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Australian Food and Grocery Councilwww.afgc.org.au

AFGCMARKET INSIGHTS: CHINA

Australian Food and Grocery Council (AFGC)

Address Level 2, Salvation Army Building 2-4 Brisbane Ave Barton ACT Australia 2600

Postal Address Locked Bag 1 Kingston ACT Australia 2604

www.afgc.org.au

ABN 23 068 732 883

This report was prepared by:

Expand into Asia www.trade-worthy.com

This Market Insights report is published for information only. It does not constitute advice or service, and no liability is accepted for negligence, omission or error of any nature. You must obtain your own advice and conduct your own investigations independently from this information.

© Copyright Australian Food and Grocery Council 2014

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CONTENTSTables V

Figures VI

Pictures VI

Message from AFGC VII

Message from Austrade VII

Introduction VIII

Product and Geographic Coverage VIII

Structure of the Report IX

Sources of Further Information X

Defined Terms in this Market Insights report X

Executive Summary XI

PART 1 11. The Big Picture 2

1.1 Demographics 2

1.2 Economic Overview 2

1.3 Food trade with Australia 3

2. Food and Beverage Trends 4

2.1 Broad trends in food and beverage consumption 4

2.2 Attitude to imported food and beverage 5

2.3 Outline of the food and beverage supply chain 6

3. Regulatory and Trading Environments 16

3.1 Trade policy position and approach to trade agreements 16

3.2 Trade Barriers 17

Summary 26

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PART 24. Snackfoods 22

4.1 Chocolates 22

4.2 Sugar Confectionery 26

4.3 Cereal-based Bars 30

5. Beverages 33

5.1 Fruit Juice 33

5.2 Tea 37

5.3 Premium Cold Beverages (non-alcoholic) 40

6. Baked Goods 44

6.1 Biscuits 44

6.2 Baking Mixes 48

7. Condiments 52

7.1 Premium Table Sauces 52

7.2 Jams 56

ANNEXES 60Annex I — Store Checks China 60

Annex II — Key Retailers in the Chinese Premium Retail Market 75

Annex III — Key Distributors in the Chinese Premium Retail Market 77

Annex IV — Key Players in China’s Premium HoReCa Market 79

Annex V — Key Government Bodies 80

Annex VI — Major Food and Beverage Trade Shows in China 82

Annex VII — Useful Links 83

Annex VIII — Food Regulation and Trade Barriers 84

Annex IX — Sources of Further Information 88

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TABLESTable 1: China GDP and GDP per capita 2

Table 2: Market sizes and anticipated 3 year CAGR for Selected Product Categories 4

Table 3: Top 10 hypermarket and supermarket operators in China 6

Table 4: Top 10 convenience store operators in China 9

Table 5: Top 3 online food and grocery retailers in China 13

Table 6: China's Free Trade Agreements 16

Table 7: Characteristics of surveyed snackfood sub-categories 22

Table 8: Overview of packaging and price point ranges — chocolate 22

Table 9: Overview of packaging and price point ranges — sugar confectionery 26

Table 10: Overview of packaging and price point ranges — cereal-based bars 30

Table 11: Characteristics of surveyed beverage categories 33

Table 12: Overview of packaging and price point ranges — fruit juice 33

Table 13: Tariff rates for selected types of fruit juice 37

Table 14: Overview of packaging and price point ranges — tea 37

Table 15: Overview of packaging and price point ranges — premium cold beverages 41

Table 16: Characteristics of surveyed baked goods categories 44

Table 17: Overview of packaging and price point ranges — biscuits 44

Table 18: Overview of packaging and price point ranges — baking mixes 48

Table 19: Characteristics of surveyed condiments sub-categories 52

Table 20: Overview of packaging and price point ranges — Premium Table Sauce 52

Table 21: Overview of packaging and price point ranges — Jams 56

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FIGURESFigure 1: Market Share of China's Total Food Imports 3

Figure 2: Routes to the market — Retailers 12

Figure 3: Routes to the market — HoReCa 14

Figure 4: Major chocolate brands in the Chinese Selected Premium Retail Market 23

Figure 5: Major sugar confectionery brands in the Chinese Selected Premium Retail Market 27

Figure 6: Major cereal-based bars brands in the Chinese Selected Premium Retail Market 30

Figure 7: Major fruit juice brands in the Chinese Selected Premium Retail Market 34

Figure 8: Major tea brands in the Chinese Selected Premium Retail Market 38

Figure 9: Major premium cold beverages brands in the Chinese Selected Premium Retail Market 41

