products manufactured on the Chinese mainland
in recent years, it said.
Hong Kong's South China Morning Post said in a
report on Monday that three popular mainland
milk powder brands － Beingmate's Baby Club,
Synutra's Super infant formula and Yili's Gold
infant formula — were found in lab tests
commissioned by the newspaper to contain trans
fat between 0.4 and 0.6 g per 100 g of the
product.
Nutritionists say trans fat can cause obesity,
diabetes, coronary heart disease and affect the
growth and development of infants.
There are two kinds of trans fat: natural and
man-made, like that in artificial fat and coffee
creamer, said Song Kungang, secretary-general
of China Dairy Industry Association.
"Trans fat is an inherent component of mammal
milk. Trans fat accounts for 4% to 9% of the total
fatty acids in milk and 2% to 6% in human
milk," Song said.
"No data have been shown to prove that natural
trans-fat in food has adverse health effects."
July/August 2013
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Food Industry News
ChinaNews
standards (Contd)
Three provinces establish seasoning
league (Contd)
The Codex Alimentarius Commission, the
international food standards setting authority,
caps the limit of trans fat in baby formula at no
more than 3% of total fatty acids. The national
standard has the same limit.
The SCMP also said the tests found two popular
overseas formula brands that contained no trans
fat. Dairy experts suspect the test results were
fabricated.
A spokeswoman for Beingmate said they have
never added anything to milk formula products
that goes against mainland regulations, the
newspaper reported.
"It' is illegal to add artificial chemicals. But the
infant formula is safe and reliable if the
substance lies in milk naturally and the amount
accords with regulations," said Cao Mingshi,
deputy secretary general of the Shanghai Dairy
Association. (cd 10/7/2013)
Three provinces establish seasoning
league
The seasoning associations of Heilongjiang, Jilin
and Shandong have entered into a joint league to
help one another in regulation, product
development, food safety and other issues related
to
the
seasoning
products
industry.
(tjkx 14/6/2013)
July/August 2013
This is an interesting development. Chinese
provinces usually interact as if they were
sovereign states, so this league by itself is
innovative. Moreover, while Heilongjiang and
Jilin are neighboring provinces, Shandong is
located in another region of China. One would
expect Liaoning to participate in a kind of
north-eastern league.
standards
China's top food watchdog said the content of
trans fat in homemade baby formula abides by
national and international standards, contrary to a
media report claiming that some milk powder
contains too much of the substance.
"Test results showed the value of trans-fatty
acids in domestic baby formula products was
0.019 to 0.574 g per 100 g of milk powder,
which conforms to national and international
standards," said a notice that the China Food and
Drug Administration posted on its website on
Tuesday. (Continued on next page)
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Food Industry News
ChinaNews
standards (Contd)
standards (Contd)
Tests of fatty acids and trans-fatty acids were
performed on 10,187 samples of baby formula
products manufactured on the Chinese mainland
in recent years, it said.
The Codex Alimentarius Commission, the
international food standards setting authority,
caps the limit of trans fat in baby formula at no
more than 3% of total fatty acids. The national
standard has the same limit.
"Meanwhile, tests have found trans-fatty acids in
all the 197 samples of imported baby formula
and the value detected was 0.024 to 0.367 g per
100 g of the product," the notice said.
Hong Kong's South China Morning Post said in a
report on Monday that three popular mainland
milk powder brands － Beingmate's Baby Club,
Synutra's Super infant formula and Yili's Gold
infant formula — were found in lab tests
commissioned by the newspaper to contain trans
fat between 0.4 and 0.6 g per 100 g of the
product.
Nutritionists say trans fat can cause obesity,
diabetes, coronary heart disease and affect the
growth and development of infants.
There are two kinds of trans fat: natural and
man-made, like that in artificial fat and coffee
creamer, said Song Kungang, secretary-general
of China Dairy Industry Association.
"Trans fat is an inherent component of mammal
milk. Trans fat accounts for 4 to 9% of the total
fatty acids in milk and 2 to 6% in human milk,"
Song said.
"No data have been shown to prove that natural
trans-fat in food has adverse health effects."
The SCMP also said the tests found two popular
overseas formula brands that contained no trans
fat. Dairy experts suspect the test results were
fabricated.
A spokeswoman for Beingmate said they have
never added anything to milk formula products
that goes against mainland regulations, the
newspaper reported.
"It is illegal to add artificial chemicals. But the
infant formula is safe and reliable if the
substance lies in milk naturally and the amount
accords with regulations," said Cao Mingshi,
deputy secretary general of the Shanghai Dairy
Association. (cd 10/7/2013)
Better times ahead for catering
industry
The growth slowdown in the country's catering
industry is over, with double-digit expansion to
return in the current half-year, according to the
China Cuisine Association.
Growth will hit 10% from July to December,
with industry revenue of RMB 2.6 trillion, the
association said in a report on Monday.
July/August 2013
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ChinaNews
industry (Contd)
industry (Contd)
Industry experts noted that many high-end
restaurants in Beijing were located adjacent to
government departments or institutions and had
therefore been hit hardest. The impact on the
catering sector was nationwide, however.
Between January and May, the latest period for
which provincial rates are available, the growth
rate of most provinces was 10% age points lower
than a year earlier.
But the growth rates varied dramatically by
region. Among first-tier cities, the outcomes for
Beijing and Guangzhou were opposite.
First-half revenue was up 8.7% to RMB 1.18
trillion. The growth rate was 4.5% points lower
than a year earlier and 4% points below overall
retail sales, according to the association. The
recovery will be driven by industry upgrading
and
transformation,
said
Bian
Jiang,
Assistant Director of the CCA.
In Beijing, a sample of 50 restaurants showed
revenue down 6%, with 15 high-end catering
establishments down 36%. The number of fast
food and take-out stores rose, while sit-down
restaurants were in decline. Volatile market
conditions, high costs and lower profits caused
these changes.
Bian said two factors that caused the first-half
downturn - the government's austerity campaign
and a wave of bird flu cases - won't persist in the
second half. Also, measures to upgrade business
adopted by many restaurant companies are likely
to take effect in the current half. And with many
major holidays due in the coming months, the
industry will get a further boost, Bian said.
Guangzhou, however, was one of the few cities
still recording rapid growth. Its catering industry
expanded more than 10%, with March's growth
rate rising to 17.8%.
The government's austerity campaign proved
most effective at curbing consumption with
public funds in Beijing, where about 2 000
restaurants closed in the first half.
Nonetheless, the industry is recovering slowly. In
June, the growth rate of revenue climbed back to
9.5%.
The H7N9 virus (a variant of bird flu) affected
the catering industry in Shanghai, Jiangsu and
Zhejiang in April.
July/August 2013
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industry (Contd)
challenges
The government's move to crack down on luxury
spending has resulted in a harsh environment for
high-end restaurants.
With lingering low prices of rapeseed on the
market and continuing influx of cheap foreign
rapeseed, domestic rapeseed has got into a fix,
the Economic Daily reported.
According to a CCA survey of major restaurant
companies in the second quarter, per capita
consumption fell 15 to 39% at high-end catering
places and their revenue slid 22.6%.
Every year, the nation launches the purchase and
storage of various crops including rapeseed, as a
measure to regulate market prices.
In the first half, Beijing Xiangeqing Co Ltd
closed eight stores, estimating a loss between
RMB 160 mio and RMB 240 mio.
Food acquired on the state system, mainly
through China Grain Reserves Corp, from
farmers nationwide, will be auctioned.
China Quanjude Group, the country's top roast
duck restaurant chain, only achieved revenue of
RMB 850 mio, down 6.5% year-on-year, while
its profit fell 32.1% to RMB 85 mio.
This year, the situation seems even more
complex. The state’s store of rapeseed oil in
2011 was auctioned earlier, the first batch of
4992 t, and the second 200 t. But all the rest fell
through.
Xiao Nan Guo Restaurants Holdings Ltd and
Tang Palace (China) Holdings Ltd's interim
reports contained warnings that their net profits
probably fell. (cd 31/7/2013)
Top cooking oil suppliers
The China Grain Reserves Corporation
(Sinograin) has published the following list of
China’s top suppliers of food oils in 2012.
Company
Yihai Kerry
Volume (mio t)
3
COFCO
1.1
Luhua
0.5
(hcfood 8/6/2013)
July/August 2013
“Price inversion and the high cost of purchasing
and storage are the main reasons leading to the
unsold rapeseed oil,” said Wang Cheng, a sales
manager at Zhonghe Food and Oil Group, a grain
processor based in Hubei province, one of the
major production bases for rapeseed in China.
“The price of future Number 1401 rapeseed oil
on the market has fallen to RMB 8064 per t, and
the price of the spot rapeseed oil is only
RMB 9100 to 9500. But the cost of the country’s
temporarily stored rapeseed oil is as high as
RMB 10 200 to RMB 10 600 per t,” said
Chen Yanjun on July 16, a senior analyst from
China Zhengzhou Grain Wholesale Market.
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Food Industry News
ChinaNews
challenges (Contd)
challenges (Contd)
Although the prop price or the state purchase
price of rapeseed has been increasing, the market
price remains low. Now almost all the rapeseed
oil on the market is imported.
Oil yield rate of imported GM rapeseed is 42%,
with a water impurity rate of 11%, while
domestic rapeseed oil yield rate is 35% with a
water impurity rate of 14%.
According to the Ministry of Agriculture,
rapeseed imports from January to May reached
1.655 mio t, a year-on-year increase of 37%.
The influx of cheap foreign rapeseed makes the
production of domestic rapeseed oil frustrating.
For farmers, growing rapeseed is a thankless
task.
Automation of rapeseed planting is low, and
labour costs can be as high as RMB 9000 per
hectare. Machine sowing technology has no
problem, but mechanical transplanting and
collecting are not ideal for domestic growers.
Current rape growing machines are all modified
machinery that was used to cultivate rice and
wheat.
“If I grow rape on all my 4 mu (about 0.27
hectares) of farmland in autumn, I could
probably get 600 kg of rapeseed the next spring.
Deducting all the costs, I could only get
RMB 300 to 400,” said Gong Zhengqiu, a farmer
from Hubei province.
“We need to develop specific rapeseed
cultivation machinery as soon as possible. In
addition, we need to promote concentrated land
cultivation to reduce labour costs,” said
Gan Yuhua, an official from the Hubei
Provincial Department of Agriculture.
Gong said that unlike 20 years ago, nobody
wants to grow rapeseed anymore. Most
farmlands are empty during the winter.
The main growing season of rapeseed in the
south is winter. Pests are fewer in low
temperatures, so the plants are real safe food,
Gan added. (cd 24/7/2013)
“Farmers used to rush to carry the rapeseed to
my house, but now it is very difficult to collect.
Sometimes you can hardly collect a car of
rapeseed even if you look for it for several days,”
food and oil broker Lu Guobing said.
Major advance to halt flow of 'gutter
oil'
Low quality of domestically grown rapeseed and
high production costs are two main reasons
leading to the difficulties facing rapeseed oil
market players.
Chinese scientists say they have made a major
breakthrough in the battle against "gutter oil" —
illegal cooking oil recycled from waste oil
collected from sources such as restaurant fryers
and drains.
July/August 2013
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Food Industry News
ChinaNews
oil' (Contd)
oil' (Contd)
Experts at the University of the Chinese
Academy of Sciences have unveiled a kit that
can test the purity of cooking oil in one minute.
"I'm a scientist, so I don't know how to market a
product. But the method is already mature," he
said. "I'd say if any company was interested, it
would take less than a month for industrial
manufacture."
The breakthrough comes as authorities continue
to crack down on the illegal collection and
reselling of waste oil to restaurants and
supermarkets.
The test kit works by placing a small sample of
any cooking oil in a test tube with a
burgundy-colored reagent and then shaking
them, co-creator He Yujian said.
The term "gutter oil" usually refers to oil
collected by using three illegal methods — oil
skimmed from kitchen wastewater, oil reused
several times by a kitchen (such as from a
deep-fat fryer) and oil extracted from animal fat.
"If the color doesn't change, the oil is safe," he
said. However, if it becomes lighter, the mixture
can be compared with a color chart that shows
the severity of the contamination.
"All illegal cooking oil contains molecules that
do not exist in normal oil," He said. "So we
created a reagent that reacts with these molecules
and changes color." Most other detection
methods require sophisticated laboratory
instruments, He said.
The change can be seen if the proportion of
illegal oil in the sample is 5% or more, the
professor of chemistry and chemical biology
said.
"But it is simply not possible for law
enforcement officials to take huge instruments
with them when they conduct routine checks at
small restaurants and markets."
For sellers of illegal oil 40 make a profit, the
proportion of recycled oil in their products needs
to be at least 5 to 10%, He said, adding that the
test kit is suitable for most oils on the market in
China.
Public concern over illegal oil began to grow in
2011 when police cracked a cross-province case.
But a laboratory test could identify only two out
of 10 oil samples from the illegal workshops.
The university team has spent nearly two years
developing the reagent, with the aim of making
detection easy, fast and cheap. The professor said
he is looking for an enterprise to manufacture the
kit.
By May last year, the Ministry of Health (later
merged to form the National Health and Family
Planning Commission), had received 762
proposed methods from the public for detecting
illegal cooking oil.
July/August 2013
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Food Industry News
ChinaNews
oil' (Contd)
oil' (Contd)
The commission chose seven — four laboratory
methods and three immediate tests, without
disclosing the methods to the public. However, at
least one expert is not confident about testing
illegal oil.
"The quality test, although with good intentions,
will have little effect if there are no channels for
individual consumers to complain about the
gutter oil they find, along with severe
punishment for the manufacturers," he said.
(cd 25/7/2013)
"Illegal oil is especially complex to detect,"
Liu Zhihong, a chemistry professor at Wuhan
University, was quoted as saying by Nanfang
Daily.
Liu said there is no flawless method yet to
recognize all illegal oil. Some methods, like
nuclear
magnetic
resonance
and
gas
chromatography, are too time-consuming and too
expensive.
But He, from the University of the Chinese
Academy of Sciences, said, "Based on laboratory
results, our reagent has an accuracy rate of about
96%, which is enough for initial inspection and
detection."
He estimated the cost for each test using the
reagent to be no more than RMB 0.5.
Meng Lingren, 20, a consumer from Beijing, is
not confident about the reagent being available to
individual buyers.
"Richer families prefer buying big brands or
imported products, while people with lower
incomes generally may care less about the oil
quality," he said. Meng believes the reagent
alone is far from sufficient to protect consumers.
Detection of illegal cooking oils in
China
In recent years in China, illegal cooking oil
incidents have led to serious food safety risks
and negative social repercussions. The illegal
cooking oils include the refined waste oil from
restaurants, repeatedly used oil and waste animal
fats. Because such cooking oils may contain
toxic polymers, peroxide and so on, they can be
dangerous to human health. The most common
clinical symptoms of poisoning include
headaches, vomiting and diarrhoea.
While monitoring purchase records and granting
administrative licences can be used to control the
problem of illegal cooking oil, a rapid and on-site
detection of illegal cooking oil is still necessary
and urgent in China.
Professor He Yujian and his group from College
of Chemistry and Chemical Engineering,
University of Chinese Academy of Sciences has
established
two
rapid
and
convenient
colorimetric techniques based on phase transfer
technology which can be used for rapid and
on-site detection of illegal cooking oils.
July/August 2013
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China’s devastated wheat crop could
spur more food deals (Contd)
Detection of illegal cooking oils in
China (Contd)
Their work, Rapid colorimetric detection of
illegal cooking oils based on phase transfer
technology, will be published on Science China
Chemistry, 2013.
In the methods, developed copper ions and
cationic gold nanoparticles protected by poly
(diallyldimethyl ammonium) chloride (PDDA)
were used as the recognition probes. And the
illegal cooking oil could be detected by the
naked eye (see image).
The results showed that qualified cooking oil
mixed with 2.8% of the illegal cooking oil could
be detected, and more than 5% of the illegal
cooking oil could be accurately detected by the
naked eye. These methods were applied in a
blind test for a total of 235 samples; the results
showed that the accurate rates of the blind tests
were 95.7%.
Compared with the traditional methods, this
method is cost-effective and allows rapid and
simple colorimetric detection of illegal cooking
oils without complex pre-treatment. A national
patent
has
been
applied
for.
(foodprocessing 1/7/2013)
spur more food deals
A combination of frost and too much rain has
wreaked havoc on China’s wheat crops, Reuters
reported Tuesday, which could force the country
to ramp up wheat imports.
July/August 2013
Food supplies are already tight for China’s
1.35 bio people. The country ranks a lowly 42nd
in the world in food security, just ahead of
Botswana. Urbanization has made arable land
scarce, persistent food safety scandals have made
consumers nervous, and volatile food prices are
driving inflation.
So the failed wheat crop may induce Beijing to
encourage even more acquisitions of foreign
food companies to secure the technology and
natural resources that China needs to feed its
many hungry mouths.
China’s food scarcity worries are already playing
a major role in deal-making around the world.
The USD 5.6 bio purchase of US soybean grower
Gavilon by Japan’s Marubeni Corp was held up
by Chinese officials for nearly a year, and then
only approved with strict rules for the combined
company, which will provide a huge portion of
China’s soybean imports.
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Food Industry News
ChinaNews
Then in May, China’s Shuanghui International
offered USD 4.7 bio for Smithfield, the United
States’ largest pork producer, prompting US
politicians to fret about whether China was
bolstering its strategic pork reserves at America’s
expense. Ben Becker, the press secretary for the
Senate Agriculture Committee, worried aloud to
the New York Times. “What if tomorrow it is the
biggest dairy producer? Or the biggest corn
producer?” Then America, he seemed to imply,
could run out of milk or corn.
As data from a report by the OECD (above)
shows, China already needs to import significant
quantities of grains and dairy. The OECD
expects China “will improve its food security and
remain self-sufficient in main food crops,” but
will also “slightly outpace its production growth
by some 0.3% p.a., similar to the trend of the
previous decade.”
Such fears are often overblown. After all, “It is
not as if China can order the world’s pigs to stop
reproducing,” the Times noted, adding that
agricultural economists say it would only be a
few years before the rest of America
pork-packing plants could replace the lost
capacity, even if all of Smithfield’s pigs were
eaten by China.
And China isn’t after Smithfield’s pigs—it is
after the company’s expertise in running an
efficient
(if
occasionally
very
gross)
protein-based supply chain.
It is implausible to think that China would be
willing or able to simply scoop up a massive
dairy company like Nestle or Danone, or a
leading corn processor like Archers Daniel
Midland. But the world’s top dairy producers,
already in the throes of a consolidation wave, are
only going to see more deals, analysts predicted
even before China’s recent wheat crop disaster.
July/August 2013
It is that trend that will impact M&A—
occasionally with China buying expertise, in the
case of Smithfield, but more often in deals like
Gavilon-Marubeni, where global players
consolidate to better meet massive Chinese
demand.
And there is certainly room for further business
opportunities if China’s crops fail to meet their
targets, as with this year’s wheat harvests.
Foreign traders and analysts estimated to Reuters
that China will now need to import some
10 mio t of wheat, nearly double the previous
estimates and the most in a decade. With China
facing changing food demands from better-off
consumers and massive soil contamination from
its decades of industrial production, Beijing may
be pushed to do even more grocery shopping
overseas. (qz 17/7/2013)
Looking to find, feed new food
consumers
Agricultural firms step up their efforts to export
higher value-added products instead of cheap
produce, report Yao Jing and Ding Qingfen in
Zhucheng (Shandong). (Continued on next page)
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consumers (Contd)
consumers (Contd)
In the spacious workshop of Zhucheng Waimao
Co Ltd, a poultry producing and processing
company in Shandong province, workers
wearing white overalls and masks were cleaning,
cutting and packaging chickens. The rumble of
machines meant voices had to be raised when
people spoke.
