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Pork demand opens growth avenues for overseas companies

Imports rising steadily as nation starts sourcing staple from more destinations

By XU JUNQIAN in Shanghai | CHINA DAILY | Updated: 2019-11-19 00:00
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"We are a small business hit by global uncertainties. Due to rising meat costs, we are forced to raise prices by 1 yuan (14 cents) per serving. We sincerely apologize for any discomfort caused and promise to bring down the price as soon as costs normalize," reads a sign in a hole-in-the-wall shop selling pot stickers, a breakfast staple, in Shanghai.

Shui Feng Guotie, named after the street it was first located on, has over the past 20 years survived rising labor and rental costs, as well as intense competition from fast food chains and mushrooming convenience stores. But the recent pork price hike might be "unprecedentedly critical" for the business, according to the business owner, a 50-year-old Shanghai native surnamed Song.

"It's not only about money, but also the stable quality of meat. I don't feel comfortable if I do not know my pork," said Song, after his pork supplier started providing him imported pork in August. "I have never had imported pork in my kitchen before. We are still getting along," quipped Song, also the chef of the mom-and-pop store.

Shortage of pigs, mainly due to an African swine fever epidemic, has led prices of China's meat staple to rise by nearly 100 percent from a year ago, according to the National Bureau of Statistics.

While the shortage has troubled the likes of Song to sustain a profitable and reputable business, it has also whetted the appetite of foreign protein producers for the Chinese market, which is already the world's largest pork importer and consumer.

Pork imports rose 43.6 percent by volume during the first nine months of this year, reaching 1.33 million metric tons, according to the General Administration of Customs.

Vionfood Group, the second largest meat manufacturer in Europe, has seen an even larger increase this year, with its export volume to China up by 150 percent year-on-year.

"With our monthly volume hitting 25,000 tons, we are seeing our busiest year in China since our arrival in 2007, both in terms of export volumes and values," said Liu Bing, representative of the German company's China office.

But he was worried that once the price of pork surpassed that of beef, there might be a substantial number of consumers switching to other types of meat.

By October, the average retail price of pork was just 20 percent lower than that of beef.

Shi Meiyin, marketing director of Spanish premium cured ham maker, 5J Cinco Jotas, is more optimistic about the Chinese penchant for pork.

Made from acorn-fed Iberian pigs, the ham is sold at 408 yuan for 70 grams on China's e-commerce platforms, prices close to that of caviar, and the retail business has been growing at 150 percent year-on-year, according to Shi.

"Unlike other high-end Western ingredients, hams are familiar items on Chinese tables. So it requires little education for Spanish hams to find their way to Chinese dining tables," said Shi.

The brand's collaboration with fine dining restaurants, five-star hotels and Michelin-starred chefs in first-tier cities like Shanghai and Beijing is also working well, boosting its wholesale business by 30 to 40 percent every year since 2015, when the 140-year-old company set up its first overseas office in China.

Following the memorandum signed between China and Spain last year, which further diversifies the pork variety exported to China, including pork with bones, the company is confident that it could continue to enjoy robust growth in the country.

"An essential part of savoring the ham is watching it sliced from the bone by a professional. We believe this particular step, like a performance, would pique more interest," said Shi.

With about one-third of its produce sent to China every year, the country is already the company's largest overseas market.

"We are proud to be the first brand to showcase ham with bones during the second China International Import Expo, as China is the most important emerging market for fine dining," said Fernando Terry Osborne, CEO of Osborne Group, the parent company of the ham brand that also has a presence in alcohol and beverage in Spain.

Danish Crown, the world's largest pork producer, sets its vision for China much further.

With an investment of 430 million yuan, it has partnered with Win Chain, an Alibaba-backed fresh food supply chain, to build a pork processing plant in East China's Zhejiang province.

"The significance of the partnership is that instead of shipping unfavorable parts on Western tables like offal, pig bones and heads to China, the company is upgrading its strategies for the country and its consumers," said Hu Guoqiang, director of Win Chain responsible for the partnership with Danish Crown.

Parts like belly fat, ribs and trotters would be separated and processed at the plant according to the culinary habits of China, after the animals are slaughtered in farms in Denmark, said Hu.

The products have been on shelves of Alibaba's retail channels including Hema Fresh and RT-Mart since July. With prices lower by 20 percent to 40 percent than market average, as it is unaffected by the domestic pig shortage, sales have been quickly picking up. The company expects that monthly sales could reach 800 tons to 1,000 tons by Spring Festival, a peak time for pork consumption in China that falls on Jan 25 next year.

"Although Danish Crown has been shipping on average 200 tons of pork daily to China for several years, the company knew little about the market, as it was mainly commodity trading with wholesalers. Neither did Chinese consumers know anything about the brand," said Hu.

ZHANG TAO/FOR CHINA DAILY
A customer selects imported pork at a supermarket in Zhengzhou, Henan province.

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