EU quality card played at SIAL China
show that ended in Shanghai last week now replaced by the finished
foods exhibition SIAL China. At the opening event this week EU
agriculture commissioner Franz Fischler was there to push Europe's
thriving food market and explore opportunities for business,
writes Lindsey Partos.
With a vast 1.3 billion population China spends approximately €225 billion each year on food and drink products. The European Union has thrown its weight behind pushing exports of food and drink products to this burgeoning market.
"In terms of overall trade, China has become the EU's second major trading partner in recent years, only behind the Americans. And I am convinced that the time is near when China and Europe will be the two most important trading partners in the world. This is why we must attach top priority to our trade relations," said Franz Fischler, speaking at the opening of SIAL China yesterday.
In the past 25 years EU-China trade has increased more than 40-fold to reach over €129 billion in 2003. A growing middle class and rising disposable incomes, plus 9 per cent annual growth leaves the landscape open to opportunities for food manufacturers and ingredients firms.
At a time when global food markets have been rocked by a raft of food scares - notably Asian bird flu and BSE - Fischler played the quality card in Shanghai.
"As a result of our concerted efforts to promote and preserve our unique products, not just in Europe but worldwide, consumers everywhere are showing increased interest in the quality of our foods," he said, adding that 'quality' has to be easily identified, to give consumers real choice, whether it be in terms of the production method, the origin, or the nutritional value.
A recent report from investment bank Goldman Sachs warns that despite the massive potential in emerging markets, increased exports from China - worth $1000 billion which makes it the world's biggest exporter - threaten profitability in many product areas, notably for ingredients.
For the food companies China has not been so problematic, as food production tends to be domestically based. However, we are beginning to see a threat in ingredients, claims the report.
According to Goldman Sachs, both global ingredients leader Danisco and UK company Tate & Lyle have commented on increased competition from China as having a negative impact on their ingredient operations.
"If China's ingredient industry expands at the breakneck speed of the rest of the economy then we might expect further margin pressure from this area," said the report.
In 2003, although several ingredients companies - Danisco and Cargill for example - announced moves to lay down roots in China, the report claims that accelerating developments in this burgeoning economy must be a top priority for leaders in the ingredients industry keen to hold onto their market share both at home and away.
Retail companies making headway in the country include French chains Carrefour and Auchan as well as the US giant Walmart.
The fifth edition of SIAL China started on Tuesday and will run until 4 April 2004. Last year three per cent of the exhibitors at the event were from the food ingredients segment of the food industry.