Japan, which is known for its strict regulations
over imported agriculture products, accounts for
70% of Zhucheng Waimao's total food exports.
"All of our products shipped to Japan have
passed quality tests since 2008," said Wang.
All of the chickens being processed were
transported from nearby feeding farms managed
and owned by the company. The modern
production line looks clean and efficient.
This has changed a lot compared with several
years ago when the company was more like a
farm and was buying chickens from scattered
peasant households who could not guarantee the
quality of their chickens and other animals.
"We have invested more than RMB 20 mio in
establishing an experimental plant to push
innovation and ensure the quality and safety of
our poultry products," said Wang Jinyou,
General Manager of Zhucheng Waimao.
Wang's 38-year-old company is just one of the
numerous Chinese agricultural producers that are
struggling to move up the value chain against the
background of the country's determination to
upgrade and transform its foreign trade.
One of the most important improvements for
China's agriculture exporters is from selling
cheap fresh products to processed goods tagged
with higher prices. (Continued in next column)
July/August 2013
Right now, Wang is planning to develop new
cooked products based on different tastes and
cooking methods. In the meantime, he will raise
the price of existing new products.
Large packages will also be adjusted to offer
smaller ones, such as shrinking one bag of fried
chicken from 300 g to 160 g, to meet local
customers' demands. In order to cater to the
elderly in Japan, Wang will launch softer
products that are easier to chew.
Wang is also trying to switch to the Chinese
market. "The key factor for expanding in the
domestic market is cultivating our brand names.
Although we were not previously paying
attention to the Chinese market, we are now
realizing it has great potential," he said.
Today, China market accounts for 70% of
Wang's total sales in quantity. However, as for its
business value, China is worth just 40%.
Another high-yielding Chinese agricultural
product, garlic, which totalled USD 1.69 bio in
exports in 2012, is also taking off after
production was upgraded. In Pizhou in East
China's Jiangsu province, the garlic planting area
is about 467 mio sq.m. There are nearly 500 000
garlic farmers. (Continued on next page)
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ChinaNews
consumers (Contd)
China eyes food security options in
Venezuela (Contd)
Garlic exports from their account for 10% of
China's total exports of the root. In recent years,
36 companies have begun to conduct
garlic-processing businesses, with five engaging
in extended processing. Local government and
companies have invested RMB 200 mio in garlic
innovation and brand building.
Venezuelan agriculture has suffered under
frequent state interventions -- from outright
nationalization to implementation of agricultural
policies criticized as being removed from reality.
New products made using better technology
include garlic oil, allicin, an organosulfur
compound obtained from garlic, and garlic
capsules. "10 t of garlic can produce one ton of
allicin with a purity of 10%. The value of the
garlic used will surge nearly tenfold to
said
Du
Feilong,
RMB 200 000,"
Deputy Director-General at Pizhou Bureau of
Commerce.
Garlic cloves will become the main exporting
product among extended processing products.
"The export of garlic cloves is 8 to 10kt every
year, which accounts for 10% of our total garlic
output every year," said Du. However, the
overall agricultural foreign trade has its
problems, with China's trade deficit in the sector
widening since 2004 as it relies more on imports.
(cd 23/7/2013)
Venezuela
Oil-rich Venezuela is recovering slowly from a
recession the government blames on weather
vagaries, including frequent drought conditions.
Opposition critics say state mismanagement of
agriculture is partly to blame. Venezuelan Vice
President Jorge Arreaza indicates his talks in
Beijing gave him hope joint ventures involving
China could bring great benefit to a sector seen
to be performing well before capacity.
Beijing has been touting its agricultural prowess
and optimum exploitation of land resources.
Critics cite China's environmental problems as an
indication that progress has been patchy.
Venezuela under former President Hugo Chavez
pursued close collaboration with China in
energy, defence and security, and technology.
Chavez died of cancer in March, soon after
handing over power to hand-picked successor
Nicolas Maduro. President Maduro's inner circle
includes Arreaza, husband to the late Chavez'
eldest daughter Rosa Virgina.
China is considering investment in Venezuela's
agriculture industries as part of a global strategy
to secure diverse sources of food supplies for its
burgeoning population.
Before he was appointed vice president under
Maduro, Arreaza was minister of science and
technology. Arreaza indicated that bilateral talks
on agricultural collaboration advanced after
Chinese Vice President Li Yuanchao visited the
country in May.
July/August 2013
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ChinaNews
Venezuela (Contd)
Apple juice exports
"Venezuela has 30 mio hectares of prime land
and great agricultural potential."
Arreaza said Venezuela's agriculture suffered
from lack of inaction by its absentee landowners.
He blamed "bourgeois" landowners for the
problem. Both Chinese and Venezuelan officials
say China has every reason to be driven by the
need to build agriculture-based alliances
worldwide. China's own soil has limited
potential, which has been further diminished by
recent urbanization in rural areas.
Arreaza discounted criticism of Chinese interest
in Venezuela's land, blaming it on opponents
inspired by "U.S. imperialism" and past U.S.
policies in the region. Both Chavez and Maduro
have blown hot and cold on normalizing ties with
Washington.
One of the ideas being pursued in Venezuela will
be modelled after a Chinese model for
establishing special economic zones to stimulate
the economy, he said. Maduro's government aims
to continue Chavez's ideal of reversing a
prolonged neglect of Venezuelan agricultural
sector that began with the discovery of oil in the
1950s. Right up to the start of the oil boom,
agriculture, fishing and forestry earned more than
half of the national income.
By 1988 that ratio dropped to 5.9% of
Venezuela's gross domestic product, the rest
supported by industrialization and oil exports,
both of which declined in later years due to a
spate
of
nationalizations
by
Chavez.
(upi 26/7/2013)
July/August 2013
The following table shows the region breakdown
of the exports of apple juice concentrate in the
first 4 months of 2013 and the same period of
2012.
Region
2013 1-4 2012 1-4
(t)
(t)
Growth
(%)
Beijing
43 667.7
27 177.9
60.7
Tianjin
16.1
43.1
-62.6
Hebei
12.4
0.0
Shanxi
2 488.2
5 519.1
-54.9
Liaoning
3 339.0
3 134.3
6.5
198.0
264.0
-25.0
Shanghai
4.5
36.3
-87.5
Jiangsu
7.2
19.8
-63.6
381.1
49.5
669.9
0.9
1.2
-28.7
22 958.9
32 282.5
-28.9
7 612.0
6 187.2
23.0
193.3
231.6
-16.6
1 811.2
0.0
Sichuan
246.2
1 627.8
-84.9
Shaanxi
108 355.4
85 367.9
26.9
5 733.2
33 301.7
-82.8
Ningxia
841.5
504.9
66.7
Xinjiang
769.5
1 673.1
-54.0
Heilongjiang
Zhejiang
Fujian
Shandong
Henan
Guangdong
Hainan
Gansu
(mofcon 27/7/2013)
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Apple juice exports (Contd)
Of the 2 traditional AJC region, Shandong and
Shaanxi, the former shows a serious decrease,
while the latter has decreased with almost the
same percentage. The Shandong based
companies are mainly state owned enterprises,
while those in Shaanxi are mostly owned by
farmer cooperatives. The increase of Beijing is
remarkable, but could be caused by the fact that
juice from other regions has been exported via
Beijing.
Cooperatives can ensure safe food
There is no doubt that China has a problem with
food safety and that it is in the interest of
everyone other than the few causing it to see an
end to the threat.
So why has the problem persisted? The answer,
unfortunately, is: Because the risk of those
responsible for food safety scandals getting
caught is low and the possible profits are high.
As long as this situation continues, basic
economic theory dictates that the problem will
continue.
The solution is obvious, though. Producers and
consumers should be directly connected in a
manner that will make the production process
transparent and identify those responsible for
tampering with food products to make more
profits.
Of course, one or two small farmers cannot do
this. But imagine the following scenario:
(Contd)
Residents of a village who produce a variety high
quality vegetables and meat products decide to
form a cooperative to ensure that their production
process is safe, even environmentally friendly,
and they hire an agricultural specialist to advise
them how to do it most effectively.
To sell their products, they set up a shop in a
nearby city, and take turns to man it. The shop
carries the name of the village, and consumers
are invited to visit the village to inspect the
production process.
Since the village's reputation and everyone's
livelihood are at stake, all the villagers will be
obliged to make sure that the production takes
place in an orderly fashion. An open invitation to
consumers to come and observe the production
process would only strengthen this tendency.
The guarantee of getting absolutely safe food
products will prompt quality-minded consumers
to buy from the village's shop, which will enable
the villagers to charge higher prices for their
products in the long run and make more profit
without resorting to illegal means.
Over time, other villages decide to follow the
model to get a slice of the pie, and some villages
even start to cooperate with each other in order to
make their production more efficient and to
diversify their sales by opening secondary sales
and production facilities such as restaurants
using only self-produced products, or starting
their own dairy.
July/August 2013
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(Contd)
(Contd)
In the end, even the larger producers get
pressured into ensuring the quality of their
products or to lose out in the competition.
Each farmer had one vote on how to run the
communal part of the business, while individual
pay out was based on individual production
output.
Some supermarket chains, too, may get
interested in setting up their own food production
line to attract consumers looking for absolutely
safe food.
Could this work? The market for this kind of
"guaranteed food" is most likely there, because
many people in China are willing to go to great
lengths - from asking relatives in the countryside
to supply home-grown products to buying
foreign products (especially milk powder) online
- to get safe products.
Is it hard to imagine that enough consumers
would be willing to pay a little extra to make
sure that they, or their children, get fresh and
healthy food to help establish such a market?
This would definitely work on a smaller scale,
especially with communal ownership of the
production facilities, which would drastically
reduce the individual incentive to cheat.
No matter who gives shape to (or starts) this
model, individual farmers, large producers (such
as certain dairy companies) and even
supermarkets, it would be beneficial to all. And a
new link between villages and cities could be
fostered, with Chinese consumers being able to
eat safe and healthier food. (cd 30/7/2013)
China's Bad Earth
In Dapu, a rain-drenched rural outpost in the
heart of China's grain basket, a farmer grows
crops that she wouldn't dare to eat.
A state-backed chemicals factory next to her
farm dumps wastewater directly into the local
irrigation pond, she says, and turns it a florescent
blue reminiscent of antifreeze. After walking
around in the rice paddies, some farmers here
have developed unexplained blisters on their feet.
On a larger scale, and with a more diversified
production process, however, one can look at the
Scandinavian cooperative model that began in
the 19th century and is still functioning today.
There, the landownership and primary
production was individual, while the shared
production facilities were communally owned.
July/August 2013
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China's Bad Earth (Contd)
"Nothing comes from these plants," says the
farmer, pointing past the irrigation pond to a
handful of stunted rice shoots. She grows the
rice, which can't be sold because of its low
quality, only in order to qualify for payments
made by the factory owners to compensate for
polluting the area.
Rural China's toxic turn is largely a consequence
of two trends, say environmental researchers: the
expansion of polluting industries into remote
areas a safe distance from population centres,
and heavy use of chemical fertilizers to meet the
country's mounting food needs. Both changes
have been driven by the rapid pace of
urbanization in a country that in 2012, for the
first time in its long history, had more people
living in cities than outside of them.
But the amount is only a fraction of what she
used to earn when the land was healthy, she says.
The plants look alive, "but they're actually dead
inside."
The experiences of these farmers in Dapu, in
central China's Hunan province, highlight an
emerging and critical front in China's
intensifying battle with pollution.
For years, public attention has focused on the
choking air and contaminated water that plague
China's ever-expanding cities. But a series of
recent cases have highlighted the spread of
pollution outside of urban areas, now
encompassing vast swaths of countryside,
including the agricultural heartland.
Estimates from state-affiliated researchers say
that anywhere between 8% and 20% of China's
arable land, some 25 to 60 mio acres, may now
be contaminated with heavy metals.
Yet the effort to keep urbanites comfortable and
well-fed has also led to the poisoning of parts of
the food chain, and some of the pollution is
travelling back to the cities in a different—and
for many, more frightening—guise.
"Pollution can be displaced only to an extent.
You can't put walls around it," says Judith
Shapiro, the U.S.-based author of the recent book
"China's Environmental Challenges." She is one
of a number of researchers and environmental
activists—including many in China—who warn
that pollution poses an existential threat to the
current regime. It is, she says, "perhaps the single
most significant determinant of whether the
Communist Party will maintain its legitimacy in
coming years."
A loss of even 5% could be disastrous, taking
China below the "red line" of 296 mio acres of
arable land that are currently needed, according
to the government, to feed the country's 1.35 bio
people.
China has long sought to industrialize its
countryside, dating to Mao's disastrous Great
Leap Forward beginning in 1958, when he
sought rapid industrialization by urging peasants
to set up backyard steel furnaces at the expense
of agricultural output.
July/August 2013
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The cumulative impact of decades of building up
rural industry is now taking an environmental
toll, particularly as industrial growth surges
forward in China's breadbasket.
Criticism even came from the Communist Party's
flagship paper, People's Daily, which posted a
message to its micro blog that read: "Covering
this up only makes people think: I'm being lied
to."
In the once agrarian provinces of Hunan and
Hubei, industrial activity rose more than
threefold from 2007 to 2011, far outpacing
industrial growth in powerhouse Guangdong.
In some cases, factories are moving to the
countryside to take advantage of cheaper land,
often made available with the help of local
officials who want to boost growth,
environmental researchers say. In other cases,
urban leaders want factories to move out of
crowded cities.
The ensuing problems of rural pollution are
exacerbated by the fact that many small-town
governments have less capacity to properly
regulate complex industrial activities than their
counterparts in big cities, experts say. Rice
farmer Zhu Hongqing has seen the market fall
after a recent cadmium scare.
The consequences of this shift catapulted to
national attention in February, after China's
Ministry of Environmental Protection refused to
release the results of a multiyear nationwide
soil-pollution survey, calling the data a "state
secret."
The decision—brought to a head when an activist
lawyer pressed the ministry to reveal the
numbers—sparked an outcry online and in the
traditional media.
The environment ministry hasn't responded to
requests for comment. In April, Zhuang Guotai,
head of the ecological department at the
environment ministry, said during a news
conference that the survey's findings would be
released after the results had been "verified" but
didn't elaborate.
The uproar over the soil survey was compounded
by a second controversy the next month, when
authorities in Guangzhou, the capital of southern
China's Guangdong province, revealed that eight
out of 18 samples in a survey of local rice
supplies had been found to contain excessive
levels of cadmium, a heavy metal that can wreak
havoc on the kidneys and cause severe bone pain.
Officials didn't say where the cadmium came
from, though the rice itself was grown in nearby
Hunan province, they said.
Cadmium is generally associated with mining
and the smelting of metals like zinc and lead, as
well as battery manufacturing, all of which are
common in Hunan.
Social media users expressed anger and
dismissed two subsequent province wide
investigations that showed excessive levels of
cadmium in only 5.8% and 1.4% of rice supplies.
July/August 2013
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ChinaNews
"First water, then the air we breathe, and now the
earth. How can people still survive?" wrote one
user on Sina Weibo, a popular Twitter-like micro
blogging service. "I suppose we can always
move abroad or to outer space."
The Ministry of Environmental Protection
publicly acknowledged the existence of such
"cancer villages"—which have unusually high
rates
of
cancer
and,
according
to
nongovernmental organizations and researchers,
number in the hundreds—for the first time a
month later.
"Chinese people have a very deep connection to
rice," adds Liu Jianqiang, a former investigative
reporter who now serves as the Beijing-based
editor of China Dialogue, a non-profit media
organization that tracks environmental issues.
"If you discover some vegetable or fruit is
poisoned, you can say 'I won't eat it.' But rice you
can't avoid."
Chinese officials have repeatedly said that they
are serious about reining in pollution. A week
after the cadmium news broke, the new Chinese
president Xi Jinping said at a meeting of top
leaders in Beijing that he planned to set an
ecological "red line," warning that those who
crossed it would be "held accountable for a
lifetime," though he didn't provide specifics.
The threat to China's countryside goes far beyond
cadmium. In January, China's official Xinhua
news agency highlighted the dangers of
hazardous chemical waste in rural areas by
profiling Zekou, described by environmentalists
as a "cancer village" in the central province of
Hubei.
Residents blame a nearby industrial park for
more than 60 recent cancer-related deaths, most
of them of people under the age of 50.
July/August 2013
In March, state media reported that 168 villagers
who live near a battery factory in the eastern
province of Zhejiang were discovered to have
elevated levels of lead in their blood, the latest in
a stream of rural lead-poisoning cases tied to
battery and smelting facilities.
And then there are the pressures being placed on
China's farmland by the overuse of chemical
fertilizers. Mr. Zhuang, of the environment
ministry, said at his recent news conference that
only 35% of the fertilizer used in China was
being properly absorbed by crops. The remaining
65%, he said, was being discharged as pollution
that was seriously tainting China's farmland.
Runoff of nitrogen fertilizer, among the most
widely-used varieties in China, can contaminate
water sources and lead to soil acidification, soil
erosion and lower crop yields.
"If things carry on this way, the soil will be
unable to bear it, the environment unable to bear
it. It is a real problem," said Mr. Zhuang.
Between 2000 and 2011, the use of chemical
fertilizer—pushed by the country's exploding
demand for staples such as rice—rose 38%, to
more than 57 mio t a year, according to the
National Bureau of Statistics.
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Such growth far outpaced the growth of total
irrigated farmland, which rose only about 15%
during the same period.
Any major reduction in food security would hurt
the Communist Party, which has staked its
reputation in part on its ability to keep the
country's granaries full with minimal imports.
Experts say that the government is aware of the
threat posed by rural pollution, noting a pledge
by the environmental minister in March to make
heavy-metal pollution a major focus. The
Ministry of Land and Resources followed by
announcing in June that it would conduct its own
nationwide soil sampling to map pollution levels
around the country, though it isn't clear if the
findings will be made public.
Later that month, China's cabinet, the State
Council, discussed a draft amendment to the
country's environmental law that would, among
other things, stiffen punishments for polluters
and require tighter regulation of fertilizers.
In Dapu, where chemicals factory was built in
2008, some of the crops are too low-quality to
sell. The factory offers compensation to farmers.
But experts say that fear of transparency, a
lumbering bureaucracy and worries over how
China would cope if large areas of land were
declared tainted raise questions about the
government's ability to respond.
Removing heavy metals from farmland is a
complicated process that can take years—time
lost for farming. That is a chilling prospect for a
government tasked with supporting 20% of the
world's population on less than 10% of the
world's arable land.
July/August 2013
The government's refusal to release its soil
survey, meanwhile, has only added to fears that
officials know more than they are willing to say.
Launched to great fanfare in the state media in
2006, the survey was originally scheduled to be
completed in 2010.
In June last year, an environment ministry
official told the Xinhua news service that more
than 20% of soil samples in a trial program for
monitoring pollution, involving 364 rural
villages, had failed to meet national standards
and that the results of the survey would be
published "at the proper time."
"There's a general feeling that government
officials know the problem is really bad, and if
they disclose it, then the public outrage will get
ahead of the ability of the state to do something
about it," says Alex Wang, an expert in Chinese
environmental law at the UCLA School of Law.
For generations of readers in the West, the
profound ties to the land of China's farmers have
been vividly depicted by "The Good Earth,"
novelist Pearl S. Buck's 1931 portrait of one rural
family's struggles in the era before the
revolution. As the protagonist Wang Lung
discovers, even through years of famine and
hardship, Chinese must ultimately find their
sustenance in the soil.
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Today, many of the country's rural dilemmas are
most visible in Hunan province, the source of the
cadmium-tainted rice discovered in Guangzhou.
In one of a handful of small studies done on
heavy-metal pollution in the area, published in
2008, Nanjing Agricultural University professor
Pan Gengxing found 60% of rice bought in
markets in a number of southern provinces,
including Hunan, contained cadmium in excess
of China's national standards.
