Recent Changes in China Presents Opportunities for NW Food Processors

by Scott Waggoner

    Changes in China are presenting significant opportunities for food processors across the Pacific, particularly here in the western United States.  Over the past 30 years China has become the world’s fastest growing major economy, largest exporter, second largest importer, and this summer took the title of Top Energy Consumer from the United States.  As China transitions to a market-based economy and many of its people move from agrarian to urban based employment, China is increasing its standard of living and adopting a consumerist culture.  The worlds’ most populated nation is starting to demand quality and new product concepts in food products which the western world can provide. Consumers are buying in kiosks, restaurants, and “hypermarkets” and are increasingly seeking new products and attractive packaging.

   This year, wages are rising rapidly throughout the country, along with public demands for a higher standard of living.  Since a labor contract law in 2008 made workers more aware of their rights, labor costs have increased about 15 percent a year.  The Chinese government has embraced the labor actions and resulting increases in salaries, as they are trying to transform China’s economy into an Americanized one focused on domestic consumption.  Beijing is also now allowing the U.S. dollar to appreciate (increasing costs in the Chinese yuan) and in 2007 failed to renew tax preferences for foreign companies. 

   As urbanization and increased spending power separates producers from consumers with a decline in traditional street markets in favor of supermarkets and restaurants, the interest and demand for value-added foods increases.  Interestingly, anything Western holds a luxury status that Chinese people are increasingly demanding and are able to afford.

   These changes present some significant, emerging opportunities for northwest food processors who take advantage of these changing conditions. While in the past, the Chinese have been slow to adopt Western consumer activities, now it is occurring and traditional expenditures such as food are expected to be one of the first markets where American value-added goods can gain significant market share. The Pacific Northwest, in particular, has the opportunity to fulfill these demands due to proximity and well-established trade routes. Increased living standards also mean that supplies purchased from China, such as ingredients and packaging materials, are likely to increase in price and offer domestic suppliers new opportunities to compete.  Increase standards of living are occurring worldwide and demands rethinking the supply chain, with domestic suppliers standing to gain.

   In summary, now is the time for northwest food processors to take a fresh look at the opportunities presented by China’s significant economic developments and to develop new ways for beneficial trade with China as well as strengthening our own supplier base.

   For more information on exporting opportunities, visit the USDA Foreign Agricultural Service website at www.usdachina.org.