Carving new Chinese trade frontiers

24 Dec, 2014 01:00 AM
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MLA stand at a Chinese food trade show.
We shouldn’t just look at the traditional routes for getting meat into China: we should be brave
MLA stand at a Chinese food trade show.

AUSTRALIA supplies only about three per cent of the beef eaten in China, and five per cent of the sheepmeat, but within those modest figures lies opportunity.

While China is officially in lockdown against importation of livestock disease, Australia has driven home its ability to get its quality-assured red meat in through China’s front door.

In doing so, it's had a prime opportunity to cultivate a positive image of its clean, green production systems.

Now it’s time to consolidate on that message, Meat and Livestock Australia’s (MLA) China regional manager Andrew Simpson thinks, and he sees some powerful advantages in e-commerce.

Mr Simpson said e-commerce solutions for selling perishable goods into China are being pursued by big Australian companies and sole operators. The beauty of the platform is it can be fitted to any size business, and readily resized to meet new contingencies.

“If you’re a small producer, you put a cap on what’s available and that adds to the exclusiveness of what you’re selling. So if you have 1000 cuts that you want to sell directly, and can get into China under the proper licencing, you should be looking to draw consumer interest in your provenance story,” he said.

“I think that’s going to be a wonderful story for Australia to tell on a micro scale.”

For any marketing into China, and particularly for technology-limited e-commerce, ‘the Chinese market’ can’t be reckoned as all of China’s 1.3 billion people.

“If you look at companies that work in this business, they aren’t promising to deliver to everyone. They select cities, and they don’t target everyone in those cities,” Mr Simpson said.

Nor is e-commerce just a matter of setting up a webpage and taking payments.

“You need to have the relationships to start with,” he said.

“You need the connections with people who can do warehousing and distribution.

“It’s a long-term program for Australian producers, but it gives us the ultimate business to consumer connection. The Chinese are rapidly building distribution networks and consumer interest, and there are premiums that we can extract because we aren’t going through so many middlemen.”

(Miner-cum-beef producer Andrew “Twiggy” Forrest has counted 19 middlemen between his paddocks and the Chinese consumer plate.)

“It’s an opportunity we shouldn’t ignore,” Mr Simpson said.

“We shouldn’t just look at the traditional routes for getting meat into China: we should be brave in exploring new frontiers of consumer buying.”

How Chinese consumers perceive beef from different markets. Source: MLA.

Tackling a megatrend

E-commerce is itself a Chinese consumer megatrend, but it ties neatly into other megatrends.

One is the overarching desire for “food without fear”. The Chinese have proven to be innovative and relentless counterfeiters.

Fake baby formula, fake beef jerky, even fake fresh eggs - a rolling cycle of food scams, coupled with an everyday environment polluted beyond Australian comprehension, have made Chinese consumers acutely sensitive to the safety of the food they eat.

One of China’s many health scares, the H51N bird flu scare of 2009, drove many Chinese to stay indoors. It was period that started a trend of online shopping for perishable foods, Mr Simpson said.

This has coincided with a more outward-looking Chinese society. Exposed at home to Western chains like Starbucks and Pizza Hut, and increasingly aware of other ways of eating outside China’s many cuisines, the Chinese are shopping for more novel foods.

These trends point to ways that Australians can wring the greatest value from our modest share of China’s red meat market, Mr Simpson said. But there are caveats.

“China isn’t a runaway economic train. There are price sensitivities. The thriftiness of the Chinese consumer is being tested. While there is a willingness to pay for supply chain assurance, the consumer will always be drawn to value.”

Chinese President Xi Jinping has pushed a range of austerity measures to curb spending in the bureacracy, and to moderate a corporate culture of conspicuous consumption.

One result is that hotels, a sector that has been a big purchaser of Australian meat, are less busy than they were.

“There’s no better example of that than the premium scotch steak market in China, which has dropped 45pc over the past 12 months,” Mr Simpson said.

“We just can’t expect that China will rise and rise. We’ve got to be conservative in our approach.”

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READER COMMENTS

Bushie Bill
26/12/2014 6:15:38 AM

There are almost endless opportunities for RARA in China, but you can see what is going to happen, can't you? A few switched-on RARA business operators (emphasis on business) will do very well and the rest of the RARA lifestyle sheep will sit on their acres and complain and whinge that everyone else is preventing them from joining in the success of the few. It sticks out like the proverbial, doesn't it?
Jon Noble
26/12/2014 7:37:42 AM

I just wonder when woolworths and coles will go there, they are in most things. When you are not the lead dog the view does not change! keep reading the propaganda news stories, all right wing, but back on the farm I do all the work unpaided and unrewarded keeping the corporations rich. See the Email about Winton that may change your views.

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