China's top rice producer, Hunan grew nearly
26 mio t of unmilled rice, almost 13% of China's
total, in 2011.
Hunan's central role in feeding China is
encapsulated in a proverb that dates back more
than 400 years to the late Ming Dynasty, when
the province had a different name: "When
Huguang reaps its harvest, all under Heaven
want for nothing."
In recent decades, however, Hunan has also
become one of the country's top five producers of
nonferrous metals like copper and lead, with
mines and smelters that accounted for 7.5% of
the country's nonferrous metals in 2012,
according to Wall Street Journal calculations
based on provincial and national statistics.
"You have farms next to mountains where
mining is happening, and not enough attention is
placed on environmental protection," says Chen
Nengchang, a soil remediation expert with the
Guangdong Institute of Environmental and Soil
Sciences.
It is difficult to say how extensive Hunan's
cadmium problem is, just as it is hard to pinpoint
exactly where the cadmium in any batch of
tainted rice comes from.
That survey, however, was based on only 61
samples. Also, China's maximum allowable
cadmium standard, 0.20 mg per kg of rice, is
twice as strict as the widely used international
standard. Studies have shown that Hunan rice is
also polluted with excessive arsenic and lead,
and that some of the rice has made it into
markets.
Zhu Hongqing, a 42-year-old rice farmer who
lives down the road from Dapu in the village of
Yanqiao, believes that his paddies are clean.
They are located more than a mile from the
chemical factory in Dapu and many miles from
any mine.
But consumer paranoia, amplified by a lack of
information, means that the market for all Hunan
rice is suffering, with prices of milled rice
dipping as much as 14% since the cadmium scare
began before recovering slightly, according to a
manager at Jincheng Rice Mill in Hunan's
Yiyang City.
"I told my wife I have a very bad feeling about
this," Mr. Zhu said one recent morning while
surveying an early rice crop on the cusp of being
harvested. "It is going to be impossible to sell it."
July/August 2013
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The political sensitivity surrounding soil
pollution is evident back in Dapu, where
villagers were afraid to give their names for fear
of reprisals from local officials. The farmer who
is growing bad rice says that the village had long
been a clean and prosperous place. Residents
made a comfortable living selling rice, jujubes,
oranges and melons. That changed in 2008, when
construction began on an aluminium fluoride
facility.
He said that none of the factory emissions were
harmful to human health and added that the
company paid pollution compensation as
required by regulations. "Conflict between
farmers and enterprises happens all the time
because chemical factories can only be set up in
the countryside," said the official, who only gave
his surname, Li. "I totally understand the local
people. I'm the son of a farmer myself."
The plant ran 24 hours a day, she says, sending
smoke over local fields when the southern winds
began to blow in late summer and polluting
irrigation systems to the point that even the
insects have fled. The fruit trees stopped bearing
fruit, and whatever did grow, no one was willing
to buy.
After villagers complained, the factory owners
agreed to pay compensation as long as farmers
continued to raise a crop. The Dapu farmer says
that she used to earn as much as RMB 10 000, or
USD 1630, each year from growing rice. Now
she gets about RMB 5400, or USD 880, to grow
rice shoots that don't produce any rice.
An official in charge of environmental protection
at the factory, Hunan Nonferrous Fluoride
Chemical, Co. Ltd., a subsidiary of state-run
China Minmetals Group, said that the facility
maintained strict environmental standards but
that faulty equipment and electricity problems
occasionally led to the accidental discharge of
excess pollution.
July/August 2013
Officials at the Hengdong Agricultural Bureau,
which is responsible for monitoring Dapu, hung
up the phone repeatedly.
(wallstreetjournal 27/7/2013)
Ice on the rocks as 80% from 'illegal'
factories
As much as 80% of the edible ice cubes in
Beijing's shops and restaurants come from
"illegal" factories, National Business Daily
reported. Only six manufacturers have
production license for edible ice in the capital,
making the total output valued at RMB 100 mio
in the summer season.
But the output of the whole market is valued at
RMB 500 to 800 mio, which means at least 80%
of the ice comes from non-qualified factories, the
report said.
Edible ice companies must have a QS, or Quality
Standard identification since 2005. And it costs
at least RMB 30 000 to cover the certification
besides building laboratories and hiring
inspectors, according to an agency for quality
certification. (Continued on next page)
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Ice on the rocks as 80% from 'illegal'
factories (Contd)
A Chinese trip for foodies and scientists
(Contd)
Ice cubes at several restaurants were found to be
dirtier than toilet water, Chinese media reported
last week.
An exchange program between the University of
California Davis and Jiangnan University's food
science and technology department aims to
explore those developments, fostering discussion
between American and Chinese students and
researchers.
According to CCTV, ice cubes used by fast food
giants including KFC, McDonald's and
Guangzhou-based Kungfu at their Beijing
branches were tested to contain bacteria at severe
levels.
The KFC ice cubes contained levels of bacteria
which were 20 times higher than the national
limit, and 13 times higher than water samples
taken from toilet bowls.
"The market is in chaos," said an employee of an
ice company, "Costs are increasing and those
with qualification certificates would have closed
down if they didn't rely on big buyers."
(cd 31/7/2013)
Although for many years Chinese cuisine was
only prepared within the home or at local
restaurants, globalization and the opening up of
China have driven a demand for canned,
packaged and frozen food products.
In the US, the science behind packaging food for
mass consumption and distribution has
developed over decades; that process is behind in
China, where a number of food-safety scandals
have made the news in the last few years.
July/August 2013
"Taste of China," led by UC Davis department of
Food Science and Technology professor Charles
F. Shoemaker, sends a group of American
students to China for a one-month summer
immersion program that includes on-campus
lectures in Wuxi, cooking classes and visits to
Suzhou, Hangzhou, Shaoxing and Shanghai.
"In the past, people really only came to the US to
study food, but these days it is important for our
students to get out and visit other countries to
learn about their food cultures too," Shoemaker
told China Daily after his return from this year's
trip. "So much of Chinese culture is built around
and over food, and I wanted to use the trip as a
way to look at China's history and science
through the lens of food."
With around 1800 undergraduate and graduate
students and 100 faculty, Jiangnan University's
food-science program is ranked China's best and
possibly the world's largest, Shoemaker said. The
curriculum is not dissimilar from UC Davis'
program, which is also highly ranked. Students in
food-science programs often go on to work for
large food corporations like Kraft and Nestle,
which employ teams of scientists.
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(Contd)
Malaysian bird nests allowed to enter
China again
As food products are shipped around the world
and can sometimes spend months on a shelf
before reaching the dinner table, the chemical
stability and safety of the food is absolutely
essential. The scientists tasked with ensuring that
the food remains fresh and also tasty have
generally studied food science and technology in
programs like that of UC Davis and Jiangnan
University.
The ban on the imports of Malaysian birds’ nests
has been lifted recently. The ban was
promulgated in 2011, when large concentrations
of nitrites were discovered in birds nests
imported from Malaysia. (tjkx 24/6/2013)
Food scientists will likely have more and more
opportunities to branch out into the Chinese
market in the coming years, Shoemaker said. A
trip like "A Taste of China" is a chance to whet
their appetites, he said.
Students from other programs at UC Davis have
joined the trip, which also showcases Chinese
culture and history. Students live in apartments
on Jiangnan University's campus, and classes are
also held at the university.
On this year's trip the group visited Yum!
Brands, the parent company of KFC in China, in
an informational visit to learn about the inner
workings of doing business in China. Chinese
food companies are very focused on food
standards in the aftermath of various tainted food
scandals, and resulting deaths. The bad press and
government crackdowns have made food safety a
priority.
"There's been a rapid change in the way their
infrastructure and distribution systems work, and
China is finally catching up," Shoemaker said.
"Exchange and research programs are important
to that process." (cd 31/7/2013)
July/August 2013
Dupont opens probiotic facility in
China
DuPont has launched production at its state-ofthe-an probiotic blending and packaging facility
in China. The new site in Beijing represents
DuPont Nutrition & Health’s first step in
packaging probiotics into ready-to-market
formats that allow DuPont to offer its customers
improved speed to market, quality and flexibility.
Investment and capacity were not disclosed.
In 2011, DuPont purchased a food processing
plant north of Beijing and converted it into a new
cutting-edge probiotic blending and packaging
site to serve dietary supplement and food and
beverage customers globally and more
specifically China and the Asia Pacific region.
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ChinaNews
China (Contd)
China (Contd)
The investment is part of a global multi-year
capacity expansion program for cultures and
probiotics in the United States, Europe and now
in China.
The probiotic formulations offer unique
improvements for digestive and immune health
and other well-being benefits for the dietary
supplement, dairy and beverage markets.
Probiotic cultures will be sourced from the
company’s North American and European sites.
“Probiotics is a fast-growing segment of our
business and the industry is experiencing
double-digit growth rates annually around the
world and in China,” said Fabienne
Saadane-Oaks, vice president Health and
Protection, DuPont Nutrition & Health. “As we
continue to support the world’s growing
population, this expansion allows us to custom
blend and package high-quality probiotic
products for our customers in the fast-growing
dietary supplement and food and beverage
industries close to our customers, where we want
to be.”
The new facility will allow customers to source
ready4-market probiotic formulations consisting
of Danisco HOWARU premium and FloraFIT
custom probiotic brands. And, by DuPont
managing the process throughout, customers will
be assured of the highest standard of food safety
and quality.
The new facility in China will be able to custom
blend the ingredients to meet the requirements of
local customers. China is already a significant
market for the YO-MIX dairy cultures from the
DuPonttm Danisco range. According to industry
estimates, in 2012 the market for probiotics
globally totaled more than USD 32 bio. That
total is expected to increase to USD 45 bio by
2018. More than 90% of the total is attributed to
food, beverage and dietary supplements.
DuPont has eight sites in China that provide a
range of food ingredients, from emulsifiers,
hydrocolloids (blended ingredients), enzymes
and sweetener ingredients to food protection
ingredients, soy protein, lecithin and fiber, and
molecular diagnostic solutions. (fif 16/7/2013)
DuPont Sees Niche in Curing China's
Indigestion
“This expansion is a further reinforcement of the
DuPont long-standing commitment to China, our
customers and consumers. We are in action to
help address some major challenges facing the
world, among those is the need for nutritious and
quality food, resulted from population growth
and urbanization,” added Tony Su, president,
DuPont Greater China.
Just reading recent headlines about food-safety
scandals in China might be enough to give a
polite person indigestion. This week CCTV
reported that ice cubes found in some KFC
(YUM) and McDonald’s (MCD) Beijing
branches contained more bacteria than toilet
water.
July/August 2013
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Indigestion (Contd)
Indigestion (Contd)
According to industry estimates cited by DuPont,
the global probiotics market is valued at USD 32
bio and projected to grow to USD 45 bio by
2018.
Asia is seen as a prime growth region, says
Fabienne Saadane-Oaks, vice president for health
and protection at DuPont Nutrition & Health,
adding that the Beijing facility will cater to
“specific Chinese needs for flavors, formats, and
textures.” (Beijing grocers often carry
blueberry-taro root yogurt, for instance.)
Other recent media investigations have exposed
gutter oil “recycled” as cooking oil; rat meat sold
as “lamb”; and growth-chemical-laced exploding
watermelons.
But where there’s a problem, there’s often a
business opportunity: Companies selling
digestive aids, dietary supplements, are nutrition
products are now finding a hungry market in
China.
Last week DuPont (DFT) opened a new
state-of-the-art
probiotics
blending
and
packaging facility in Beijing. Previously the
company operated a small pilot plant to test the
Chinese market.
Probiotics are the “good” bacteria—such as live
cultures found in yogurts—that can help
maintain a healthy digestive and immune system.
DuPont’s new facility will work with both
dietary-supplement and dairy companies in
China. (Continued in next column)
July/August 2013
According to DuPont’s research, the market for
health supplements in China is growing at a fast
15% a year. Supplements to enhance digestive
health are especially popular.
According to Saadane-Oaks, half of all diseases
caused by microorganisms in China are due to
contamination in the food supply. Word up:
Gutter oil is tough on the tummy.
China also has a nascent organic foods industry.
For instance, Green Yard, a small “organic”
dairy farm on the outskirts of Beijing, where
cows are fed only organic fodder, is becoming
popular among expats and capital foodies. (Still
unconfirmed is whether the cows breathe rarefied
air, apart from Beijing’s toxic smog)
(Bloomberg 24/7/2013)
We usually try to avoid including several items
on the same topic. However, these two items are
quite complementary.
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Ingredient News
ChinaNews
ING US to levy anti-dumping duty on
xanthan gum from China
The United States decided on Thursday to levy
anti-dumping duty on xanthan gum imported
from China.
US to levy anti-dumping duty on
xanthan gum from China (Contd)
The Chinese Ministry of Commerce has
repeatedly urged the United States to abide by its
commitment against trade protectionism and
work together with China and other members of
the international community to maintain a free,
open and just international trade environment.
(cd 21/6/2013)
new Chinese facility
Solvay has announced its decision to build a new
state-of-the-art facility to manufacture vanillin in
Zhenjiang (Jiangsu) [1], boosting its production
capacities by 40% and enabling the Group to
better serve the fast-growing Asian market.
The US International Trade Commission (ITC)
claimed that the domestic industry was
threatened or materially injured by imports of
xanthan gum from China, setting the stage for the
Commerce Department to impose punitive duty
on these products. The Commerce Department
alleged on May 29 that Chinese producers and
exporters sold xanthan gum in the US market at
dumping margins ranging from 15.09% to
154.07%.
It said that imports of xanthan gum from China
were valued at an estimated USD 82.4 mio in
2012. Xanthan gum is used as a thickener and
stabilizer in three major sectors, namely, food
and beverage, consumer and pharmaceutical
products, and oilfield and industrial use.
Solvay Aroma Performance is the world’s
biggest producer of vanillin with facilities in
Baton Rouge in the United States and Saint-Fons
in France. Combined with the new plant in
Zhenjiang, expected to be operational by the end
of 2014, the company’s worldwide production
capacities for vanillin and ethyl-vanillin will
expand significantly.
July/August 2013
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ChinaNews
new Chinese facility (Contd)
new Chinese facility (Contd)
Demand for vanillin in Asia is outpacing
worldwide demand.
The Aroma Performance global business unit
includes Solvay Group’s diphenol and
fluorinated intermediates operations, comprising
three main product segments: flavors and
fragrances for the food and perfumery markets
(with its flagship vanillin and ethyl-vanillin
product line sold under the Rhovanil and
Rhodiarome brand names); intermediates for the
crop protection, pharmaceutical and electronics
markets; and finally, inhibitors solutions used for
by-products of the petrochemical industry.
The Zhenjiang facility will be fully compliant
with both international and local stringent
regulations.
With this new investment, Solvay Aroma
Performance establishes a unique, sustainable
and global industrial fully integrated vanillin
platform, spread over three continents, and
controls the entire production chain, from
making the raw material catechol to flagship end
products like Rhovanil vanillin.
A network of fully equipped food application
laboratories and food technologists together with
a dedicated sales force cater for specific local
demands and serve clients worldwide with a
complete product range to meet strict regulatory
and customer safety requirements.
“The addition of this manufacturing facility in
China makes of Solvay a uniquely positioned
highly reliable partner for our worldwide
customers, especially those in the highly
regulated food industry. It is an important step in
our strategy to continue strengthening our market
position, by offering a truly global production
footprint that ensures full traceability for food
safety and to consolidate Solvay as the global
reference for food-safe vanillin” says Dominique
Rage, President of Solvay Aroma Performance.
As an international chemical group, Solvay
assists industries in finding and implementing
ever more responsible and value-creating
solutions. The Group is firmly committed to
sustainable development and focused on
innovation and operational excellence.
Solvay serves diversified markets, generating
90% of its turnover in activities where it is one of
the top three worldwide.
The group is headquartered in Brussels, employs
about 29 000 people in 55 countries and
generated EUR 12.4 bio in net sales in 2012.
(fif 2/7/2013)
MSG disappearing
Industry experts report that the MSG industry is
gradually disappearing. Some of the older small
players have tried to survive by adding chicken
essence to their product range, but most of them
failed in that market as well. (tjkx 2/7/2013)
July/August 2013
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Ingredient News
ChinaNews
MSG disappearing (Contd)
Pepsi to reduce use of toxic chemical
(Contd)
"The work has been done in California; the rest
of the US will be completed by February 2014,"
the statement said. "PepsiCo suppliers are also
undertaking this effort globally."
This may apply to the smaller companies, but the
large MSG producers are still going strong.
Actually, chicken essence still contains about
40% MSG, so it is more like an upgraded version
of MSG than a really new taste enhancer.
Pepsi to reduce use of toxic chemical
PepsiCo China said Thursday the company is
taking measures to cut the amount of
4-methylimidazole, or 4-Mel, in its caramel
coloring, after an American environmental group
reported Wednesday that Pepsi products contain
high levels of the cancer-causing chemical.
The Centre for Environmental Health found
Pepsi products bought in 10 states outside
California still contains high levels of 4-Mel.
PepsiCo China said in a statement to National
Business Daily that the caramel coloring Pepsi
used in China is legal according to local laws and
regulations.
A PepsiCo statement in response said their
caramel coloring suppliers are modifying the
production process to reduce the amount of
4-Mel. (Continued in next column)
July/August 2013
Despite Pepsi's promise, Michael Green, CEH's
executive director, said, "Pepsi's delay is
inexplicable. We urge the company to take swift
action to provide all Americans with the same
safer product they're selling in California."
PepsiCo's share prices fell 1.2% on Wednesday.
An unnamed Chinese food expert said that safety
issues about 4-Mel have not come up in China.
"But it is possible 4-Mel can cause cancer," the
expert said. (cd 5/7/2013)
COFCO
Canada-based stevia firm GLG Life Tech plans
to team up with state-backed Chinese food giant
COFCO (Beijing) to develop food and drink
products containing the sweetener. The two sides
have signed a letter of intent to produce stevia
extracts and formulated products to sell in China.
The venture is GLG's second attempt in China. In
2010, it set up another business, AN0C, to sell
and distribute zero-calorie food and drink
products in China. However, demand
zero-calorie drinks in China was low and a
spokesperson said the venture is now "dormant".
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Ingredient News
ChinaNews
COFCO (Contd)
COFCO (Contd)
"The AN0C (All Natural, Zero Calories)
products that we developed and marketed in
2011 proved that there was a market for low and
zero calorie drinks sweetened with stevia.
Unfortunately, at the time we launched there was
also a cool summer, some problems with our
bottles, and significant competitive response, so
we were not able to get any momentum. We
haven't had any funds to do the marketing
required to re-enter the market," he said.
"COFCO certainly could, they want to be able to
provide these types of products, and with us, they
don't need a lot of development time."
"What COFCO like about the deal is that they
can get a sweetener that is grown in China, does
not need imported sugar," he claimed.
Reflecting on the prospects for the tie-up with
COFCO, China's largest food company, the GLG
spokesperson said rates of obesity and diabetes
were on the up in China. Government attention
on the problems, he said, could lead consumers
to look for zero-calorie products.
"In the past, they haven't been big buyers of low
or zero calorie products, but we think this will
change as the government focuses on these
issues," he said.
"When I first started to go to China just ten years
ago, hawking on the sidewalk and smoking
everywhere was the norm. Now it is much
different, and this is because the government
focused on the issues. Next will be obesity and
diabetes - hello, stevia". Restrictions on artificial
high intensity sweeteners in China could also
benefit the two companies, the spokesperson
added.
COFCO's investments include a stake in Chinese
dairy Mengniu, which could become a customer
for GLG's stevia products. COFCO also owns
65% of one of the two bottlers for Coca-Cola Co.
in China.