Figure 10: Major biscuits brands in the Chinese Selected Premium Retail Market 45

Figure 11: Major baking mix brands in the Chinese Selected Premium Retail Market 48

Figure 12: Major Premium Table Sauce brands in the Chinese Selected Premium Retail Market 53

Figure 13: Major jam brands in the Chinese Selected Premium Retail Market 56

PICTURESPicture 1: Shelf display at Tesco China 7

Picture 2: China – geographical division for supply chain purposes 10

Picture 3: Shelf with chocolate gift boxes at Ole Supermarket 25

Picture 4: Shelf with sugar confectionery at City Shop 28

Picture 5: Cereal-based bars on wangooshop — a Chinese online retailer that caters to expatriates 31

Picture 6: Minute Maid displayed at end of gondola — Lianhua Supermarket 35

Picture 7: Shelf with tea boxes at Tesco China 39

Picture 8: Premium cold beverage shelf at City Super 42

Picture 9: Biscuits shelf at Tesco China 47

Picture 10: Baking mixes shelf display at City Shop 49

Picture 11: Stick on labels for baking mixes - Duncan Hines 50

Picture 12: Premium Table Sauce shelf display at Lianhua 55

Picture 13: Jams shelf display at City Shop 57

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MESSAGE FROM AFGCThe Australian Food and Grocery Council (AFGC) is the leading national organisation representing Australia’s food, drink and grocery manufacturing industry. The membership of AFGC comprises more than 178 companies, subsidiaries and associates which constitutes in the order of 80 per cent of the gross dollar value of the processed food, beverage and grocery products sectors.

The China Market Insight forms part of the AFGC’s renewed engagement on international trade issues. We hope that this information, along with the information on the markets in Malaysia and Thailand, will assist all food industry companies.

www.afgc.org.au

MESSAGE FROM AUSTRADEThe Australian Trade Commission — Austrade — contributes to Australia’s economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

� develop international markets

� win productive foreign direct investment

� promote international education

� strengthen Australia’s tourism industry

� seek consular and passport services.

We achieve this by generating market information and insight, promoting Australian capabilities, developing policy, making connections through an extensive global network of contacts, leveraging the badge of government offshore and providing quality advice and services. This activity has received funding from Austrade as part of the Asian Century Business Engagement Plan.

www.austrade.gov.au

The views expressed herein are not necessarily the views of the Commonwealth of Australia, and the Commonwealth does not accept any responsibility for any information or advice contained herein.

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INTRODUCTION With rising incomes and increasing consumer demand across Asia presenting export opportunities for Australian based food and beverage manufacturers, the Australian Food and Grocery Council (AFGC) commissioned a series of reports to deepen Australian industry understanding of particular markets.

While Australian and international research has focussed on export opportunities for products such as dairy, meat and wine across Asian markets, there has been little focus on the opportunities for manufactured food products such as snacks, non-alcoholic beverages, and confectionary.

The aim of this project is to provide insights into some of the opportunities that exist for specific manufactured food products in particular markets as a means of contributing to, and supporting the development of, better knowledge of export opportunities of manufactured food into Asia.

PRODUCT AND GEOGRAPHIC COVERAGEWhile there are export opportunities across Asia, the AFGC Market Insights focus on three key markets: Thailand and Malaysia because of improved access under the respective trade agreements; and China due to the long term food consumption forecasts.

This Market Insights series of reports focus on the premium retail and Hotels/Restaurants/Cafes (HoReCa) sector, for the following specific products:

� Snackfoods

– Chocolate

– Sugar Confectionery

– Cereal-based Bars

� Beverages

– Fruit Juice

– Tea

– Premium Cold Beverages

� Baked Goods

– Biscuits

– Baking Mixes

� Condiments

– Premium Table Sauces

– Jams

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By concentrating on specific products, the Market Insights report is able to bring deeper insights into the key considerations for Australian food & beverage manufacturers. These products have been selected for initial focus for two reasons: (i) each has witnessed significant import growth (between $6m–$219m from 2010–2012 1) into the target markets , and (ii) they are export items supported by capabilities of the Australian food & beverage sector. Together, these products represent opportunities for food & beverage exports from Australia into China.

The Market Insights report offers detailed practical insights into specific product categories, far beyond information which is in the public domain. Manufacturers in the product categories covered (snacks, beverages, baked goods, condiments) — or those with capability to extend into these categories — should find the detailed insights both practical and compelling.

STRUCTURE OF THE REPORT We recommend that you find your own path through this Market Insights report, which may not necessarily be from cover to cover.

