Organic food products in China: Market overview
Chinese organic agriculture began in the late 1980s, driven initially by environmental concerns and later by export opportunities. The sector’s growth was remarkable, reaching over million hectares within five years. The Chinese government was quick to move to regulate the organic sector through a series of rules and regulations introduced since the mid-1990s. By 2005, compulsory organic standards and supervision systems were introduced for organic certification bodies operating in China, and as a consequence all organic products, including imports, must comply with the national rules and standards.
There is no clear and comprehensive statistical information about the volume and value of organic production in China. The latest estimate was 2.03 million hectares of certified organic farmland in 2009, while total organic production was valued at about US$ 2.4 billion in 2008, of which US$ 500 million went for export and the rest was sold locally. Organic imports were estimated at about US$ 3 million – US$ 8 million per year, and a maximum of US$ 20 million in 2009.
Food safety led Chinese authorities to start introducing rules and regulations for China’s food sector in the early 1990s. National regulations on organic agriculture were first introduced in the early 2000s and the last one was applied in 2005. They require organic certification bodies, inspectors and operators to comply with Chinese national organic standards and certification protocols. Imports of organic products must also meet such national regulations. Because the Chinese organic regulatory system does not yet recognize any other organic systems, inspection and certification of all operation steps must be conducted against Chinese organic standards by inspectors and certifiers directly approved by the Chinese authorities. Currently, there are only 26 organic certifiers who have such approval, and all are based in China.
China’s domestic market in organic products began developing in the mid-2000s and has expanded very rapidly, especially in the past few years when stories of food scandals became prominent. Chinese organic consumers can be divided into eight main groups: white collar families; families with young children; families with health issues; overseas returnees; business people from Chinese Taipei and Hong Kong (China); government officials; young people; and foreigners living in China. White collar families, accounting for 40% of organic consumers, are the largest group. Studies regarding organic products indicate that Chinese consumers are very concerned about food quality, which they define less in terms of appearance and more in terms of nutritional properties and safety. Reliable certification is important and trusted more than advertising and promotion, especially by producers and traders. Consumers are also less concerned about whether organics are produced in China or imported.
Retailers, especially supermarkets and specialty shops, dominate domestic organic markets. The major sales channel is through conventional and high-end supermarkets, which control more than 80% of retail markets. Specialty shops are growing in number, but their sales are limited.
There is already market saturation in some organic products, such as rice, fresh vegetables, fresh fruits, meat and green tea. Unless they have unique qualities, such as special health benefits or product innovation, such goods have low market potential. Organic products with good prospects include processed products and food supplements, especially dairy products, food for babies and children and processed gourmet foods.
Exporters interested in exporting organic products to China are recommended to:
- Prepare themselves and their products before making trade contact by ensuring that they have ‘good’ products that are not expensive, taste good and have organic integrity and good and consistent quality. Exporters should also learn about Chinese import rules, including customs and food safety requirements, so that they are familiar with the system and procedures.
- Organize market access by choosing the right importer-distributors as partners. It is important that exporters find opportunities to meet in person with prospective trade partners, such as by attending international organic trade fairs and/or Chinese organic fairs such as BioFach China, Organic China Expo (OCEX) and China Nutrient & Healthy Food & Organic Products Exhibition (CINHOE).
- Introduce their products into Chinese markets by working with the Chinese trade partners to design jointly the sales and marketing plan.
- Ensure market success through product innovation, focusing especially on product quality and packaging.