In the US and Europe, yoghurt, cereal and ice
cream brands have used the sweetener, although
stevia has been most seen in soft drinks. The
GLG spokesperson said it was "too early to tell"
whether the venture would focus on drinks or
food.
Xiao Ming Hao, president of COFCO's Nutrition
and Health Institute, said: "We plan to increase
the health value of stevia from developments of
technology, basic application, products and
quality safety and to provide more health options
for the Chinese diabetic and obese population."
(justfood 14/6/2013)
Tate & Lyle forms food systems joint
venture in China
Tate & Lyle PLC has signed an agreement with
Yitong Food Industry Co., Ltd. (Xuzhou,
Jiangsu) [2] to form a Sino-Foreign Joint Venture
through the acquisition of a 51% equity interest
in Jiangsu Howbetter Food Co., Ltd, a leading
Food Systems business in the People’s Republic
of China. (Continued on next page)
July/August 2013
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Ingredient News
ChinaNews
Regional News
venture in China (Contd)
venture in China (Contd)
Olivier Rigaud, President, Speciality Food
Ingredients for Tate & Lyle said: “The
combination of Tate & Lyle’s global blending
capabilities and recipe know-how with
Howbetter’s strong local expertise and
infrastructure provides us with an excellent
platform on which to accelerate the growth of
our Food Systems business in China.”
Under the terms of the agreement, Tate & Lyle
will acquire 22% of its equity interest from
Yitong and the balance of 29% from S.B
International, a wholly-owned subsidiary of a
Europe-based global food business (which has
been a shareholder in Howbetter since 2009).
Tate & Lyle also has an option to acquire
Yitong’s remaining 49% equity interest in
Howbetter at a later stage. The transaction is
subject to governmental approval which is
expected in the autumn.
Howbetter provides stabilizer systems and
ingredient blends for customers across China
mainly in the dairy and beverage categories. It
operates from a blending facility in Suqian and
has application laboratories in the nearby city of
Xuzhou, both in Jiangsu Province.
Feng Guang, Chairman, Yitong and General
Manager, Howbetter, and who will also be
General Manager of Tate & Lyle Howbetter said:
“Tate & Lyle and Howbetter are two highly
complementary businesses with the same
absolute focus on quality and customer service.
Together, we will be able to offer our customers
in China a significantly enhanced range of
products and technical expertise”. (fif 18/7/2013)
Fujian
Fujian still China’s canned food province
According the Fujian Food Industry Association,
the region’s 106 canneries produced more than
2.36 mio t of canned food in 2012, making it the
top production region in this sector in China.
(hcfood 1/7/2013)
How better was one of the first domestic food
blending businesses in China to be awarded a
license to operate under new regulations put in
place in 2010. (Continued in next column)
July/August 2013
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Regional News
ChinaNews
Fujian tea output
Beijing (Contd)
The Fujian Bureau of Statistics reports that the
province has produced 166kt of tea in the first
half of 2013, up 7.7%. The type with the largest
growth was black tea, with a growth rate of
41.7%. (cbn 9/7/2013)
Xinjiang
Aksu attracting beverage investment
The Aksu region in Xinjiang has recently
become an attractor for investment from the
nation’s largest beverage companies, including
Uni-President, Wahaha, ChefKong and Huiyuan
and Jianlibao. This preference for Aksu is
attributed to the region’s abundant supply of
water. (tjkx 10/7/2013)
A first foreign invested winery, Chateau
Bolongbao, was established in Fangshan in
1999. Also see the item on Huailai (Hebei) in this
section.
Gansu
Fields of sunflowers star in Gansu
The sunflower industry is on a track to becoming
the second-largest agricultural industry in Gansu
thanks to the efforts of Gansu Joy.
Beijing
Fangshan wine cluster
The Fanshan District, situated southeast of
Beijing, is regarded by many experts as ideal for
developing a wine industry. The local
government is actively supporting this by
establishing a Fangshan Wine Cluster. A number
of domestic and foreign investors have already
inspected the region. (tjkx 15/7/2013)
July/August 2013
On July 22, the Incredible China Photographer's
Tour will arrive in Minqin, a small little-known
county in Gansu province that has sprawling
fields of radiant sunflowers.
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Regional News
ChinaNews
Gansu (Contd)
Gansu (Contd)
It is projected to produce 50kt of high-end
cooking sunflower oil and 77kt of sunflower
protein products annually.
Sunflower oil contains abundant linoleic acid
that helps lower blood pressure, moderate
cholesterol levels and is good for cardiovascular
and cerebrovascular health.
Major Asian media outlets will join the tour to
record the natural extravaganza, including those
from The Nation in Thailand, The Korea Herald
from the Republic of Korea, The Star
Publications and Sin Chew Daily from Malaysia,
The Straits Times from Singapore, The
Kathmandu Post from Nepal, The Statesman
from India, The Philippine Daily Inquirer and
Gulf News from the United Arab Emirates.
The tour is co-organized by China Daily and
Gansu Joy Agricultural Technology Co, which
manages the sunflower fields and produces
Westerner-brand sunflower oil.
Located at 38 degrees north latitude - called the
golden line for planting - Minqin county has a
sunny climate ideal for growing sunflowers.
Gansu Joy now cultivates 16 666 hectares of
sunflowers in Minqin and is preparing a new
plantation and processing facility in Lanzhou,
capital of Gansu province and it is expected to
put into service this September.
With total investment of RMB 1.87 bio, the new
site in Lanzhou will be ready in September.
July/August 2013
Today coronary heart disease, stroke, cerebral
thrombosis, arteriosclerosis and high blood
pressure are on the increase, but using
appropriate oil can help, said Cao Wanxin, a
professor from the Xi'an Oil Science Research
Institute.
According to industry data, sunflower oil now
ranks third among all vegetable oils in
consumption worldwide. In Eastern Europe,
sunflower oil is second only to soybean oil. In
Japan and the ROK, sunflower oil is widely used
as a high-end product. In Japan it is often
presented as a gift.
Use of sunflower oil is increasing in China as
well. It is estimated that in 2015 its consumption
will reach 650kt, accounting 2% of the nation's
total cooking oil.
If the proportion can be increased to 5%, it will
mean a great opportunity for the industry,
analysts said. They noted that today consumers
choose cooking oil not only according to
standards for safety and hygiene, but also its
nutrition and health.
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Regional News
ChinaNews
Gansu (Contd)
Gansu (Contd)
The increasing awareness of health among
domestic consumers in large part fuels the rise in
use of sunflower oil, they said.
Gansu Joy is expanding sales of its
Westerner-brand sunflower oil beyond the
province with sales channels in the nearby
provinces of Shaanxi, Qinghai, Sichuan, and the
Inner Mongolia and Ningxia Hui autonomous
regions, as well as big cities like Beijing,
Shanghai and Guangzhou and prosperous eastern
provinces including Jiangsu and Zhejiang. It has
also expanded into overseas markets such as
Japan.
According to Gansu Joy, sunflower oil is
smokeless at high temperature and is a good
choice for frying foods or baking. It is easily
absorbed by the human body and has pleasant
fragrance, the company said.
In addition to its effects in improving
cardiovascular and cerebrovascular health,
sunflower oil may also help improve one's
complexion because it is rich in vitamin E, the
company said.
The premium cooking oil market in China is now
dominated by foreign companies, especially
Spanish and Italian olive oil producers. Imported
from their places of origin abroad, the oil is
usually packed in small bottles and sold at high
prices.
Analysts said that China's high-end cooking oil
market has large potential and it is possible for
more domestic brands to sell their own superior
products to compete with foreign counterparts.
They also noted that government policy also
encourages domestic companies to develop
quality cooking oil.
Currently Westerner brand is the only
homegrown sunflower oil product to receive the
certification of "green, organic food" from the
Ministry of Agriculture. It has also been granted
the status as a "famous trademark of Gansu."
The company said it adheres to the goal of
pursuing the best quality through strict quality
controls of every link along the production chain,
starting from the selection of seeds to planting
and processing. It said that only high quality will
enable the company to gain a foothold in the
market as consumer are more aware of food
safety.
With intensive investment in research and
development, the company plans to develop
more sunflower-related products in the future.
In the 12th Five-Year Plan (2011-15) for the
food industry, the government has called for
companies to produce more diverse products
than traditional soybean oil.
The Gansu Sunflower Association started by the
company now has 31 members including
Lanzhou University, Lanzhou University of
Technology, Gansu Agricultural University and
the Gansu Academy of Agricultural Science.
July/August 2013
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Regional News
ChinaNews
Gansu (Contd)
Shanxi (Contd)
In cooperation with academic partners, the
company has to date developed 11 sunflower oil
products and owns the intellectual property in a
sunflower protein convenience food.
With help from the China Association for
Science and Technology, the company also
established an exchange center on technology
and plans to invite experts and professionals
from both home and abroad to jointly work on
improvements in the sunflower industry.
The company said that the sunflower has many
benefits. Its seed can be made into oil, while its
flowers, leave, stem, pith and root can all be used
in traditional medicine.
Its petal and leaves can strengthen the stomach
and aid digestion, its pith can be made into
diuretic drug and other parts are effective in
reducing blood pressure.
In addition, growing sunflowers is a good choice
both ecologically and economically in the
western regions in China because it changes the
desert into oasis and helps local residents in the
quest to rise from poverty. (cd 18/7/2013)
Shanxi
This tie has forged a similar friendship between
the famous Fenjiu spirit produced in Lüliang and
Burgundy wine. (tjkx 13/6/2013)
Hebei
Huailai plans to be major wine region
10 new wine projects have been initiated in
Huailai (Zhangjiakou, Hebei) last year, involving
a total investment of RMB 540 mio.
The region is currenty the home of 33 wineries.
The local authorities have adopted wine making
as a pillar of the local economy and intend to
register the Shacheng region of Huailai as an
official DOC.
Friends in spirits
Lüliang (Shanxi) has a signed a friendship
agreement with Semur-En-Auxois in France’s
Burgundy.
They hope that the number of wineries will
increase to 50 in the coming 2–3 years.
(tjkx 26/7/2013)
July/August 2013
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Regional News
ChinaNews
Hebei (Contd)
Zhejiang (Contd)
At Baizhang Town in Yuhang, 5000-plus locals
have been short on water for over a month since
streams near the town dried up. They have had to
depend on a small fire truck that sends water into
the town everyday, shallow wells and tap water
from nearby towns via pipes.
Huailai is located near Beijing, so this item can
be compared to the one about Fangshan in this
section. It is the home base of the Great Wall
brand, now part of the COFCO Group. It seems
that the region around Beijing and its twin city
Tianjin (the home of Dynasty, Remi-Martiin’s
Chinese venture) is becoming an important wine
region.
Zhejiang
Water grows scarce for thousands as drought,
heat blast landscape
About 58 000 people in Hangzhou (Zhejiang) are
feeling some of the worst effects of the summer’s
prolonged drought and extreme heat in the form
of scarcity of water for drinking, bathing and
other uses, according to Hangzhou Forestry
Bureau. More than half of them are in Yuhang
District, and the rest are at Chun’an and Lin’an.
The fire truck can only offer each household two
barrels of water a day, the water from the
shallow wells is neither abundant nor very clean,
and water piped from nearby towns is good only
for irrigating crops and is scarce as well.
“Over 5000 people are suffering from drought
ever since the 44 water intakes in the town dried
up a month ago,” says Ma Guojun, director of the
agriculture office in Baizhang Town.
In some places, the heat has been very extreme:
A high of 43.5 degrees Celsius was recorded in
Fenghua in east Zhejiang twice last week. High
temperatures in 27 of the 36 cities and counties
in the province surpassed 40 degrees Celsius for
more than a week. Fifteen people in Zhejiang
Province had died by yesterday from heat-related
illnesses.
Villagers in Yashan Village of Baizhang Town
said it had not rained since the end of June and
an artificial rain that officials produced by
seeding clouds was too small to do much good.
Before the fire truck was put into water service,
they had to carry water from villages kilometers
away.
July/August 2013
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Regional News
ChinaNews
Company News
Zhejiang (Contd)
Zhejiang (Contd)
The fire truck, from the nearby Huanghu Fire
Brigade, has only a small, 3.5 t water capacity,
but it is the largest such vehicle that can navigate
the area’s hilly roads, officials said. The truck
also supplies two barrels a day per household in
Dusong Village in the town, where “500
villagers haven’t had a shower for a whole
month,” resident Wang Daoliang said.
The withering weather also caused the price of
fresh vegetables to rise 5.3% last week after
increasing 2.7% last month, according to
Hangzhou Statistics Bureau.
Residents are asking to have more water piped
in, and the local Yuhang Meteorological Bureau
says it is ready to seed clouds to produce rain
when there are clouds in the sky. Hangzhou has
spent RMB 80 mio on its drought response,
including trucking in water, irrigating farms and
seeding clouds. On Friday, Hangzhou began
cutting back on power usage with an “orderly
power utility” policy as a result of a daily
100-kw power deficit.
The policy requires that all nighttime
illumination of scenery must be shut off,
manufacturing that does not require continuous
operations is required to halt production for four
days a week and high-energy-consumption
enterprises must stay idle five days a week.
Department stores, hotels and office buildings
must reduce electricity consumption by 20%
during the morning peak.
Hot and dry conditions led to a forest fire that
broke out on the hills in Fuyang City in
Hangzhou a week ago that took firefighters two
days to put out. It rekindled on Thursday and
wasn’t put out again until Sunday.
More than 77 000 hectares of farmland have
been damaged in Hangzhou, causing 646 mio
yuan in losses, Xinhua news agency reported.
Specialty crops in the area such as tea, lotus and
hickory nuts have been hit very hard.
While high temperatures will persist most of the
week, it should be a few degrees cooler, and then
the temperature is forecast to drop some more
toward the end of the week. (sd 13/8/2013)
Hickory nuts have become a popular snack in
recent years.
Desserts recalled in Taiwan, sold on
mainland
Desserts recalled by the Taiwan company
Uni-President were still being produced and sold
on the Chinese mainland on Sunday, two days
after they were removed from shelves in Taiwan
as a precaution.
July/August 2013
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Company News
ChinaNews
mainland (Contd)
mainland (Contd)
Uni-President's Taiwan office recalled seven
products on Friday after they were found to
contain an ingredient bought from supplier Roci
Industrial Co.
A worker at the company's Kunshan (Jiangsu) [1]
plant, who gave only his surname, Lin, said it has
its own suppliers of raw materials.
Roci had previously been caught selling one
ingredient it produced after their expiration date,
namely locust bean gum, and agar powder, an
industrial additive.
The products recalled by Uni-President contained
a different ingredient, carrageenan, which is an
approved food-hardening agent. "Some of the
ingredients come from Taiwan, but I'm not sure
if the seven products, which were recalled in
Taiwan, are involved," said a man who gave his
name as Wang at the Beijing branch of
Uni-President China Holdings Ltd.
Wang said staff at the Beijing plant had not been
informed of a recall. The plant sells its products
in the capital, neighboring Tianjin and in the
provinces of Shanxi and Hebei, according to the
company's website.
"It is impossible to import ingredients from
Taiwan. All our materials are from the
mainland," he said.
The seven products recalled were two pudding
products and five ice-cream products. The
pudding, which is the most popular of the seven,
is sold on the mainland, according to the
Uni-President China website.
When contacted, the other Uni-President
branches on the mainland denied using
ingredients from Roci.
Zhou Feng, who works in sales for
Uni-President's Wuhan branch, said the products
on the mainland are not related to the food scare
in Taiwan as they do not import ingredients from
the province.
In an outlet of FamilyMart, a chain convenience
store in Shanghai's Huangpu district, clerk Zhao
Weiyuan said there had been no notification that
the product needed to be removed from shelves.
July/August 2013
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Company News
ChinaNews
mainland (Contd)
Mengniu offers to buy Yashili (Contd)
Zhang Yusong, a spokesman for the Shanghai
industry watchdog, said if the company claimed
they had suppliers on the mainland and the
questionable products did not flow into the
market, Shanghai is not involved in the food
scare. "We'll release a notice of any possible
recall after an inspection on Monday," Zhang
said.
In a Saturday notice on its website, Uni-President
Taiwan said the products it recalled contain
carrageenan produced by Roci, adding that
preliminary tests on materials from Roci proved
they met food standards.
"We suspended the sales to protect the rights and
interests of the consumers and cooperate with a
judicial investigation. We will resume sales after
we conclusively ensure the safety of the
ingredients," the notice added. (cd 3/6/2013)
Mengniu is buying a 75% stake in Yashili
International Holdings Ltd from chairman Zhang
Lidian's family and Carlyle Group. It will also
offer to buy the rest of the company, giving
shareholders the option to sell at HKD 3.50 a
share in cash, or about 5% more than Yashili's
last trading price.
The move will help the Inner Mongolian
producer catch up with domestic rivals in the
baby milk formula market, which is estimated to
be worth more than RMB 50 bio, according to
Song Liang, a dairy industry analyst at the
Distribution Productivity Promotion Center of
China Commerce.
Last year, Mengniu's milk formula sales were
worth no more than RMB 300 mio, only
contributing 1.6% of its revenue. Yashili
(Chao’an, Guangdong) [3], ranked eighth in
China's milk formula market, had a growth rate
of 35.8% last year.
Mengniu offers to buy Yashili
Largest single domestic deal for baby formula
maker valued at USD 1.6 bio. Mengniu Dairy
Co. (Huhhot, Inner Mongolia) [2], the country's
largest dairy producer, has offered to acquire a
domestic baby formula maker in a deal valued at
about USD 1.6 bio, to boost its presence in the
highly profitable sector of the dairy industry.
The acquisition, which would be the largest
single deal in the domestic dairy industry, is
expected to lead to further integration in China's
milk powder business.
July/August 2013
The acquisition would pave the way for
integration in the milk formula sector as demand
for baby food rises and the government pushes
for safer products. The domestic baby milk
formula market has been severely weakened
since a milk powder scandal in 2008 and is
losing its majority market share in high-end
products to foreign rivals.
The acquisition move also indicates the
government's efforts to encourage integration in
the dairy industry, especially in the milk formula
sector, said Jian Aihua, a researcher with
CIConsulting, a leading industry research
institution. (Continued on next page)
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Company News
ChinaNews
Mengniu offers to buy Yashili (Contd)
Industry experts predict the 127 baby milk
formula producers in China will be halved,
making it hard for those with a smaller
production capacity to survive.
The Ministry of Industry and Information
Technology said on Tuesday that integration of
the milk powder industry is expected to involve
10 large companies with revenues exceeding
RMB 2 bio in two years, accounting for 70% of
the industry.
The State Council said this month China will
take measures to ensure the safety of baby milk
products and will draft policies to support
mergers and acquisitions among formula
producers.
The acquisition would be Mengniu's third this
year. French food giant Groupe Danone SA has
invested in two joint projects with Mengniu, a
move that will help improve Danone's sliding
market share in China and restore consumers'
confidence in the country's dairy market. Danone
will invest about EUR 325 mio in the projects.
Through the deals, Mengniu will probably
achieve breakthroughs in the high-end yogurt
sector, allowing it to rival domestic competitors.
Two months ago, to secure the quality and safety
of its milk supply, Mengniu announced plans to
pay HKD 3.18 bio, or HKD 2.45 per share, to
take a controlling stake, or 26.9% stake, in the
country's largest raw milk producer China
Modern Dairy Holding Ltd, which owns 22 dairy
farms nationwide. (cd 19/6/2013)
July/August 2013
French milk brand sets up in China to
woo worried parents
French milk brand Candia announced Monday it
was setting up shop in China in a bid to ride on
the wave of booming demand for foreign baby
formula following a succession of food safety
scares. Chinese parents have become distrustful
of domestic milk brands, particularly after a huge
2008 scandal involving formula tainted with
melamine that killed six children and sickened
300 000 others.
