Trends and opportunities
The market

With a population of over 1.3 billion, China is currently Asia's second largest food and beverage market by value after Japan. As China's economy grows and appetite for sophisticated consumer tastes develops, Australian food and beverage companies have a great opportunity to enter the China market. In 2006-07, Australian food exports to China were valued at $664 million (Source: Food Australia Report - Australian Food Statistics 2007).  

The increased interest and demand for Australian food and beverages is being driven by China's strong economic growth, and its rising per capita income. Emerging second tier markets and wealthy coastal cities, not just big hubs like Beijing, Shanghai and Guangzhou, are providing opportunities for Australian companies to access a greater share of the Chinese market.

Food consumption patterns in China have changed significantly as living standards have risen. Chinese consumers are becoming more discerning and are demanding:
Higher quality
Modern packaging
Freshness
Better nutrition
Confidence in food safety and ingredients integrity
Convenience
More variety
Opportunities

Foreign-invested supermarket retailers such as Wal-mart, Trust-Mart, Makro, Jusco, Carrefour, Tesco, Lotus, Metro, Park'N Shop, 7-Eleven, Watson's and major domestic chain store outlets such as Hualian, Lianhua, and Vanguard have expanded in China with speed. These supermarkets have become more diversified and sophisticated, and offer local consumers an increased range of imported foods and beverages.

The proliferation and growth in the number of food retail outlets and chains presents opportunity for Australian exporters of food to China. All of the foreign-funded supermarkets plan to increase their investment in China.

Australia is recognised by local consumers as having a clean and green environment with good quality products and brands. Many Australian exporters have already taken advantage of this competitive edge by establishing a position as a supplier of products such as meat, dairy products, fresh fruits and seafood. 

Market feedback has shown interest in Australian suppliers of:
Milk powder, UHT milk, cheese, butter and margarine
Seafood (eg. oysters, live lobster, live abalone, live king crab)
Fresh fruit (eg. citrus)
Wheat, barley and rice
Frozen red meats (eg. beef, veal, lamb)
Processed foods
Wine
Beer
Natural fruit juice
Convenience and 'instant' foods
Confectionery and snack products

Australian wine exports to China have risen significantly. In 2007 China surpassed Japan becoming the largest export market in Asia for the Australian wine industry. Australia also ranked second largest overall supplier of bottled wine to China. Data released by the Australian Wine and Brandy Corporation (AWBC) highlights the importance of China as a key emerging market for Australian exporters. Over the calendar year ending December 2007, Australia exported over 17.9 million litres of wine to China, with a total export value exceeding A$55.7 million. 

The AWBC and Austrade work closely together in promoting a unified Australian wine industry marketing and educational message to the Chinese market. In August 2008, the AWBC and Austrade China announced a new, cooperative partnership for the China market. The partnership will work towards the effective development and coordinated delivery of the Wine Australia China Market Program and Austrade China's business development and export promotion initiatives to the benefit of the Australian wine industry.

Both organisations support in-market initiatives including a China Australia Wine Importers Network (CAWIN) for importers and distributors of Australian wine in China. All Australian wines destined for export to China must have export approval from the AWBC. More information about Australian wine export licensing as well as Chinese imported wine regulations and requirements is available via the AWBC China market guide. For further information please refer to the AWBC website: www.wineaustralia.com

Given the continued opening up of the China market, and with a bilateral Free Trade Agreement between Australia and China under discussion, there is potential for further growth in Australian food and beverage exports to China.

Currently, however, a range of Australian food and beverage products are still not permitted for export into China, as protocols are yet to be negotiated and agreed between the Chinese and Australian governments. Exporters are encouraged to confirm their product eligibility to enter the Chinese market prior to engaging in commercial activities with Chinese customers or directly investing in a Chinese business opportunity. Exporters can make initial enquiries to their local Australian Quarantine and Inspection Service (AQIS) office or Austrade.

Tariffs, regulations and customs

Following entry into the World Trade Organization, China has reduced its overall average tariff for agricultural products from 21.2 per cent to 15.3 per cent. However, China still has pockets of high tariff protection - as high as 65 per cent on some key products of interest to Australia. 

Australia-China Free Trade Agreement negotiations are progressing on tariffs and other China market access issues. These include tariff rate quotas, standards and technical regulations. Latest information on Australia-China Free Trade Agreement negotiations can be viewed at Trade policy - Australian Department of Foreign Affairs and Trade.

Industry standards

All import foodstuffs and beverages are subject to inspections by the China Entry-Exit Inspection and Quarantine Bureau (CIQ). Quarantine and Inspection in China can be complicated and challenging, so be prepared and do not underestimate the cost, documentation and time required. Accessing up-to-date information on quarantine and customs requirements such as labelling and packaging requirements, food standards and allowable ingredient listings can be challenging. The most recent China Entry-Exist Food and Beverage Quarantine and Inspection Industrial Standard took effect on December 1, 2007.  The new Standard adopted the internationally common use, 3MTM PetrfilmTM as one of its standards.

All imported pre-packaged food must be labelled in both English and Chinese (simplified Chinese as used in mainland China) with the general standard for the labelling of pre-packaged food (GB7718-2004), the following is the example of minimum information to be listed:
Standard name of foodstuffs
List of ingredients
Exact volume of each ingredient
Net weight and volume
Name and address of manufacture and local agent or distributor
Production date, use by date and guidance for storing
Quality grade
Code of national standard, or industrial standard, or enterprise standard for the product
Special contents if there are any (eg. irradiated food)

All imported pre-packaged beverage and wine must be labelled in both English and Chinese (simplified Chinese as used in mainland China) with the General standard for the labelling of pre-packaged beverage and wine (GB10344-2005), the following is an example of minimum information to be listed. Other information maybe required depending on the specific product and it is advised that exporters check with specialist logistical companies or relevant departments prior to exporting products to China:
Wine name
List of ingredients
Alcoholic strength
Original wheat juice and fruit juice volume
Name and address of manufacture and local agent or distributor
Production date, use by date and guidance for storing
Net weight and volume
Code of national standard, or industrial standard, or enterprise standard for the product
Quality grade
Production license

Note: Wine and alcoholic beverages over 10 per cent alcohol volume are not required to list the date of minimum durability (use by date/expiry date) on the label.

All imported pre-packaged foods for special dietary uses must be labelled in both English and Chinese (simplified Chinese as used in mainland China) with the general standard for the labelling of pre-packaged foods for special dietary Uues (GB13432-2004), the following is the example of minimum information to be listed:

Food name
List of ingredients and exact volume of each ingredient:
Nutrient
Net of weight and volume
Name and address of manufacture and local agent or distributor
Production date, use by date and guidance for storing
Edible method, recommended nutrient intake, and targeted people
Code of national standard, or industrial standard, or enterprise standard for the product
Quality grade

Please note that CIQ requirements often change and it is encouraged that exporters re-confirm requirements for labelling and other product certifications prior to dispatch of goods for export.