China's culinary development: opportunities for Thai firms

Aside from urbanisation, the other major factor in China’s changing eating habits is rising incomes. Only one generation ago, the Chinese diet was rather poor, composed mainly of rice and cereals. As incomes have risen, people have been demanding higher quality food, such as meat, fish, eggs, fruit and vegetables.

This in turn has led to increasing demand for safe, conveniently packaged, processed, ready-to-eat and takeaway foods including fast noodles and rice dishes. Although there have been some concerns over packaged food after recent health scares, new food-processing regulations are now coming in and these will stimulate the market even further.

In my opinion, the most difficult hurdle facing Thai producers is their limited access to the local distribution network. There are a number of reasons for this. Firstly, logistics and infrastructure are poor outside the major centres, which makes it difficult for exporters and importers to reach people. Chinese retailers also tend to prefer to stock domestic products on their shelves, rather than imported items.

The way many foreign food producers have overcome such challenges is to establish their own distribution networks through independent retail chains. Many foreign chains, including major supermarket and hypermarket operators such as Carrefour and Wal-Mart, are expanding into second- and third-tier cities. Meanwhile, Thai food producer CP Group has set up its own retail chain CP Lotus, which has more than 70 stores and 300 million customers. Another Thai company, Central Group, is also establishing a presence in China, opening its first two stores in Hangzhou and Shenyang.

It is also a good idea for Thai food producers to work with local importers and distributors, as through them they can gain valuable market advice and learn how to position products to meet local tastes, laws and pricing.

Fortunately, Thai food producers enjoy many advantages compared with others exporting to China due to the similarities between the two countries. Thanks to our shared heritage many much-loved Thai dishes originate from China, and many Chinese recipes are based on blends of the five basic flavours: salty, sweet, sour, bitter and spicy.

Thailand also has geographic proximity to China and thanks to the Thailand-China free-trade agreement in food, Thai producers enjoy excellent access to the Chinese market. Moreover, Thailand and China are at similar levels of economic development, so a Thai food producer with a good understanding of local consumers and acceptable price points is well on the way to understanding Chinese consumers.

Within the next 10 to 20 years, China is expected to become the world’s largest importer of agriculture and food products, with annual sales of branded food products projected to increase from $150 billion (Bt4.6 trillion) at the beginning of this decade to $650 billion by 2017.
This is a phenomenal business opportunity and I look forward to seeing Thai producers take advantage of it!

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