Foreign brands have benefitted as parents choose
to buy non domestic products, driven by the
belief they are of better quality. Surfing on this
demand, Candia said Monday it had opened its
first shop on July 23 in the eastern city of
Wenzhou. Ten other shops will open before the
end of the year, centred around the eastern coast
in the cities of Hangzhou and Ningbo.
“The choice (we made) of a specialised
distribution system is essential in a country
where consumers have a heightened need of
reassurance on the origin of products,
particularly for milk and baby formula,” the
brand said in a statement. “The Candia brand
offers Chinese customers a source of direct
supply from France,” said Giampaolo Schiratti,
head of the brand.
Chinese demand for foreign baby formula is such
that many parents and networks of traffickers
have travelled far and wide to buy up stock,
forcing some stores abroad to limit sales in the
wake of shortages.
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Company News
ChinaNews
French milk brand sets up in China to
woo worried parents (Contd)
Baby-Milk Demand Helps to Lift
Danone (Contd)
The announcement comes as foreign formula
manufacturers already in China have come under
government scrutiny in an apparent price fixing
investigation. Several companies have since
announced they will cut prices for milk in what
has become the world’s largest market for baby
formula. (theglobaldairy 30/7/2013)
China—which has become one of the world’s
largest infant formula markets—has been a key
growth driver for Danone since the rise of the
middle class there and as well as concerns about
the safety of Chinese-made dairy products.
Switzerland’s Nestlé SA, Netherlands-based
Royal FrieslandCampina NV and U.S.-based
Abbott Laboratories and Mead Johnson Nutrition
Co. are also under investigation.
Danone
Strong demand for baby milk in China helped
Danone stem falling sales in Europe in the
second quarter, as the company tried to reassure
investors about growth in the Chinese market
after it cut prices on infant formula.
Strong demand for baby milk in China helped
Danone SA stem falling sales in Europe in the
second quarter, as the company tried to reassure
investors about future growth in the lucrative
Chinese market after it cut prices on infant
formula.
The maker of yogurt brands including Danone,
Dannon and Activia on Monday confirmed its
full-year targets, despite recent price cuts in
China amid a probe into foreign makers of infant
formula and inflation in raw-material prices.
Danone earlier this month cut prices for
baby-milk products in China after local
authorities started probing foreign makers of
infant formula for possible price fixing and
anticompetitive activity.
All companies have cut prices and said they are
cooperating with authorities. Danone pared
prices by as much as 20%, while Nestlé sliced an
average 11% from its Wyeth Nutrition line of
baby products in China, where a can of baby
milk powder can cost up to four times more than
in Europe.
Analysts have said they are concerned such cuts
could weigh on Danone’s margins, adding to
continuing concerns over lackluster consumer
spending in Europe and an inflation of
raw-material prices recently. Danone Chief
Financial Officer Pierre-André Térisse said the
price cuts will have some impact on the group
but that this will be “manageable.”
“We are fundamentally positive for the prospects
of China,” he said on a conference call. Danone
aims for its second-half margin to be at least in
line with the 13.3% posted in the first six
months, which was down 0.49%age point from
the same period last year, mainly from
investments in boosting volumes in Europe. “We
will try to do more,” Mr. Térisse said.
July/August 2013
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Company News
ChinaNews
Danone (Contd)
Danone (Contd)
“It is not entirely clear what the impact of price
cuts in China will be,” said Société Générale
analyst Warren Ackerman. “If input costs are
going up for milk powder and prices go down,
obviously your margin is squeezed but Danone
may try to get back some of the losses from price
cuts by investing less in promotions.”
On an organic basis—stripping out acquisitions
and currency swings—revenue rose 6.5%against
analyst expectations for 5.7%.
Sales of baby formula in China are projected to
reach USD 29.5 bio in 2017, up from
USD 12.4 bio in 2012, according to research firm
Euromonitor International.
Foreign makers of baby milk like Danone have
benefited from Chinese parents rushing to their
products since a 2008 scandal—when dangerous
levels of an industrial chemical killed at least six
infants and made many more ill—scared them
away from locally produced baby milk.
The rush to foreign-made baby milk has even led
to some retailers in Europe rationing the
purchase of baby milk as Chinese visitors would
buy up cans of formula and bring or ship them
back home.
This trend, along with sales in China and Hong
Kong, helped drive 13.5% organic revenue
growth at Danone’s baby-food segment in the
second quarter.
Danone said sales for the three months ended
June 30 rose 6.7% to EUR 5.72 bio
(USD 7.6 bio). Sales growth was solid growth in
the U.S. and Russia.
In Europe, where sales have been falling sharply
due to weak economic conditions, second-quarter
sales fell 3% from a year earlier, organically, but
that was a better showing than in the first quarter,
when sales in Europe fell 5.1%.
For the first half of the year, Danone profit rose
10% to EUR 972 mio from EUR 881 mio a year
earlier, reflecting a higher valuation of its stake
in Moroccan unit Centrale Laitière.
Danone’s EUR 200 mio European cost-savings
plan is running on schedule and should also help
buoy margins in the second half of the year, said
Chairman and Chief Executive Officer Franck
Riboud in a statement.
Milkworld venturing into China
The New Zealand based dairy company
Milkworld has started selling its product in China
through its local agent Jianbang International
Trade Co., Ltd. (hexun 1/8/2013)
This news was released just before Fonterra
made headlines with its botulism-contaminated
whey powder. Although we have not received
further news about Milkworld, the company’s
launch in China will certainly have been affected
by Fonterra’s problems.
July/August 2013
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Company News
ChinaNews
Mead Johnson sees China infant
nutrition rebound
Mead Johnson sees China infant
nutrition rebound (Contd)
Infant nutrition company Mead Johnson has
announced its financial results for the quarter
ended June 30, 2013. Sales increased 4% to
USD 1055 mio. Sales growth was 8% in the
Asia/Latin America segment, partially offset by a
4% decline in the North America/Europe
segment due to the impact of businesses exited in
late 2012.
EBIT for the first six months of 2013 totaled
USD 480.7 mio, down from USD 497.1 mio in
the same period of the prior year.
“We are encouraged by our revenue growth in
the quarter,” said CEO Peter Kasper Jakobsen.
“It allowed us to increase demand-generation
investments. Our China/Hong Kong business has
returned to positive volume growth after three
consecutive quarters of decline. We are fully
cooperating with the Chinese regulatory
authorities in the ongoing probe. We expect to
meet with them again in the near future with the
objective of reaching a final resolution. We
remain confident in our long-term prospects in
this important market. Sales growth was strong
across South Asia and Latin America, with a
majority of markets showing increases in market
share. In the North America/Europe segment, we
saw higher non-WIC market share in the U.S.
offsetting
lower
category
consumption.
Importantly, we made significantly higher
investments in demand generation throughout
our global operations in order to drive future
growth.”
Sales for the six months ended June 30, 2013
totaled USD 2093.2 mio, up 5% from
USD 1998.9 mio a year ago. Sales increased 4%
from price and 1% from volume. (Continued in
In the first half of 2013, as compared to the
prior-year period, higher sales and improved
gross margins were offset by higher
demand-generation investments, transaction
gains related to foreign exchange seen in the
prior year, and higher pension settlement
expense.
“We expect to deliver constant-dollar sales
growth of about eight% from core operations,”
Jakobsen said. “We anticipate growth across our
global portfolio will offset any sales impact from
recent price decreases in China. We will continue
to invest in demand generation where we see
opportunities to accelerate growth.” Mead
Johnson expects reported sales growth of 6%.
This reflects a 2% impact from discontinued
non-core businesses and a strengthening U.S.
dollar. (ingredientsnetwork 29/7/2013)
Milk despite dilution
The NZX is allowing Chinese dairy player Bright
Dairy (Shanghai) to keep control of Canterbury
milk company Synlait’s board despite a dilution
in its stake from a USD 120 mio public offering
of shares.
next column)
July/August 2013
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Company News
ChinaNews
Milk despite dilution (Contd)
Milk despite dilution (Contd)
The NZX has also granted Synlait Milk a waiver
allowing the Bright Dairy-appointed directors
who cannot attend a meeting to appoint another
Bright dairy director to exercise their voting
right.
The exchange said today it was granting
Canterbury dairy processor and exporter Synlait
Milk a waiver from a listing rule and that will
permit Bright Dairy to continue to appoint four
of eight directors even though its shareholding
will dilute to between 38% and 41% with the
USD 120 mio offer of shares to the public.
Bright Dairy holds 51% now, after it pumped
USD 82 mio into Synlait Milk in late 2010.
It is not buying any new shares in the share offer
to keep its holding at 51%.
Synlait Milk told the NZX that Bright Dairy
would not support the share offer unless it could
continue to consolidate Synlait Milk into its
accounts under China’s accounting rules and to
do that it had to have control of Synlait Milk’s
board.
Synlait Milk announced its offer this morning.
The company is raising USD 75 mio from the
issue of new shares and would offer also up to
USD 45 mio of shares from existing shareholders
selling all of part of their shareholdings.
Synlait said an indicative share price would be
USD 2.05 to USD 2.65 for the shares. That
would give the company a market value of
between USD 305 mio and USD 372 mio.
Synlait Milk was expected to list on the NZX’s
main board on July 23. The USD 75 mio new
capital would be used for growth initiatives.
(global dairy 24/6/2013)
How Nestlé finds clean milk in China
NZX has agreed on the conditions the ”special”
governance arrangements are contained in
Synlait Milk’s Constitution and are fully
disclosed in the offer documents and every
annual report during which the arrangements
apply, and that Bright Dairy holds no less than
37% of Synlait Milk.
Exploding watermelons, toxic peanuts, and
contaminated rice are just some of the food
hazards that routinely bedevil Chinese
consumers. The risks of contamination are
particularly far-reaching in the case of milk,
since more than 70% of Chinese mothers rely on
baby formula rather than breast milk to feed their
babies. Longstanding concerns regarding unsafe
milk in China came to a head in late 2008, when
the Chinese authorities accused more than 20
domestic producers of selling milk adulterated
with melamine.
July/August 2013
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Page 84
Company News
ChinaNews
(Contd)
(Contd)
Six infants died and more than 50 000 babies
were hospitalized. In 2011, regulators closed
more than 400 dairy farms for violating
sanitation and certification standards.
Domestic sourcing of milk can yield a significant
cost advantage, build the local supplier
ecosystem, and prepare the ground for the day
when Chinese parents start trusting local milk as
reliable enough for their babies.
Growing numbers of Chinese families have
responded by shunning domestic infant formula
in favor of imported brands. That’s creating
challenges for both local and multinational
companies selling dairy products in China. The
country’s largest dairy producer, China Mengniu
Dairy, on June 18 announced a HKD 12.5 bio
deal to buy Yashili International, a local infantformula maker.
The deal makes sense because “the government
is trying to consolidate the industry,” Guosen
Securities analyst Todd Yang told Bloomberg
News. The goal is to “better monitor both
upstream and downstream food quality.”
China Mengniu isn’t the only company
positioning itself to benefit from China’s
renewed focus on fixing its troubled food supply.
To see how one multinational is handling the
challenges, consider Nestlé, the world’s biggest
food company.
Like almost all other big foreign companies
selling dairy products in China, Nestlé relies on
imported milk powder for its infant formula. For
other dairy products, however, Nestlé stands out
for meeting its raw material needs by buying
fresh milk from Chinese farmers.
July/August 2013
That’s no easy task. Nestlé’s milk collection is
concentrated primarily in northeast China, where,
as in much of the country, the dairy sector is very
fragmented: More than 18 000 farmers supply
Nestlé with a daily average of 100 liters of milk.
Given this structure, there are many points where
milk can become contaminated, so Nestlé utilizes
what it calls a “factory and farmers” model that
eliminates the middleman.
Farmers bring milk directly to a network of
Nestlé-owned collection centers, none more than
an hour’s distance from the farm, where a
computerized system samples, tests, and tags
each batch of milk. To reduce further the risk of
contamination at the source, the company
provides farmers with continuous training and
assistance in cow selection, feed quality, storage,
and other areas.
Now Nestlé is implementing a more ambitious
strategy to transform its milk supply chain by
collaborating with local governments, banks, and
investors to accelerate the consolidation of
China’s dairy farms. Fewer, larger, and
professionally managed dairy farms will have
more reliable quality and use land and labor
more productively.
www.giract.com
Page 85
Company News
ChinaNews
(Contd)
(Contd)
Nestlé is building a new institute to upgrade the
training that staff at larger and more
professionally managed farms need. Around the
institute, Nestlé is building three demonstration
farms with thousands of cows. For farmers who
want to increase their scale, Nestlé is providing
credit guarantees to finance purchases of more
cows.
Like Nestlé, global companies can leverage their
knowhow and scale to help accelerate the
upgrading of their suppliers’ capabilities.
The Nestlé case offers five important lessons.
First, build visibility into and control over the
supply chain. Know your suppliers and, as much
as possible, their suppliers, too. Without
end-to-end visibility and control, you run the risk
of being blindsided along any of a number of
dimensions—product quality and safety,
environmental damage, safety and health of
workers, and theft of intellectual property, to
name just a few.
Second, ownership is not a necessary
requirement for control of the supply chain.
Visibility into and control over the supply chain
dramatically reduce the need to own the supply
chain. Capital is always a scarce and costly
commodity. Like Nestlé, most companies are
generally better off investing their capital in
downstream activities that offer greater
opportunities for differentiation and thus higher
returns.
Third, be proactive in providing training and
assistance to ramp up the capability of your
suppliers. In strategic markets such as China, it is
critical for you to ensure not just short-term but
also long-term success. (Continued in next column)
July/August 2013
Fourth, prefer and, if possible, try to create more
consolidated (but not monopolistic) supply
chains. Greater consolidation means fewer
suppliers as well as fewer links in the supply
chain. As a direct result, there will be fewer
points which need to be monitored and where
things can go wrong. Also, bigger suppliers are
likely to be more professionally managed, to be
more productive, and to offer greater potential
for collaborative innovation.
Finally, believe in and practice the concept of
“shared value.” Nestlé is very clear that it wants
a long-term collaborative partnership with its
suppliers. More than once, the company has
unilaterally increased the price it pays to dairy
farmers to help them cover the rising cost of feed
and to give them an incentive to boost milk
supply the following year. Without a win-win
mindset, long-term partnerships are impossible.
(global dairy 24/6/2013)
Chinese dairy float for NZX
China’s Bright Dairy will retain four seats on the
eight-member Synlait Milk board, despite the
likelihood it will lose its majority ownership
status after the company’s planned initial public
offer and share market float, which is planned for
next month.
www.giract.com
Page 86
Company News
ChinaNews
Chinese dairy float for NZX (Contd)
Chinese dairy float for NZX (Contd)
Former Finance Minister Ruth Richardson is on
the board at present, along with former Fletcher
Building executive Bill Roest. Penno said the
composition of the board was not unusual, given
Bright Dairy would still be a major shareholder
with 40%. “We think that we have got the
balance just right,” he told APNZ.
Synlait Milk sought, and received, NZX
dispensation to keep the board’s structure as it is,
despite the prospect of its ownership falling to
around 40%, down from the current 51%, as the
result of the diluting effects of the share issue.
Penno said the USD 75 mio in fresh capital
would go towards projects over the next three
years worth a total of USD 183 mio, which he
said would also be funded by debt and operating
earnings.
Canterbury-based Synlait Milk said it would seek
to raise USD 75 mio in new capital through the
issue of shares in a USD 2.05 to USD 2.65 range.
The company expects to list on the NZX on July
23.
“The infant formula market is growing very
quickly, and what we are seeing here is that they
[Chinese participants] are really turning their
attention to New Zealand to be the supplier of
high-quality products.”
The IPO and listing come at a time of intense
interest in the milk powder and formula industry,
and follow the successful launch of the Fonterra
Shareholders Fund last November.
At the indicative price range, Synlait Milk would
have a market capitalisation of USD 305 mio to
USD 372 mio, the company said.
Chief executive John Penno said Bright Dairy
had been consolidating Synlait Milk into its
accounts, so an agreement had been reached to
allow that to continue. After the issue, Bright
Dairy could continue to appoint four directors,
one of which must be a New Zealand resident.
The board would comprise three independent
directors and the board members would elect the
managing director, which would then be ratified
by the shareholders. The chairman, who would
get the casting vote, would be independent.
The offer documents point to strong earnings
growth, with underlying earnings before interest
and tax almost doubling from USD 13.5 mio in
the July 2012 year to USD 26.9 mio in 2013 and
USD 32.9 mio in 2014. Synlait Milk is an
offshoot of Synlait Ltd, owned primarily by 100
or so New Zealand shareholders and 22.5% by
Japan’s Mitsui.
Bright Dairy is listed on the Shanghai stock
exchange with a market capitalisation of about
USD 3.5 bio. (globaldairy 25/6/2013)
July/August 2013
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Company News
ChinaNews
Yili starts up new plant in Henan
Yili Dairy has started production in its new plant
in Jiyuan (Henan) [4]. The new facility can
produce 390kt of drinking milk p.a.
(hcfood 16/7/2013)
prices in China as probe begins
FrieslandCampina Trading (Shanghai) Co., Ltd.
has announced that it is fully cooperating with
the Price Supervision and Anti-Monopoly
Bureau under China’s National Development and
Reform Commission (NDRC) as part of an
anti-trust investigation. Beijing has launched an
investigation into alleged price-fixing by foreign
firms.
The move from FrieslandCampina came as Swiss
giant Nestle pledged to "immediately" cut prices
on some formula products by up to 20%. The
company promised not to raise prices on new
formula products for a year. French firm Danone
says it will also cut the price of its formula in
China, but is yet to release any details.
Sales of foreign brands have soared in China,
which is the world's largest market for baby
formula, after tainted milk scandals damaged
their Chinese competitors.
The most serious scandal killed six children and
made hundreds of thousands sick in 2008 when
melamine was added to baby formula.
Baby formula quality remains the leading food
safety issue in China since the melamine-tainted
milk scandal. (Continued in next column)
July/August 2013
prices in China as probe begins (Contd)
FrieslandCampina stated that it supports the
NDRC’s objective to ensure fair pricing; the
company will reinforce compliance with pricing
and anti-trust regulations. FrieslandCampina
commits to adjusting contractual terms to
explicitly emphasize adherence to China’s AntiMonopoly Law.
FrieslandCampina will also enhance its Code of
Conduct and provide comprehensive anti-trust
training based on Chinese laws.
To support Chinese consumers and offer more
value, FrieslandCampina will per July 8th, 2013
reduce its price of the full range of Friso products
in China by 5%.
FrieslandCampina’s value promise includes the
unique grass-to-glass system, in which the
company invests in managing the entire supply
chain from processing, marketing and
distribution to provide consumers with safe and
premium products. Friso for China is 100%
produced and packaged in the Netherlands and
distributed exclusively by FrieslandCampina.
FrieslandCampina remains highly committed to
the China market. The company continues to
fully cooperate with local authorities in every
market in which we have a presence, and plays
an important role in providing dairy products for
hundreds of millions of people all over the world
every day. (fif 8/7/2013)
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Page 88
Company News
ChinaNews
Fonterra reacts to China price probe
New Zealand’s largest milk product exporter,
Fonterra, is cutting prices on its Anmum milk
product brand in China amid a Chinese
investigation into high domestic prices of infant
formula.
It has been reported that high prices charged by
companies including Nestle, Danone and
Mead Johnson Nutrition have been the subject of
a
National
Development
and
Reform
Commission (NDRC) in China.
The NDRC is a macroeconomic management
agency with wide administrative and planning
control over the Chinese economy.
Fonterra president of Greater China and India
Kelvin Wickham said the group would cut prices
by 9% on its Anmum maternal health products
sold in China in light of recent industry-wide
price revisions.
