Australia’s Share of China’s organic pie
China’s domestic organic market is the fourth largest in the world and worth US$500 million. That figure is only set to grow leaving a wide window of opportunity for Australian organics businesses writes Jue Chen.
In the last decade or so, there has been a significant increase in the interest in organic foods at a global level. This has also touched China itself, which has experienced dramatic economic growth in the last 20 years. The global and Chinese domestic organics markets are proving to be in hot demand with China’s growing affluent urban middle class now paying greater attention to the quality of their food and now also, with the money and resources to have it.
Sales of Chinese organic products have increased by up to 30 percent, mainly in eastern China. Demand is also increasing for imported organic products. Large international retailers Wal-Mart and Carrefour have substantially increased sales of organic food products. The Chinese Organic Food Development Centre estimates domestic sales of organic food products to be around US$500 million. This is set to increase by 30 percent to 50 percent in the coming year. According to the International Federation of Organic Agriculture Movements, China is already the fourth largest organic market in the world behind the US, Germany and Switzerland and is poised to move up that ladder in the near future.
There are three categories where food can be claimed safe and ecologically environmentally friendly in China. They include ‘non-polluted food’, ‘green food’ and ‘organic food’. The relationship among them can be described as a pyramid, the lowest level quality is ‘non-polluted food’, and the highest level quality is ‘organic food’. Chinese ‘organic food’ has originated from international market demand, while ‘green food’ and ‘non-polluted food’ labels have been introduced for domestic consumption.
‘Organic food’ is still a new concept in China with the majority of Chinese consumers having little understanding of what organic food is and most of its availability in China being restricted to major supermarkets in large cities. However, in the last few years, facing the world financial crisis, and with the Chinese government’s stimulation of the domestic economy, the Chinese organic food market has begun to turn around from export-oriented to domestic market orientation. The ‘organic’ concept has been promoted and is now becoming more well-known to Chinese consumers.
For regular organic food buyers, consumption of organic food is part of their lifestyle and they have related interests in nature, society and environment. A recent trend originating from the US called LOHAS – acronym for Lifestyle of Health and Sustainability – stresses a new kind of connected lifestyle and trends which many consumers are taking on. This trend is gaining popularity in the affluent cities of China such as Shanghai and Beijing.
The growing interest in organic food is especially driven by a large market and government concern especially over food safety issues. The 2008 Chinese food contamination scare of infant milk formula involving melamine-tainted dairy products has increased Chinese consumer’s concerns about food safety issues. Since then, more attention has been paid to organic food labelling and logos on packaging as the consumer’s guarantee that the product has been produced organically, without chemicals, pesticides or artificial ingredients. One obstacle however is that there are 28 organic certification bodies in China, which include certifications from the US, EU, Australia, Japan and China’s own domestic creditations. It is arguable whether Chinese consumers can trust organic labels, and which ones can be trusted.
With four years of experience, BioFach China has become the largest international organic product fair in China. The exhibitors mainly come from China, Germany, France, Australia and Taiwan. In May this year, 315 exhibitors participated in the exhibition, with Australia the biggest foreign exhibitor, and for the first time, having 14 companies working together in promoting Australian made organic products as one entity.
While Australian milk and dairy products are continually successful, other products, such as organic wine and honey and organic cosmetic products have also increased awareness. At the same time, the two days of the BioFach China Conference on International Organic Food Markets and Development also provided a forum for both the international and Chinese domestic organic food industries to share market information and theoretical studies.
Like many western consumers, Chinese consumers are also motivated to purchase organic products for food safety issues relating to personal health and environmental concerns. However, Chinese consumers are more suspicious of the quality of food purchased and have high expectations in the improvement of overall organic food certification and inspection as well as policy enforcement. They are also eager to understand more about organic food and what this industry is all about.
Australia is often regarded as a ‘lucky country’, with cleaner air, vast spaces and is identified as having an image of being ‘green and clean’. In this context Australia has the largest organic area under cultivation in the world and offers the ideal image for promoting organic products to overseas markets. With this in mind the Australian organic industry should not ignore the Chinese market. ■
* Jue Chen is undertaking a PhD at Swinburne University of Technology with special research interests in consumer buyer behaviour related to the purchase of organic food, food safety, lifestyle and environmental issues in both China and Australia. In May, she was a guest speaker at China’s BioFach conference where she discussed the first national survey on factors determining organic food consumption in China.
Contact the author at: JuChen@groupwise.swin.edu.au
To read a profile on Australian dairy business, True Organic, which is enjoying success in China, click here.