Agriculture and food industry in China: Different opportunities in different segments
In a lot of areas of the Agriculture industry of China the focus is in one of short breath. They tend to follow new trends like adolescent girls following fashion. If tomorrow people want orange tulips, all tend to produce orange tulips. This trend creates a fast flowing market which switches extremely fast between shortage and overcapacity. This lifecycle generally develops in 1-2 year.
As an innovative European company in this segment of the agriculture industry, the development offers a lot of possibilities. Being ahead of the market and creating the trends is a high rewarding strategy. Following trends like Chinese companies would do, or just create one type of flower/plant, would not add a lot of value to the market.
Looking at the wine industry, a totally different aspect of the agriculture industry in China, the situation is totally different. This industry has grown exponentially over the past years, without exemptions. Consumers can be roughly divided into two core consumer groups. One group is the rich collector/wine connoisseur who wants the expensive European wines. The second group consists out of people who drink bottles Chinese and Western wines of about 20 euros at restaurants. The second consumer group generally drinks sweet Chinese wines.
According to the research of McKinsey named mapping the Chinese middleclass, the urban upper-class Chinese are strongly growing. Looking at the flower & plants-industry, this creates high growth in demand for exclusive flowers and plants. However, the middleclass flower and plants companies in China had rough years. Due to government cuts in spending, a lot of companies in this segment have gone bust over the past years.
The food industry is a market with a lot of potential in the Chinese industry. Due to food scandals in China, the interest in foreign products is very high. People buy products with English labels and ignore products with Chinese labels, even though they might be foreign products. European companies in all aspects of the food industry could do well in China. However the fresh fruits and vegetables is a different story. Due to the distance and travel time it is near impossible to compete on a price level with the Chinese local providers.
There are a lot of possibilities in the different aspects of the agriculture industry. Beijing 1421 has a strong foothold in this industry thanks to Mr. Arie Boeve. He has been operating in the Chinese agriculture industry for many years. Besides Arie Boeve his expertise, CEO Peter Pronk has his roots in the meat industry, which also offers a lot of possibilities. If you have any interest in benefiting from the large agriculture industry potential, please do contact our office.