“We are committed to providing high quality,
premium imported products to Chinese
consumers and we are also committed to being
an integral part of and long-term partner to the
Chinese dairy industry,” Wickham said.
(Contd)
It has also been reported that Danone,
Netherlands-based Royal FrieslandCampina and
Nestle’s Wyeth brand have been reviewing
prices within the Chinese infant formula market.
South Island milk product exporters into China
are yet to see any impact on prices.
Westland Milk Products and Synlait Milk both
produce a variety of products for the Chinese
market including milk powder, butter and
infant-related products. But so far it appears it is
the larger multinational firms that are being
targeted by the authorities.
Westland Milk Products chief executive Rod
Quin said his company continued to export to
China as it had for 10 years, and had not been
directly affected by the pricing issue. He was
aware, however, of the pricing issue having an
impact on the multinationals.
“The (New Zealand) industry is very aware of
any change in the Chinese regulation,” Quin said.
The price reduction for Anmum Materna would
be effective from August 1. The Anmum brand
included formulated milks for women during
pregnancy and while breastfeeding.
“In this regard though I’m not sure it is a change
in regulation, rather a decision by the Chinese
government to (provide) incentive to manage
prices down, obviously with a view to say that
they think the market for infant formula has
become overheated.”
Fonterra doesn’t directly sell infant formula in
China, an important growth market for dairy
companies and one of the world’s largest for
infant formula.
He also noted recent commentary from China
with regard to the quality of milk products and
issues around making sure Chinese consumers
got what they paid for. (Continued on next page)
July/August 2013
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Page 89
Company News
ChinaNews
(Contd)
McDonald's hopes to wow mainland
diners with rice (Contd)
Synlait Milk chairman Graeme Milne was not
aware of any impact on Synlait from changes in
the Chinese regulatory environment. However,
he had yet to be updated by his executive team.
Chinese company Bright Dairy and Food Co has
a cornerstone stake in Synlait Milk.
The company's strategy includes more efforts to
develop the night consumption market from 5 pm
to 5 am, thought it has put more emphasis on
breakfast, lunch and afternoon snacks in the past,
he said in an interview with Xinhua.
Synlait tended to supply the Chinese market on a
business-to-business model, meaning it supplied
other companies which in turn supplied branded
products into shops, Milne said. “We’re not
involved at the retail end,” he said.
diners with rice
With an eye on dinner tables in the Chinese
mainland, McDonald's, the world's leading fast
food operator, on Wednesday announced new
rice products for the mainland market.
Starting from June 10, the new products,
including chicken and beef rice wraps, will be
sold in all 1700 McDonald's restaurants on the
Chinese mainland.
The core menu, including the chain's staples like
the Big Mac and McChicken, will not be
changed, Kenneth Chan, chief executive officer
of McDonald's China, said in the press release.
"Our new dining options are examples of how
McDonald's innovates to bring more options to
our Chinese customers, because that's what they
want," Chan said. (Continued in next column)
July/August 2013
According to the latest data from McDonald's,
dinner foods account for half of foreign food
operators' sales in China and this market is
growing at a double-digit pace.
Meanwhile, McDonald's will set a series of
standards regarding rice quality and safety, Chan
told Xinhua. McDonald's sources the rice it uses
on the mainland from Harbin, capital of
Northeast China's Heilongjiang province, one of
the country's major grain production areas.
The company plans to maintain its
competitiveness and boost its overall business
growth by increasing the variety of the products
it offers, he said.
McDonald's opened its mainland first store in
Shenzhen, Guangdong province, in 1990. It has
currently more than 1700 outlets and over 90 000
employees on the Chinese mainland. It plans to
recruit 75 000 more this year, and the number of
mainland outlets is expected to reach 2000 by
2014.
The US -based fast food giant has about 34 000
stores worldwide. In 2012, McDonald's same
store sales rose 3.1% as revenues rose 2% to
USD 27.57 bio. (Continued on next page)
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Company News
ChinaNews
diners with rice (Contd)
In 2013, the company plans to invest about
USD 3.2 bio of capital in opening 1500 to 1600
new restaurants and reinvesting in existing
locations. It targets a system-wide sales increase
of 3% to 5% and operating income growth of 6%
to 7%. (cd 6/6/2013)
Zhongyi to develop new whole grain
snacks
The Zhongyi Food Group (Hunan) [5] and the
School of Food Engineering of the Zhongnan
Forestry Science University have jointly set up
an Engineering Lab for the Processing of
Cereals’. Researchers have already developed
maize candy, sesame and oats chocolate and
raisins and oats chocolate. A common aspect of
all these products that they have a low in sugar
and high in fiber. Their cereal oligosaccharides
and oats
fiber
contents
is
70-80%,
(tjkx 22/7/2013)
Canned fish to Russia
Jiabike Food Co., Ltd. (Ningbo, Zhejiang) [6]
has exported its first batch of canned fish (64.2 t)
to Russia. (tjkx 13/6/2013)
Campbell Soup Company announced that it has
entered into an agreement to acquire Kelsen
Group A/S from Maj Invest, a private equity
firm, and several other investors. Based in Nørre
Snede, Denmark, Kelsen is a producer of quality
baked snacks that are sold in 85 countries around
the world. Its primary brands include Kjeldsens
and Royal Dansk. Kelsen has established
distribution networks in markets in Asia, South
America, the Middle East and Africa as well as
the United States. It is a market leader in the
assortment segment of the sweet biscuits
category in China and Hong Kong, where growth
in sweet biscuits is outpacing the growth of the
USD 60 bio global sweet biscuits market.
Kelsen has been exporting premium Danish
butter cookies to China for more than twenty
years. Its Kjeldsens brand has strong awareness
with retailers and consumers in major cities, and
its sales in China have grown at a compound rate
exceeding 28% in the last three years. The
company generated DKK 1.043 bio in net sales
for the year ended Dec. 31, 2012. Aggregate net
sales have grown at a compound double-digit
rate since 2009. Kelsen employs 366 people
worldwide.
Denise Morrison, Campbell’s President and
Chief Executive Officer, said, “We are delighted
to welcome the Kelsen team to Campbell and to
add Kelsen’s distinctive brands to Campbell’s
outstanding portfolio of baked snacks, including
our Pepperidge Farm cookies and crackers in
North America and Arnott’s biscuits in Australia.
July/August 2013
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Page 91
Company News
ChinaNews
(Contd)
(Contd)
Kelsen will give Campbell a solid platform for
growth in baked snacks in China and for the
expansion of our international footprint. The
acquisition of this successful business is another
important step in Campbell’s quest to delight
new consumers through expansion into
higher-growth spaces, including fast-growing
emerging markets.”
The terms of the transaction were not disclosed.
Closing is subject to regulatory approvals and
other customary conditions. Campbell expects
the acquisition to be modestly accretive
beginning in 2014.
Campbell plans to operate Kelsen as a standalone
business based in Denmark, reporting to Luca
Mignini, President – Campbell International.
Mignini said, “Kelsen’s combination with
Campbell will represent a wonderful marriage of
complementary skills and capabilities. Its strong
position in China and Hong Kong will enhance
our presence in the region. At the same time,
Kelsen’s talented management team will have
the opportunity to leverage Campbell’s
marketing, consumer insights, R&D and supply
chain expertise to grow the business in both new
and existing markets.”
Brian Rønsholdt, CEO of Kelsen Group, said,
“Kelsen has been providing quality products to
consumers for over 75 years. We look forward to
joining Campbell and its family of trusted
brands.
Campbell’s
consumer-focused
capabilities and wide-ranging experience in
biscuit production will provide new resources for
enhancing Kelsen’s product lines and
strengthening our engagement with consumers
around the world.”
July/August 2013
Bruun & Hjejle in Denmark and King & Wood
Mallesons in Hong Kong served as Campbell’s
legal counsel. Maj Invest and Kelsen investors
were advised by FIH Partners and Kromann
Reumert served as legal counsel. (fif 18/6/2013)
We will see more and more that international
M&As will affect the Chinese market as well.
New sugar plant in Shandong
The new plant of the Lingyunhai Sugar Group
(Rizhao, Shandong) [7] has been put in
operation. The new facility has a capacity of
1.2 mio t p.a. This will increase the company’s
total capacity to 2.4 mio t p.a., making it the
largest sugar producer in the world.
(tjkx 19/6/2013)
Nekta enters the Chinese market
New Zealand based fruit juice maker Nekta is
entering the Chinese market with its range of
infant formulae. The company has started its
sales campaign in Fujian. (hcfood 9/6/2013)
Uni-Present can start in Hainan
Uni-President’s new beverage plant in Hainan
[8] is expected to start producing in September
2013. (tjkx 23/7/2013)
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Company News
ChinaNews
Moet toasts opening of first sparkling
winery
winery (Contd)
Moet Hennessy, the wine and spirits unit owned
by French luxury group LVMH, inaugurated
China's first winery dedicated to the production
of premium sparkling wine on Friday, in the
Ningxia [10] Hui autonomous region.
"With the company's international resources, we
believe this new operation will provide Chinese
consumers a great sparkling wine."
Domaine Chandon (Ningxia) Moet Hennessy
will release its first bottle in 2014, bearing the
Chandon brand.
"The winery not only helps support our group's
total business in China in the future," said
Christophe Navarre, CEO of Moet Hennessy, "it
also indicates our long-term vision in this
fantastic market.
"No matter if the Chinese market goes up or
down, we will always be here, and we want to be
part of China's future."
Located close to the Helan Mountain near
capital city Yinchuan, the winery - with
operational area of 6300 sq m - will follow
company's worldwide procedures to ensure
highest quality sparkling wines.
the
an
the
the
It will benefit not only from the support of
Chandon's international winemaking expertise
and latest production facilities, but also from
Ningxia's ideal climate, said officials, where the
soil and the environment are all perfectly suited
to growing Chardonnay and Pinot Noir grapes.
"Moet Hennessy has always been committed to
providing high-standard winemaking expertise to
make the finest quality wine," said Navarre.
July/August 2013
Mark Bedingham, the managing director of Moet
Hennessy Asia Pacific, told China Daily that the
sparkling wine produced in Ningxia will initially
satisfy local demand but in the future it will also
look at exporting the product.
"The wine market in China is booming and its
growth is dramatic. This opening marks another
significant milestone in Moet Hennessy's
continued efforts to help develop wine in China,
and is another sign of the company's commitment
to China," said Bedingham.
In May, the company also launched a new
winery in Deqin (Yunnan) [11], in the famous
area of Shangri-la.
"The winery in Yunnan is dedicated to top
quality, premium wine. So, to produce the best
red wine in China, we are willing to wait longer,"
added Navarre.
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Company News
ChinaNews
winery (Contd)
Bedingham said the pricing of its premium
sparkling wine produced in Ningxia will not be
as high as that of the red wine made in Yunnan.
The image of its perfect wine drinker in China,
he added, is "young consumers who are looking
for a high-quality lifestyle".
Hawthorn wine
Researchers of the Weifang Engineering College
(Weifang, Shandong) [12] had developed a new
type of hawthorn wine. The raw material is
grown abundantly in the Qingzhou region of
Shandong. The research has been conducted in
cooperation with Shengshi Hongda Industrial
Group (Shandong). (tjkx 30/9/2013)
The output of sparkling wine in Ningxia will be
larger than the winery in Yunnan.
"In most of the world's major wine markets,
sparkling wine accounts for just 0.9 to 3% of
total demand," said Bedingham. "But the 1% of
China's wine market, which is still increasing, is
a big number. I believe as a pioneer in the
sparkling wine sector in China, we will achieve a
high market share after we release it next year."
Six years ago, Moet Hennessy acquired Wenjun,
a Chinese white spirits producer in Sichuan
province, and Navarre said it has been moving
quickly to sell Wenjun in luxury markets.
"Now we have a rich portfolio in China's luxury
spirit and wine markets," said Navarre.
Statistics from International Wine and Spirit
Research show that sales of wine and spirits in
Asia-Pacific are forecast to overtake those in
Western countries by 2016.
By then, the total amount of wine consumed
every year is expected to rise from 3.39 bio cases
to 3.68 bio cases, with 75% of that increase
coming from China. (cd 29/6/2013)
July/August 2013
Yanjing: first quarter of 2013
Yanjing Brewing (Beijing) has produced
11.3 mio hls of beer in the first quarter of 2013,
up 7%. The turnover in the same period was
RMB 2.868 bio, up 9.8% and the net profit
RMB 45.49 mio, up 20.16%. (tjkx 11/6/2013)
As the prices of raw materials have been
decreasing recently, the profitability of the
brewing industry is on the rise again.
Kweichow Moutai Co Ltd. (Zunyi, Guizhou)
[13] - China's top liquor producer - has seen
nearly flat growth in revenue in the first half of
the year, hit by the government's campaign to
crack down on lavish spending using public
funds. (Continued on next page)
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Company News
ChinaNews
(Contd)
(Contd)
The company said its revenue for the first six
months of 2013 was RMB 17.9 bio, up 0.6%
year-on-year, or RMB 100 mio. The
government's campaign has hit high-end liquor
companies the most, industry experts said.
Sichuan Tuopaishede Group said because of the
government's austerity campaign and the
restrictions on the sale of alcoholic drinks within
the military, sales of its high-end products have
fallen significantly, as has its net profit, which is
expected to be down about 80% for the first half
of the year.
In the first four months of the year, liquor
production volume was 3.81 mio kiloliters, an
increase of 6.9% year-on-year but down 10.36%
points compared with the same period last year.
To boost sales, Moutai has slashed prices to
attract more customers in the mid-range market.
In mid-July, the company said it planned to
reduce the prices of some products by up to 50%.
But industry experts are not optimistic about the
company's expansion plans in the mid-range
market, where its distribution channels are not
established well enough to compete with local
brands.
For years, Moutai has relied heavily on high-end
group consumption and specialized stores to
develop sales.
To change its distribution channels, which used
to target luxury spending, to aim at ordinary
customers will take considerable time and effort,
said Ma Fei, an industry consultant.
Meanwhile, Moutai's peers are also posting
lackluster results. Jiugui Liquor Co Ltd said its
first-half revenue has seen a rapid decline,
resulting in a nearly 90% drop in profits.
July/August 2013
Another top liquor brand, Wuliangye Group,
launched mid-range products priced between
RMB 200 and 500 this month. The group is
seeking a flattened distribution channel for all its
products to reboot its profits, said Wang
Chuancai, an industry consultant.
Tang Qiao, chairman of Wuliangye Group, said
it is changing its product structure that used to
emphasize the sales of its high-end product lines,
bringing in 70% of revenues.
He said the sales target for this year has been
lowered to about RMB 30 bio, only slightly
higher than last year's RMB 27.6 bio.
Tang said the days of demand exceeding supply
are over. This year the inventory situation has
forced them to change their strategy for
development.
Xie Ji, an analyst at the New Food Industry
Institute, said with the decline in spending on
luxury drinks and growth in public consumption
of liquor, the two sides will eventually overlap in
the product range priced between RMB 100 and
300. The liquor products of this price range will
make up half of the industry total sales in the
future, he said. (Continued on next page)
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Company News
ChinaNews
(Contd)
Kraft's new plant to double output
volume (Contd)
An increasing number of distributors who used to
represent mid-range liquor brands have now
shown strong interests in Wuliangye's new
products, Xie said.
"We will continue to boost marketing and
innovation efforts for our key brands and to
further expand our sales channel coverage in
China," Shawn Warren, president of Kraft Foods
China, said in a statement yesterday.
But he added the evolution is far from over.
After the tumult of contraction, stability in the
market is only the first step. Dealing with
overcapacity will be a major challenge, he added.
For example, he said, there are about 2000 liquor
manufacturers nationwide. A number of small
liquor producers are very likely to disappear.
(cd 1/8/2013)
Kraft's new plant to double output
volume
Kraft Foods China has started the construction of
a RMB 545 mio plant in Suzhou (Jiangsu) [14] to
expand production capacity. The plant, which
will be more than double Kraft's production
capacity in Suzhou after it is completed in
August 2014, brings the total investment of Kraft
Foods in Suzhou to RMB 1.14 bio.
China has become the fastest growing market in
Kraft's global business and the company has been
stepping up efforts to add local flavors to cater to
Chinese consumers.
The company produces Oreo and Chips Ahoy
biscuits as well as Cadbury chocolates and Halls
cough drops. China's snack-food market is
valued at over RMB 75 bio last year, said market
research firm Euromonitor. (sd 14/3/2013)
The recently signed free trade agreement
between Switzerland and China will help Swiss
chocolatier Lindt & Sprngli to establish itself as
the preferred premium chocolate brand in the
country, according to the company.
As one of the originators of the globally
renowned Swiss chocolate culture, Lindt's
heritage dates back to the year 1845.
Ever since, the name Lindt has stood for
premium chocolate, delighting consumers with
innovative products of the highest quality, said
Andreas Pfluger, vice-president responsible for
Asian market.
July/August 2013
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Company News
ChinaNews
(Contd)
(Contd)
"These are exactly the attributes that we want to
pass on to the demanding Chinese chocolate
lovers," Pfluger said. Lindt products have been
available on the Chinese market for the past
decade via a network of distributors.
"The recently approved Free Trade Agreement
between Switzerland and China will further
support this expansion," Pfluger said.
After years of double-digit growth in the market
for premium chocolate, the company decided to
establish their own base here. In August 2012, a
Lindt & Sprngli subsidiary in Shanghai was
opened to incorporate the Swiss premium
chocolate tradition into Chinese culture.
The subsidiary had a strong start, driven by the
company's number one brand Lindor, which sold
particularly well in metropolises like Shanghai,
Beijing and Guangzhou. With its festive red and
gold-colored premium packaging, Lindor is
becoming increasingly popular as a gift,
especially for the Chinese New Year. "We are
continuously expanding our presence in China,"
Pfluger said.
Currently, Lindt chocolates are available in more
than 40 cities at nearly 3000 sales outlets. To
guarantee the perfect condition of its products,
the main distribution channels are gourmet food
outlets and department stores, Pfluger said.
"For the near future, we believe that Lindt &
Sprngli China will manage to establish itself as
the preferred supplier for premium chocolates
and therefore contribute to our overall sales
results.
July/August 2013
He believes there is tremendous potential for
growth in the Chinese market. Currently per
capita chocolate consumption on the Chinese
mainland is about 100 g a year, compared to
500 g in Taiwan, 1.6 kg in Japan and 12 kg in
Switzerland. More and more chocolate is being
sold in China. And the number will grow even
larger.
At present, per capita consumption in the
mainland's first-tier cities is already equal to that
in Taiwan. However, compared to figures in the
West there is still a huge potential to be explored,
Pfluger said. To better cater to the Chinese
customers, the company has designed a special
strategy, he said.
"We realized that a successful sales concept is
needed to introduce our brand to a new market
with little to no chocolate tradition," Pfluger said.
"This is why we created special Lindt Boutique
corners in department stores to present to the
consumers our unique chocolate expertise and
allow them to taste the outstanding quality of
Lindt chocolate.
"So far, 100 Lindt Chocolate Corners have been
established, and we have plans to open many
more over the next couple of years," he said.
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Company News
ChinaNews
(Contd)
Mondelez International Breaks Ground
to Expand Biscuit Plant in China
"By taking part in selected events, such as the
House of Switzerland during the Beijing
Olympic Games in 2008 and the World
Chocolate Wonderland in Beijing in 2010, our
Lindt master chocolatiers impressively presented
their craftsmanship and expertise as well as our
fine chocolates to a growing audience by
convincing them of our outstanding product
quality." (ccd 1/8/2013)
Kraft Foods (Suzhou) Co. Ltd. [14], part of the
Mondelez International family of companies,
today hosted a groundbreaking ceremony for the
expansion of its biscuit plant in Suzhou, China.
