Open the door to Chinese opportunity

30 Jul, 2014 02:00 AM
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There is no question whether or not the dining boom is underway.

THE opportunities in the Chinese market have not been overlooked by WA farmers.

But work needs to be done before producers can cash in on the increasing affluence of the Chinese consumer.

That was the key message from Financial Times emerging markets editor James Kynge, London, who was the keynote speaker at yesterday's Sheep Updates.

Mr Kynge said WA farmers were no strangers to the fact China, with its expanding middle class, could have a huge impact on the demand and price for their product, whether that was beef, sheep or grain.

But he said the branding power and potential for WA produce was not being fully exploited.

"There is no question whether or not the dining boom is underway," Mr Kynge said.

"The question is who will be putting the dishes on the table, will it be WA or will it be one of your competitors?

"That situation remains unclear."

In order to capitalise on the increasing demand for protein from China, Mr Kynge said the WA supply chain needed attention.

"If WA is aiming at the premium end of the market, which it should, then there are some issues," he said.

"You are dealing with a lot of small suppliers and a relatively fragmented market, which could make it hard to maintain quality in the eyes of the Chinese consumer.

"How do you first create the brand, promote the brand and then protect the brand in a place like China where there is a food scandal nearly every week.

"That is key but it is also the biggest challenge."

The industry changes underway in China and the push from the Chinese government to foster vertical integration in the food sector presented additional obstacles for WA.

"Because of this the big food companies are moving into agriculture and the agricultural companies are moving into food," he said.

"They all want to have a 'from farm to shop' footprint so they can control every step of the process and therefore control the quality.

"What does that mean for WA? Does mean the Chinese market will be sewn up by the big Chinese companies, and if so is there an opportunity for you to attract those big companies to WA?"

Mr Kynge said all the opportunities in China were coming from consumers.

He said they were the drivers and the reference point for everything.

"It is important to look at what those people are eating, how their tastes are changing, what they like and don't like," Mr Kynge said.

"Where you used to have a population of $690 million rural Chinese living a subsistence life, you now have discretionary spending among that group of people.

"I am not saying they will all start eating prime Australian beef, but they will start increasing the protein content of their diets, which will have a displacement effect on protein markets elsewhere."

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