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Food Consumption and Marketing in China A perspective on China’s rapidly changing food economy
Food Consumption and Marketing in China
A perspective on China’s rapidly changing food economy
The Traditional Chinese View of Food
A meal is composed of two major components: grain (rice—fan) and vegetables (dishes—cai)
Grain is the most important ingredient, but a meal without dishes is boring and tasteless, so both should be consumed in moderation.
Freshness of vegetables, fruits, and meat is a very important factor for Chinese consumers.
There is a strong connection between foods and health, and waste and over-eating are discouraged.
Historical Factors
Food supplies have not always been abundant Inter-regional transportation was costly and
difficult Cold chain systems and household
refrigeration were often lacking Diets were influenced by regional availability of
foods. Urban and rural diets show significant
differences in consumption of grain and livestock products.
Implications for Food Marketing
Consumers shop daily for fresh ingredients and buy in small quantities
Supply chains are short, and consumers may buy directly from producers
Quality and food safety attributes of food are determined by experience and reputation
Mass media marketing is not important
Key Historical Facts
In the Qing dynasty and during the first 40 years of communist rule, farmers were “taxed” heavily to provide food for urban residents.
Over several decades, the gap between rural and urban incomes and food availability widened.
Collectivization of farms in the 1950s reduced incentives for productivity growth in agriculture, and food scarcity increased with population growth
Rural diets in the 1970s were largely vegetarian. More than 300 million people in China did not receive
adequate nutrition on a regular basis.
Recent Trends in Chinese Food Consumption
Rapidly growing consumption of livestock products Increased consumption of fruits and higher-quality
vegetables Rising consumption of processed food products and
food prepared away from home. Declining consumption of rice, potatoes, and other
staple grain and starchy foods Rising concern for food quality and food safety. Rise of supermarkets as a major force in food retail
Rural Per Capita Food Consumption
0
50
100
150
200
250
300
1978 1981 1984 1987 1990 1993 1996 1999 2002
Grain Vegetables Rice & Wheat
Kg/Person
Rural Per Capita Food Consumption
0
5
10
15
20
25
1985 1988 1991 1994 1997 2000 2003
Veg. Oil Red Meat Poultry Eggs Aquatic Fruit
Kg/Person
Urban Per Capita Food Consumption
020406080
100120140160
1985 1988 1991 1994 1997 2000 2003
Grain Vegetables Fruits
Kg/Person
Urban Per Capita Food Consumption
0
5
10
15
20
25
1985 1988 1991 1994 1997 2000 2003
Veg. Oil Pork Beef/Mutton Poultry Eggs Aquatic
Kg/Person
Per Capita Milk Consumption
0
5
10
15
20
25
1990 1993 1996 1999 2002
Rural Urban
Kg/Person
Factors Driving Dietary Change
Agricultural and commercial marketing policy changes
Income growthForeign direct investment and the
growing role for multi-national firmsUrbanizationRapid modernization of food processing,
transportation, and retailing systems
Reform and Opening
With the adoption of the household responsibility system (HRS) in 1981, China’s agricultural production boomed, and the availability of agricultural produce and food greatly increased.
The early 1980s and mid- to late 1990s were likely periods of structural change in food consumption in urban China as a result of the introduction of the dual-track marketing system and the elimination of food rationing.
The opening of China’s food processing and retailing sector to foreign direct investment (FDI) has facilitated the rapid modernization of China’s food processing and distribution systems and created an environment that fosters food product innovation
Dietary Transformation
During income-induced dietary diversification, economic prosperity enables consumers to afford a more varied and balanced diet and to demand nutritionally superior products.
A critical implication of globalization is the severing of the link between diets and the local availability of resources and local habits.
─Prabhu Pingali, 2004.
Engel’s Law at Work:Rural Households
0
500
1000
1500
2000
2500
1978 1981 1984 1987 1990 1993 1996 1999 200200.10.20.30.40.50.60.70.8
Total Expenditures Food Expenditures Food Exp. Share
Yuan/Person Share
Engel’s Law at Work:Urban Households
0100020003000400050006000700080009000
10000
1985 1987 1989 1991 1993 1995 1997 1999 2001 20030
0.1
0.2
0.3
0.4
0.5
0.6
Total Expenditures Food Expenditures Food Exp. Share
Yuan/Person Share
Foreign Direct Investment
0
1000020000
30000
40000
50000
60000
0
5
10
15
20
FDI FDI/GDCF
Million USD
Source: IMF
Percent
Growth of Supermarkets
0
5
10
15
20
25
1994 1996 1998 2000 200201000020000300004000050000600007000080000
Stores Retail Share
Percent Number
Supermarket Sales in Major Cities
05
10152025303540
Shanghai Beijing Tianjin Chongqing Qingdao
Retail Sales (bil $) Supermkt Sales (bil $) Share
Factors Hindering Supermarket Growth
Consumer demand for freshnessWet markets still dominate markets for fruit
and vegetables and meatDistribution networks are still under-
developedConsumer shopping patterns still favor
more frequent trips with smaller purchase quantities
Questions?
Annual Production Growth
0
5
10
15
20
25
30
Pork Beef Mutton Poultry Eggs Milk
1984-1994 1994-2004 1999-2004
Percent
Source: CNBS/USDA
Rural and Urban Grain Consumption
0.00
50.00
100.00
150.00
200.00
250.00
300.00
1985 1990 1995 2000 2003 2004
kg p
er c
apita
rural urban
Taste Changes
-4
-2
0
2
4
6
8
10
12
1981 1984 1987 1990 1993 1996 1999 2002
Kg/Person
Grain Pork Beef Poultry Eggs FishVeg Fruit Milk