COFCO selling plant in Xinjiang
COFCO (Beijing) has announced that it intends
to sell its fruit processing subsidiary in Khotan
(Xinjiang). Due to lack of raw material, the
subsidiary has been operating at a considerable
loss. A key product of that plant is apricot jam.
(pd 29/7/2013)
Wahaha enters Russian market
The Wahaha Group (Hanghzou, Zhejiang) [9]
has entered the Russian market with its tea
beverage. A first batch has been shipped to
Wladiwostok. (hexun 24/6/2013)
With a total investment of approximately
USD 85 mio, the project spans 30 000 sq.m.
(more than 98 000 sq.ft.) and is expected to be
completed in August 2014.
The project will more than double the plant's
current capacity and create 340 new jobs. The
Suzhou plant will feature state-of-the-art
production lines to make Oreo and Chips Ahoy!
biscuits to meet the growing demand from
Chinese consumers.
This project is consistent with the company's
previously announced strategy to invest in
emerging markets to drive sustainable, profitable
growth.
"We deeply appreciate the Suzhou government's
help and support for Kraft Foods China and this
project," said Shawn Warren, President of Kraft
Foods China. "Since the introduction of Oreo and
Chips Ahoy! to China in 1996, the country has
become our second-largest market for these
brands globally, after the United States, due to
our consistent focus on quality, innovation and
marketing. After this project is completed, the
expanded plant will be a model in our global
supply chain network."
July/August 2013
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Company News
ChinaNews
Mondelez International Breaks Ground
to Expand Biscuit Plant in China
(Contd)
"The Kraft Foods' Suzhou plant has set examples
in the Suzhou Industrial Park in terms of
production efficiency, energy savings, emissions
reductions and community involvement," said
Madam Sun YanYan, Vice Chairman of the
Suzhou
Industrial
Park
Administrative
Committee. "We're pleased to see that this
project will further drive the development of the
local economy."
Mondelez International currently operates two
manufacturing plants and a regional biscuit
research and development center in Suzhou.
(yahoo 17/6/2013)
Kvass war
A cold war has recently erupted in China about
who is the manufacturer of real kvass. One of the
oldest local manufacturers, Qiulin (Harbin,
Heilongjiang) [15] has referred to the beverage
of Wahaha as ‘fake’ on its microblog account. A
large company like Wahaha is not likely to
remain calm over such an allegation. The
industry is waiting to see how this verbal war
will develop. (hcfood 15/7/2013)
As kvass is a Russian beverage, it makes sense
that a company in Harbin was the first to
introduce it to China. During recent years, a few
companies in other parts of China, mainly the
country’s northern part, have tried their luck at
launching a kvass of their own, without success.
Kvass war (Contd)
The giant Wahaha has the financial means to
finance a major marketing campaign and it is
probably that campaign that has made Qiulin
decide to initiate this, un-Chinese, direct verbal
attack.
break up
A key shareholder in Smithfield Foods Inc has
hired advisers to help break up the US pork giant
and sell it in pieces rather than allow it to be sold
intact to China's Shuanghui International
Holdings Ltd, according to a regulatory filing.
Starboard Value LP, a 5.7% shareholder in
Smithfield, said it hired New York-based Moelis
& Co and Business Development Asia LLC to
help get a better offer for Smithfield shareholders
than the USD 4.7 bio deal which would be the
largest Chinese takeover of a US company if
completed.
In the filing, Starboard, a New York-based hedge
fund, reiterated its belief that Virginia-based
Smithfield, the world's largest hog farmer and
pork processor, would be worth more if it were
broken into three parts - US pork production, hog
farming and international sales of fresh and
packaged meats - and then sold.
July/August 2013
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Company News
ChinaNews
break up (Contd)
break up (Contd)
The advisory firms will assist it in "identifying
and connecting any strategic or financial buyers"
for Smithfield's "individual business units" and
finding a "sum of the parts transaction that could
qualify as a superior agreement", Starboard said
in the filing.
US lawmakers also have raised concerns about
foreign ownership of the nation's food supply.
Starboard, which laid out its criticisms of the
Smithfield deal in a letter to the company's board
last month, did not reply to an e-mail from China
Daily requesting further comment on the hedge
fund's decision to hire advisers.
Smithfield agreed in May to be acquired by
Shuanghui (Luohe, Henan) [16], the main
shareholder in China's largest meat-processing
enterprise, for USD 34 a share, or USD 4.7 bio.
The agreement, which the companies said they
expected to close in the second half of this year,
also includes USD 2.38 bio in assumed debt.
The proposed deal is under review by the
Committee on Foreign Investment in the United
States (CFIUS), an interagency panel that
investigates foreign investments in connection
with national security issues. The proposed deal
is seen as helping China - the world's largest
consumer of pork - meet demand for the meat, as
its increasingly prosperous residents eat more
protein.
Since the proposed deal's announcement, US
Senators have raised questions about the Chinese
company's ability to comply with food safety
standards if the transaction goes ahead.
Ken Goldman, an analyst at JP Morgan Equity
Research of America, said he believes the
transaction will be approved, as CFIUS works
out a "compromise solution".
Although pork itself doesn't directly affect US
national security, a bird flu outbreak this spring
and the discovery of thousands of dead pigs in
Shanghai's rivers, has added to China's "negative
reputation" in the protein industry, the analyst
said. Deaths tied to tainted milk and a chickenprocessing plant fire also have fueled food safety
concerns.
Observers, however, expect the proposed
Smithfield deal to win regulatory approval, due
to the companies' assertion that the merger is
driven by growing pork demand in China and not
a strategy to export pork to the US. The
agreement is unlikely to raise traditional antitrust
concerns because it doesn't give Smithfield already the world's largest hog farmer and pork
producer - a larger share of the US pork market.
Smithfield CEO Larry Pope recently told the US
Senate Agriculture Committee that the nation's
pork producers "struggle" to build market share
in the US as Americans' pork consumption
dwindles. As pork is only the third most
consumed US meat, producers are forced to look
outside the US for growth opportunities, he said.
July/August 2013
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Company News
ChinaNews
break up (Contd)
break up (Contd)
Since announced, the proposed Smithfield deal
has received support from local, state and
national officials, unions, hog farmers,
academics and US food industry peers, Pope
said.
"It is our belief that the divisions of Smithfield
are easily separable and had the company
explored a sale of these businesses in separate
transactions, shareholders may have received far
more value than the USD 34 per share
consideration contemplated by the proposed
merger," Starboard's letter said.
The transaction apparently has cleared one US
regulatory hurdle, as the waiting period for
objections to be filed with the US Justice
Department expired Friday. The company
already has satisfied antitrust authorities in
Mexico and Poland.
The proposed deal still requires approval by
Smithfield shareholders, who had long been
critical of Smithfield's stock price with Pope in
charge before the transaction was announced.
In its June 17 letter to Smithfield's board,
Starboard said the proposed merger "significantly
understates a conservative sum-of-the-parts
valuation of the company," which it put at
between USD 9 bio and USD 10.8 bio, after tax,
or approximately USD 44 to 55 per share. That
projected price represents a premium of 29% to
62% to the USD 34 per share Shuanghui deal,
according to the letter.
Starboard's letter noted that Smithfield's
hog-production and pork divisions are the
world's largest, and its international division
includes interests in hog farming, meat
processing, and branded meat operations in
Poland, Romania, UK and Mexico.
July/August 2013
"We question whether the board gave sufficient
consideration to a sale of the divisions in
separate transactions, or whether it focused
primarily on an all-cash transaction for the
company as a whole, which we believe would
entail a much more limited universe of
potential." (cd 16/7/2013)
Jollibee targets 500 stores in China by
2014
Homegrown food giant Jollibee Corp. is aiming
to boost its footprint in China to 500 stores,
according to founder and president Tony Tan
Caktiong. The food and beverage conglomerate
currently has 400 stores across its brands in
China and is looking to add another 100 by next
year. In China, Jollibee operates brands Yonghe
King (which was acquired in 2005),
Hong Zhuang Yuan (in 2008) and San Pin Wang
(in 2012).
“One of the reasons why our profit growth in the
first quarter 2013 of 33% was strong was
because a big part of that came from China. We
have a very good trend and our estimate is by
next year we will reach 500 existing brands
stores,” said Caktiong. (Continued on next page)
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Company News
ChinaNews
2014 (Contd)
2014 (Contd)
In Jollibee's first quarter 2013 results, China led
the growth with 27.1% sales increase. Southeast
Asia and the Middle East grew 23.8%,
Philippines 10.3% and US 9.2%.
“We’ve not really looked at Myanmar yet but
there are a lot of interested parties who are
convincing us to move there,” Caktiong shared.
The food conglomerate has also recently voiced
interest in expanding in Indonesia and India.
In 2011, Jollibee established headquarters in
China — a research and development center in
Beijing and a food processing center in Anhui
province.
The food conglomerate whose brands include
Jollibee, Greenwich, Chowking, Red Ribbon,
Mang Inasal and Burger King, has been steadily
expanding its brands internationally, particularly
to countries with large Overseas Filipino
Workers (OFW) populations.
According to Caktiong, sales in their stores
across the Middle East has also been doing well.
Middle East is a key destination for Filipino
nurses, engineers, maids, and others who seek
greener pasture abroad.
“More of our stores in the Middle East have very
high same-store sales. [There are] double-digit
growth rates across countries in the Middle East.
In Saudi Arabia, Dubai and Kuwait the samestore sales are very strong,” he said.
Caktiong said that while they have had a lot of
offers from Myanmar, they haven’t yet looked
into the opportunity. Myanmar is one of the key
developing markets investors have been eyeing
for expansion.
The international expansions come as part of
Jollibee's strategy to have a 50:50 ratio for its
foreign and local businesses in the next 5 to 7
years to maintain overall growth trajectory.
Jollibee currently has 80% of its operations in the
Philippines and 20% based abroad. “Probably by
the end of the year this ratio will change slightly
to 79% Philippines, 21% abroad," he said.
The stellar performance of the Philippine
economy, however, is making officials rethink
the target ratio. The Philippines grew 7.8% in the
first quarter, one of the highest rates in the world.
"While business abroad is growing well, the
Philippines is also growing well. When both are
doing well it is difficult to quickly change the
ratio," said Caktiong.
"The Philippines is growing so fast so if you
want to change the ratio you have to grow
faster," he explained.
In 2012, the Jollibee group opened a total of 223
new stores: 135 in the Philippines and 88 abroad.
At the end of the year, it was operating a total of
2 074 stores in the Philippines and 554 stores
overseas. (rappler 28/6/2013)
July/August 2013
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ChinaNews
Nestle’s China investment shows need
to think local
to think local (Contd)
Success in emerging markets is dependent on the
ability to think locally. However, while domestic
players do have the home field advantage,
multinational corporations benefit from stringent
internal structures and expertise in areas such as
supply chain management. Could the best way to
drive growth be to combine the strengths of each,
creating “multi-local” operations? Nestle would
seem to think so.
To get around this, in categories where domestic
players have an advantage – so areas excluding
nutrition and coffee – Nestle has developed joint
venture arrangements with local partners such as
Yinlu and confectioner Hsu Fu Chi.
I’ve been to a few factory openings in my time.
But never have I attended one as extravagant as
the ceremony to officially open the Nestle-Yinlu
dairy facility in the eastern Chinese city of
Chuzhou (Anhui) [17] on 11 July.
The occasion kicked off at 9.28am, a time picked
because the Feng Shui master consulted by Yinlu
suggested that this would help to guarantee the
success of the 370 000 sq.m. factory.
Drumming girls, a Chinese dragon, cannons
firing gold confetti and fireworks (as well as
some comparatively dry remarks from Yinlu and
Nestle management along with local government
officials) followed.
As I sat in the already baking morning sun, an
obvious truth was driven home. China, for all its
potential size and scope, is an entirely different
market to the western countries that so many
food multinationals call home. As multinational
food groups – from Hersheyto Arla – look to
bulk up their operations in markets like China, to
ignore this simple truth is to court failure.
“An important building block for Nestle in China
is the development of local partnerships,” Nestle
group CEO Paul Bulcke told the audience in
Chuzhou. “They allow us to stay closer to the
Chinese consumer and meet demands for…
healthy, safe and nutritious products.”
Alongside consumer insight, another distinct
advantage that Yinlu has is its distribution
structure. Yinlu followed Mao Zedong’s
example: starting in the countryside and then
moving into the city, one industry pundit
explained. This means that, where the majority of
multinational corporations operating in China are
struggling to get out of second or third-tier cities,
Yinlu has a strong rural footprint.
But multinationals do have the upper hand in
some areas. Take the Nestle-Yinlu pairing.
Nestle brings to the table a lot more than its deep
pockets and global R&D capabilities. (Continued
on next page)
July/August 2013
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Company News
ChinaNews
The company is an expert in supply management
and the development of strong internal structures.
In the case of Yinlu, in which Nestle took a 60%
stake two years ago, the Swiss food giant has
helped in the development of a stronger
management structure.
“The new Yinlu factory… is just one more
example of our commitment… to build these
partnerships into even stronger businesses,”
Bulcke said. “We are on an historic and exciting
journey
in
this
country.”
As Yinlu chairman Chen Qing Yuan
acknowledged in a press conference following
the ceremony, the company had previously been
run with the entrepreneurial spirit typical of its
founders. However, as a company grows and
extends its reach these attitudes can only take
you so far.
responsible supply chains
One Yinlu source told just-food that the company
had been presented with a number of options
when it was considering how to enter its next
phase of growth two-to-three years ago. This
included the possibility of a private listing.
However, if it had pushed ahead with this option,
the demands of trading on the stock exchange
would likely have required Yinlu to bring in
external management. The partnership with
Nestle was considered a favourable option.
By leveraging the local know-how and – never to
be underestimated – consumer understanding of
Chinese companies and combining this with the
rigorous approach to issues such as food safety,
supply chain and professional management
present in large international corporations and it
would seem that you have a winning recipe.
Nestle was certainly keen to emphasise its
commitment to its joint venture partnerships in
the country. (Continued in next column)
July/August 2013
As part of its commitment to operating
responsible supply chains, Cargill announced a
new assessment tool to help food and beverage
customers achieve their growth, cost reduction
and risk mitigation goals by identifying,
prioritizing and quantifying risks
and
opportunities in its supply chains. The
announcement was made at the 2013 Institute of
Food Technologists (IFT) Food Expo. The new
tool allows Cargill and its customers to rapidly
identify and assess areas of risk and opportunity
so they can take action on responsible sourcing
issues that may negatively or positively impact
business, such as labor practices, the
environment and biodiversity.
The tool translates these risks and opportunities
into specific financial terms by assigning cost
and revenue implications to those identified in
the assessment as having the highest likelihood
of occurrence and highest business impact. The
company’s
unique
approach
facilitates
collaboration and alignment across all partners in
the supply chain to move quickly to address
issues and opportunities. (Continued on next page)
www.giract.com
Page 104
Company News
ChinaNews
Special Features
responsible supply chains (Contd)
responsible supply chains (Contd)
“Customers, consumers and other stakeholders
are increasingly demanding more information
and communication around what’s happening in
our extensive supply chains to mitigate corporate
or brand risk, find opportunities for cost
reduction, or use sustainability as a potential
platform for growth,” said Scott Portnoy,
corporate vice president of Cargill’s food
ingredients & systems businesses.
-
This commitment will be extended to
cover 100% of our palm oil products and
all customers worldwide – including
China and India – by 2020
-
Soy field. A partnership with The Nature
Conservancy that helps Brazilian soybean
farmers comply with the Brazilian Forest
Code
“However, sustainability investments often
struggle to gain traction as many organizations
fall short of quantifying a return on investment.
Our tool delivers a business case that enables
responsible decision making and action.”
Sustainability issues continue to be an important
topic among customers. In a recent survey of
Cargill’s food and beverage customers, 93%
identified sustainability as one of the most
critical issues of importance to their businesses.
This assessment tool is the most recent example
of Cargill’s continuous work in creating ways to
improve its supply chains. In just the last few
years, Cargill has announced:
The most common cited focus areas were setting
objectives and goals for sustainability and
responsible sourcing. (fif 16/7/2013)
-
-
Cocoa pods - Its Cocoa Promise aimed at
promoting sustainable cocoa production.
The promise focuses on three areas:
training farmers, supporting farming
communities and investing in the longterm sustainable production of cocoa
A pledge to supply its customers in
Europe, United States, Canada, Australia
and New Zealand with palm oil certified
by the Roundtable on Sustainable Palm
Oil and/or originated from smallholder
growers by 2015 (this excludes palm
kernel oil products)
Growing your own food: Chinese
consumers’ response to food safety
issues
Regular readers of these pages do not need to be
reminded of the various food safety problems
that have stubbornly occurred and re-occurred in
China during the past few years.
The loss of confidence in the domestic food
industry has triggered a number of peculiar
responses among Chinese consumers. One of
them is Community Supported Agriculture
(CSA).
July/August 2013
www.giract.com
Page 105
Special Features
ChinaNews
Growing your own food: Chinese
consumers’ response to food safety
issues (Contd)
Balcony farmers are taking root
(Contd)
A number of articles about various forms of CSA
have appeared recently in China. We have
collated them in a special column in this issue of
China News.
Xue Ling, 26, has been planting vegetables on
the balcony of her apartment in Jinan, capital of
Shandong province, since 2010. "It is the only
way to keep my food, at least the vegetables,
clean and safe," she says.
With growing wealth, concerns about food safety
and the fever for online shopping, more urbanites
are taking to farming on their own terms.
Zheng Jinran reports in Beijing.
The perfect storm of two major trends in China online shopping and growing concerns about
food safety - has given birth to a generation of
urban farmers.
More urban residents, many of whom are young
people between the ages of 25 to 35 living in
metropolises such as Beijing, are growing
vegetables and herbs on their balconies or rented
farmland in the suburbs, and turning to Taobao, a
major online shopping service provider in China,
to start their apartment gardens.
Online searches for vegetable seeds at Taobao
has increased by 280% over the past year,
according to the company.
"That means, every day, more than 6000 people
went to online shops at Taobao expecting to buy
seeds and tools that can convert their balconies
into a small vegetable garden," says Lu Qi, a
public relations officer from Taobao.
July/August 2013
"Then I found out that many of my friends have
realized the importance of eating vegetables.
They have been busy planting this year and
asked for my help to get tools for them," says
Xue, who opened a shop for vegetable seeds in
April because of the demand.
"The sales in my shop are much higher than I
expected. More than 2000 bags of seeds have
been sold since then," she says. "They plant
vegetables not to save money but to guarantee
food safety," Lu says.
A number of food scandals have rocked the
nation in recent years, including the discovery
that cucumbers were found with contraceptives
and another incident where leeks were found
filled with toxic pesticides. The latest crop to join
the list of tainted foods is the Yantai apple,
which was found, wrapped in paper bags
containing chemicals. (Continued on next page)
www.giract.com
Page 106
Special Features
ChinaNews
(Contd)
(Contd)
Xu Jian, 36, an urban farmer in Hangzhou,
Zhejiang province, spent about RMB 1000 in
seeds and organic fertilizer on farmland he
rented. He paid RMB 3560 to rent the 30-sq.m.
farmland for two years. But the move did not
come without its consequences: His mother
moved out of their hometown to help him plant
the vegetables.
Taobao will soon release rules to regulate land
owners and tenants. The website will also soon
provide a platform where plots on a farm will be
offered for rent. "But in the initial state, only
residents in Hangzhou and Shanghai can enjoy
this new service," Lu says, adding that it could
possibly expand to cover all cities in China in the
near future.
"Planting vegetables by myself may cost more
money than buying them from the market and
they might consume extra energy. But the risk of
having polluted food is everywhere. I don't want
my 3-year-old daughter to suffer from any of it.
It is great fun to plant in the farmland and share
the spoils with my colleagues," he says, adding
that every weekend his family drives to the
farmland.
"More cities will see the free and convenient
exchange of extra vegetables or other agricultural
products," he says. "But there are many problems
in achieving this goal, including the packaging
and we don't know when it will come to
fruition." Xu's contract for the farmland he rents
will end in December. "I'll still rent some land to
plant vegetables, but maybe this time I'll try to do
it through the website. I hope it will work to offer
me and more people with appropriate land
options," he says.
Taobao has taken notice of the demand for
vegetables. In addition to selling seeds and tools
for urban farmers, the major online shopping
provider has begun selling fresh vegetables and
other organic food like rice on an independent
website called agri.taobao.com as of early June.
"About 1000 farms and companies want to join
and provide their organic products on this new
platform," Lu says. "But these green products
such as fresh vegetables have special
requirement in packaging and transporting, so the
sales are not large." For those urbanites who
crave a bigger plot to grow their crops, the
website has a bigger plan: Offering farmland for
its users to rent. The option should be available
in June. (Continued in next column)
July/August 2013
Following nature's lead on food
No tomatoes in winter. No oolong tea after Tomb
Sweeping Day. Do not treat meat as an everyday
staple. The initial impression is that she keeps to
the stringent regime of a sustainable lifestyle, but
Shi Yan says it is all totally natural - if you live
on a farm. She is probably the best-known
advocate of community-supported agriculture in
this country, and she is totally committed.
"If you live and feed on the farm, you have more
vegetables and grains. And you can only kill a
pig once in a while. It cuts down the
consumption of meat." (Continued on next page)
www.giract.com
Page 107
Special Features
ChinaNews
Following nature's lead on food (Contd)
As for the tea, she says oolong tea before
Qingming (Tomb Sweeping Day) is better
because pesticides are rarely necessary then.
It was a success, although the founder says with
all modesty "it was because we broke the ground
at the right moment, when concern for food
safety was extremely high." The farm is still
thriving after three years but Shi wanted to
address the bigger issue - the sustainability of the
rural community "where we are determined to
live".
"Whatever nature dictates, it is often the best,"
the 30-year-old post-doctorate graduates say. She
calls herself a "new farmer" and has been
preaching the cause for many years in her slow,
calm, measured tones.
Shi is on the sustainability lecture circuit, often
appearing in a simple linen shift with her hair
tied up in a ponytail and wearing sandals that had
just trudged through the farm fields. She has
been doing this since she came back from six
months' of hard labor on the Earthrise Farm in
Minnesota in 2008.
As head of the year-old CSA model farm, Shared
Harvest, she recruits land-owning farmers who
are willing to work on the land themselves. Shi
monitors the farming process, markets the
produce to customers who are willing to pay for
their vegetables in advance, and shows them
around when they visit.
"Once you build up an intimate relation with the
land, life is different," says the city-bred
agriculture scientist from Baoding, Hebei
province. It was the hands-on experience from
dawn to dusk that taught her the CSA concept
from the ground. She wrote a book on her return
and quickly became a champion of the
movement.
Her first project, initiated with her heavyweight
graduate program supervisor Wen Tiejun from
Renmin University of China, is Dondon Farm in
western Beijing. It made its name as a rented plot
of land that hires farmers and promises clean,
natural produce for customers who order and pay
in advance.
"Having another stakeholder means more
transparency, customers can get what they want
to know not only from us, but also from different
farmers," she says, "and if there are
disagreements, all the better.
July/August 2013
www.giract.com
Page 108
Special Features
ChinaNews
"It is the farmers who benefit from the model
more than anyone else. Farming should be
rewarding enough to let them stay on the land."
Yolanda, an expectant mother who is a member
of Shared Harvest, is definitely a Shi Yan fan.
For now, Shared Harvest makes RMB 0.45 for
every 500 g of vegetables sold. It has already
cleared the red, and even projects a sizable profit
at the end of 2013, when the number of members
will exceed 600. Her hope is that these members
will care enough about what they eat to come
down to the farms more often and take part in the
whole process.
To encourage them, Shi tirelessly updates
progress on the plots and posts reports online on
her various social network accounts, sharing
everything from pop quizzes on botany to the
farms' daily delights and woes to quotes from
Mother Teresa.
"They ask me why my photos always look so
good. I tell them the photos show the love of the
photographer," she says as she carefully packs
bunches of kale into delivery boxes. This is all
part of her routine, and she attends to it with the
eye of a committed lover. She highlights the
beauty of deformed tomatoes and crooked
cucumbers with a dash of humor, arranging them
into heart and swan shapes that are posted online
with a poetic line or two. That's attracted about
30 000 fans to her weibo account.
It is part of her larger plan to educate consumers:
That perfect-looking vegetables may not be safe,
and that buying from your neighborhood farmer
reduces "food miles" and carbon emission.
July/August 2013
"Shi has her feet on the ground, but she upholds
an ideal at the same time. I admire her for the
stamina and her vision for a better future. I trust
her. I've seen the farm myself and I can let go of
all my worries about food," she says.
Shi current lives, works and has her research
base at Mafang village where she has 40 pigs,
2000 chickens, 30 geese and three farms. Her
loving husband works with her and more than 20
young colleagues who all affectionately call her
"boss".
"Shi Yan taught me not to lie," says Chen Li,
who is in charge of sales for Shared Harvest.
"That's almost against a salesman's instinct. But
honesty is the core of our business."
Chen joined the enterprise a year ago because he
believed Shi's initiative is "small and beautiful",
and that "it could only be done by someone who
is adamant and innocent at the same time".
"I marvel at how people are willing to help her
because she's so trustworthy," he says.
(cd 14/7/2013)
People power
Farmers supported by their communities may be
the answer to China's concern over food safety,
efficient land use and the unbalanced distribution
of rural-urban demographics. Sun Ye goes out
into the countryside to find out if this model will
work for the country. (Continued on next page)
www.giract.com
Page 109
Special Features
ChinaNews
People power (Contd)
People power (Contd)
The physical manifestation of the trend is a box
of vegetables that appears on the doorstep every
week, filled with seasonal produce with an
occasional wormhole, but is still warmly
welcomed. It is also the chance to meet and get
to know the farmer who supplies the box, and the
opportunity to bring the children down to the
farm to take part in the sowing and the
harvesting.
CSA encourages young farmers to go back to the
land, and offers them a business model that gives
them insurance against fluctuating prices brought
on by inclement weather, unpredictable harvests
and natural disasters.
It is the building of a community, one that is
prepared to pay a premium up ahead for the
assurance that vegetables on the table are grown
according to safe practices, are sustainable,
seasonal and as far as possible, free from an
overload of pesticides. It is a chance to meet and
meld with other members of the community who
have the same passion and beliefs.
This is what community-supported agriculture
(CSA) looks like in China, for now. But looking
beyond the summer tomatoes and winter
cabbages that are purchased even before they are
sown, CSA is a new concept that goes against the
traditional, or is a return to old systems depending on how you look at it.
More importantly, it is a trend triggered by
rampant food-safety problems thrown up in
attempts to adequately feed a growing country
of 1.35 bio. Huge waves of urban migration are
yet another problem as the younger generations
abandon the hard and thankless efforts of
cultivation in their villages and head out to the
bright lights.
CSA involves the communities around the farms,
and is a model that has worked with varying
success in North America, Australia and
New Zealand.
In China, CSA is only at its juvenile stages, and
it may grow up to be a very different child.
Shared Harvest in suburban Beijing takes its
name from a CSA guidebook. It has also become
living proof for this farming model since its
inception in mid-2012.
It is a cooperative that supplies more than 400
members with weekly boxes of green vegetables
- all of which have been paid for upfront.
This new initiative has also helped its farmers, by
educating them on agricultural methods that are
sustainable, with an emphasis on the long-term
rather than short-term bounties. For example, the
farmers would probably not have given up the
use of pesticides on their own.
"It is simply scary," says Liu Xiancang, the
director of the Liu village co-op that's
responsible for supplying the vegetables that get
sent out to Shared Harvest members.
(cd 15/7/2013)
July/August 2013
www.giract.com
Page 110
Special Features
ChinaNews
Harvesting the homegrown
Harvesting the homegrown (Contd)
City folks are just as concerned about the food
they put in their mouths, often more so than rural
residents. That's why many are turning to their
tiny balconies for sustenance. Eric Jou reports on
a growing trend.
"You know what's going on with your food, there
are no pesticides or herbicides - nothing that will
negatively affect your health," says Hodge. "A
lot of farmers who do traditional farming have
vegetables they grow for sale and vegetables they
grow for their own consumption. They grow
them differently because they know the
chemicals they use are hazardous."
Imagine growing organic lettuce, tomatoes and
cucumbers all without pesticides and chemicals.
Then imagine being able to harvest such
vegetables without even leaving home or
changing out of your pajamas to go to market.
That is the promise of urban farming, of growing
fresh produce in limited spaces.
As more and more people migrate from rural
China to the cities, many of them wind up living
in cities such as Beijing. According to the
National Bureau of Statistics of China, more than
163.36 mio people moved from their hometowns
to other locations to work in 2012.
Such transient psychographics can be both a
blessing and a curse, particularly when it comes
to food.
Urbanites are eager for opportunities to
reconnect to nature. And they face many
challenges of time and space.
Urban farming is basically about growing
produce and food in an environment with limited
space, and it is slowly gaining popularity in
Chinese cities. Dannan Hodge, co-founder of
urban farming company High Rise Homestead in
Beijing, says it is a popular concept with a lot of
benefits.
High Rise Homestead works to help Beijing
residents to "grow their own" at home. They
supply products such as frames that train plants
to grow upward, kits for growing produce on
inclined surfaces and vertically stacked planters.
Windowsills and balcony gardens are all in the
picture. Hodge says the most popular plantings
on balconies are vegetables because they're
simple to grow, even strawberries, cherry
tomatoes and gourds.
"It really does inspire people to eat healthy - you
can't grow a bag of chips," she says. People especially children - get excited to see their own
food grow, food that they planted and will
harvest themselves.
"There is also a health benefit where people are
inspired to become more conscious consumers,"
she says. High Rise Homestead is working to cut
down the supply chain by sourcing materials
locally. Elizabeth Jane Ashforth says the idea of
growing food indoors is great. Ashforth is a
doctor of marine biology who tried to build her
own sustainable system within her apartment in
Beijing, and she says growing food indoors can
create wonders.
July/August 2013
www.giract.com
Page 111
Special Features
ChinaNews
"People in general have lost a connection to
where their food comes from and how difficult it
is to grow actually," says Ashforth.
"I like having new projects and learning new
things. It just hit me one night that I could learn
something about aquaponics," adding that he's
spent "many hours on Youtube researching
growing my own food".
"Doing something like this adds a bit of greenery
to your home, it just makes you feel connected to
the environment and that can only be a good
thing." American Tim Quijano has recently
started giving DIY lessons on setting up
aquaponic ecosystems.
Aquaponics is similar to a hydroponic setup
where plants are grown in water, except
aquaponics introduces fish into the equation.
A simple aquaponics setup involves a fish tank
with possibly edible fish, a water pump, a second
layer above the tank where the plants are grown
and a light source.
The fish eat and create waste and the pump
siphons the water to the upper layer to fertilize
and water the plants. The water then drains back
into the lower tank.
According to Quijano, some aquaponics setups
can support edible fish such as tilapia. A fellow
with the Princeton in Asia organization, Quijano
says his main passion is working on
environmental issues. Quijano started working
on aquaponics during a move from one
apartment to another.
"What got me started was that I had this fish tank
in my apartment that I moved into this year and I
thought how I could do something fun with this,"
says Quijano. (Continued in next column)
July/August 2013
China has a rich history and culture of being selfreliant when it comes to food, says Quijano.
Pointing out recent food safety scares and the
migration of workers from the countryside to the
cities, Quijano says that there is a wealth of
agriculture knowledge in Chinese cities.
"I live in a large apartment complex and the
grannies that are there, they have set up little
makeshift greenhouses with a stick of bamboo
and a tarp. There's so much knowledge and
there's such an appreciation for it."
Aquaponics newbie Andrew Morrissey attended
one of Quijano's workshops on a whim after
seeing an online posting about it.
"I came to see what it was about and whether I
could do it at home and grow some tomatoes for
the family and make me more useful," says
Morrissey,
"I don't know about farming but I am never
going out and buying vegetables again but if I
can get something going and it works. If it can
get bigger over time with a bit of experimenting
it can be a lot of fun. Maybe I can get some
edible fish. It would make the wife very happy."
(cd 15/7/2013)
www.giract.com
Page 112
Upcoming Events
ChinaNews
Upcoming events
Upcoming events (Contd)
2013 Guangzhou Food Fair
2013 China (Guangzhou) Int’l Food
Exhibition
Location:
Canton Fair, Pazhou Hall
Dates:
September 5 - 9
Telephone:
020-89231623
Fax:
89231633
Email:
[email protected]
China (Guangzhou) Int’l Food & Nutrition
Exhibition
Location:
Canton Fair Pazhou Hall
Dates:
September 7 – 9
Telephone:
020-8989 9477
2013 China (Beijing) Int’l Healthy Potable
Water Exh. (SIHWE)
Fax:
89899050
Email:
[email protected]
2013 China New Agricultural Equipment &
Services Exh. (NRCE)
2013 China (Changsha) Int’l Tea Exhibition
Location:
China Agricultural Exhibition
Centre
Dates:
September 5 - 7
Telephone:
010-57241408
Fax:
n.a.
Email:
[email protected]
2013 Shanghai Int’l Nutrional & Health Food Exh.
Location:
Hunan Int’l Exhibition Centre
Dates:
September 12 - 15
Telephone:
0769-83835898
Fax:
n.a
Email:
n.a
China (Weifang) Int’l Food Industry
Exhibition
Location:
Shanghai Mart
Dates:
September 6 – 8
Dates:
Weifang Lutai Exhibition
Centre
September 13 - 16
Telephone:
020-66637275
Telephone:
0536-2456919
Fax:
n.a.
Fax:
n.a.
Email:
[email protected]
Email:
n.a.
July/August 2013
Location:
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Page 113
Upcoming Events
ChinaNews
2013 China Int’l Imported Food (Chongqing)
Exh. & Forum
2013 8th China (North) Int’l Food Additives &
Ingredients Exhibition
Dates:
Chongqing Int’l Exhibition
Centre
September 13 – 15
Telephone:
4006191090
Fax:
n.a.
Email:
n.a.
Location:
2013 8th China (North) Int’l Food Processing
& Packaging Equipment Exhibition
2013 China (Qingdao) Int’l Pharmaceutical
Raw Materials & Intermediates Exhibition
2013 China (Qingdao) Int’l Pharmaceutical
Machinery Exhibition
3rd China (Qingdao) Int’l Food Safety Testing
Equipment Exhibition
2013 Shanghai Int’l Condiments & Food
Ingredients Exhibition
Location:
Shanghai Everbright
Dates:
September 15 – 17
Telephone:
0 21-37821468
Fax:
37821458
Email:
[email protected]
6th Wine China Expo
Dates:
Centre
September 23 – 25
Telephone:
010- 64416542 / 64414996
Fax:
n.a
Email:
n.a.
Telephone:
0532-85012515
Fax:
85012915
Email:
[email protected]
2013 Vinexpo China
2013 Oil China
Location:
Dates:
Qingdao Int’l Exhibition
Centre
September 26 – 28
Location:
2013 Zhejiang Int’l Hotel, Restaurant & Food and
Beverage Exhibition
2013 Zhejiang Int’l Food & Beverage Catering
Service Exhibition
Dates:
Hangzhou Peace International
Exhibition Centre
September 26 - 28
Telephone:
0571-89738388/89738372
Fax:
89738368
Email:
[email protected]
Location:
July/August 2013
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Page 114
Upcoming Events
ChinaNews
2013 14th Int’l Fruit & Vegetable Exhibition
2013 8th Shanghai Int’l Fishery & Aquatic
Products Exhibition
Location:
Yantai Int’l Exhibition Centre
Dates:
September 26 – 28
Location:
SNIEC
Telephone:
0535-6686271
Dates:
October 120 -12
Fax:
6686272 6686273
Telephone:
021-34141311
Email:
[email protected]
Fax:
n.a.
Email:
n.a.
2013 China (Xiamen) Int’l Tea Exhibition
11th China Int’l Meat Industry Exhibition
China Xiamen Tea Packaging Design
Exhibition
Location:
Qingdao Int’l Exhibition Centre
Location:
Xiamen Int’l Exhibition Centre
Dates:
October 13 – 15
Dates:
October 10 – 13
Telephone:
010-68020935
Telephone:
0592-5959888
Fax:
51661769
Fax:
5959611
Email:
[email protected]
Email:
[email protected]
2nd Shenzhen Int’l Hotel Equipment
Exhibition
2013 China (Shenzhen) Bakery Exhibition
Location:
Shenzhen Int’l Exhibition Centre
Dates:
October 10 – 12
Telephone:
020-85627337
Fax:
n.a.
Email:
n.a.
July/August 2013
Location:
Shenzhen Int’l Exhibition Centre
Dates:
October 14 -1 6
Telephone:
020-31746168
Fax:
22223568
Email:
[email protected]
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16th China (Tianjin) Ice Cream & Dairy Raw
Material and Equipment Exhibition
5th China Int’l High End Beverage &
Functional Beverage (Shanghai) Exh.
Location:
Tianjin Int’l Exhibition Centre
2013 15th China Int’l Organic Food Exhibition
Dates:
October 15 -1 7
Telephone:
2013 2nd China Int’l Nuts & Convenience
Food Exhibition
Fax:
02228362467，28362448，13752519366
15th Int’l Nutrition & Health Exhibition
n.a.
Email:
[email protected]
2013 3rd Famous Wine & Int’l Wine
(Shanghai) Exhibition
4th IND China Int’l Cereals & Oils Machinery
Exhibition
2013 9th Int’l High End Healthy Food Oil &
Olive Oil (Shanghai) Exhib.
4th IEOE China (Beijing) Int’l Edible Oil
Exhibition
Dates:
Centre
October 16 – 18
Telephone:
010-59507558
Fax:
n.a.
Email:
n.a.
Location:
Location:
Shanghai Intex
Dates:
October 20 - 22
Telephone:
010-85753243
Fax:
n.a.
Email:
n.a.
2013 Xinjiang Int’l Hotel Exhibition
2013 Chongqing Int’l Food Processing &
Equipment Exhibition
Dates:
Telephone:
0991-2303954
Dates:
Chongqing Int’l Exhibition
Centre
October 18 – 20
Xinjiang Int’l Exhibition
Centre
October 25 – 27
Fax:
2303979
Telephone:
023-63202811
Email:
[email protected]
Fax:
63202822
Email:
[email protected]
Location:
Location:
July/August 2013
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Page 116
Upcoming Events
ChinaNews
2013 China Int’l Children’s Food Safety
Conference & Exhibition
2013 China (Shanghai) Vegetarian Food Fair
Location:
Shanghai Everbright
Dates:
October 31 – Nov. 8
Telephone:
021-64752979
Dates:
China Int’l Exhibition
Centre (Sanyuan Hall)
October 26 – 28
010-53050679
Fax:
64752907
Telephone:
53050688
Email:
[email protected]
Fax:
Email:
[email protected]
Location:
4th China Int’l Nutrional & Health Food
Exhibition
Dates:
China Agricultural
Exhibition Centre
October 29 – 31
Telephone:
021-61107259
Fax:
61294683
Email:
[email protected]
Location:
2013 China Tianjin (Bohai) Int’l Food Fair
2013 3rd Tianjin Int’l Wine Industry Fair
Location:
Tianjin National Exhibition Centre
Dates:
October 31 – Nov. 04
Fax:
02288371010、88373212、28012979
88371005
Email:
n.a.
Telephone:
July/August 2013
www.giract.com
Page 117

ChinaNews

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