Part I of this report contains important information about market size and growth, food & beverage trends, key trade shows and routes to market, as well as regulatory and trading considerations such as labelling standards. This information will be useful for new exporters and for established exporters looking to revisit the underlying market dynamics.

Those with some background and experience in China may wish to skip directly to the content relevant to their specific product lines, which falls in Part II of this Guide. There you will find details — for each covered product category – such as ‘share of shelf’ for key brands, packaging size, price points, tastes and promotional trends, any trade barrier details – and contacts for key retailers and distributors in the market. For those seeking even more detail, the report contains the detailed results of premium retail store surveys across China.

1 Analysis of data from UN Statistical Database ‘Comtrade’ 2014

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SOURCES OF FURTHER INFORMATIONCommercial realities, market averages and product trends change frequently. The insights and contact details provided in this Market Insights report are likely to change over time. The Annexes contain a list of organisations, agencies and companies that may assist in providing further information.

DEFINED TERMS IN THIS MARKET INSIGHTS REPORTThere are several defined terms used throughout this Market Insights report, which are critical to understanding the results and implications. These include:

Australian Suppliers Australian food and beverage manufacturers who may seek to export from Australia into China.

Premium HoReCa Market Premium hotel, restaurant and café groups and franchises targeting middle and upper-middle income customers.

Selected Premium HoReCa Market Those Premium HoReCa Market groups and franchises included in the survey underlying this Market Insights report, as set out in Annex IV.

Selected Premium Retail Market Those Premium Retail Market stores included in the survey underlying this Market Insights report, as set out in Annex II.

Selected Product Categories Those product categories included in the survey underlying this Market Insights report (snacks, beverages, baked goods, condiments).

Premium Retail Market Premium retail outlets supplying food and beverage to middle and upper-middle income customers.

Exchange Rates AUD 1 = 5.8 Chinese Renminbi

AUD 1 = 0.95 United States Dollars

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EXECUTIVE SUMMARYWith rising incomes and increasing consumer demand across Asia presenting export opportunities for Australian based food and beverage manufacturers, the Australian Food and Grocery Council (AFGC) with funding assistance from Austrade, commissioned a series of reports to deepen Australian industry understanding of the opportunities that exist. These reports examine opportunities for specific manufactured food products — snacks, beverages, baked goods and condiments – in Malaysia, Thailand and China.

This report is focussed on China — a market with immense and growing opportunities but a market which requires meticulous planning, a strategic approach to market entry, and patience.

While each manufacturer must uncover their own unique value proposition in the Chinese market — including by comparing their own offering with the prices, packaging, and flavours identified in this report, there are several consistent themes across the market:

� The Chinese processed food and beverage market is very much globalised with competitors from a diverse range of countries including Europe, the United States, and South East Asia through to local Chinese manufacturers.

� Australian food products are generally well regarded and more likely to be competitive at the premium end of the market – given our limited scale of production and global reputation.

� At the premium end, package sizes are shrinking and high quality defined-source ingredients (and verifiable health claims) are of growing importance to the Chinese consumer.

� Each exporter must map out their entry strategy – store format, target cities, direct or through distributors. If starting from scratch, premium food producers should consider targeting emerging premium supermarkets through experienced importer/distributors – some of which are identified in this report.

The challenges of market entry into China – labelling, import taxes and customs – should not cloud the opportunity. These can be deftly handled by experienced importer/distributors if they are convinced of the unique value to their target buyers.

In terms of the specific product categories, there are a wide range of opportunities to be considered as part of an individual company’s approach to the China market. This report highlights a number of opportunities for each category including:

� Chocolates: Gift giving is an important element of Chinese culture. Premium chocolate products with appropriate packaging can be marketed as gifts, particularly for festival celebrations.

� Sugar Confectionery: There is a trend toward sugar confectionery becoming a more regular snack in the market however there is a preference for less sweet products.

� Cereal Bars: Demand for healthy cereal bars is growing but currently in early phases of market development. Opportunity exists for Australian exporters to become established as part of growing market.

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� Fruit Juice: Similar to Australia, there is opportunity for premium fruit juice products in coffee shops in China. Opportunity exists for carbonated juice products to be sold as non-alcoholic beverages.

� Tea: There is currently a strong focus on traditional teas and the market for other types of tea, including flavoured tea, is in the early stages of development. There is an opportunity to promote Australian products as clean and safe however it is a very price competitive market.

� Premium Cold Beverages: There is a consumer focus on healthy beverages with fruity flavours and vitamins. A strong opportunity for healthy and natural carbonated beverages exists in the market.

� Biscuits: In a highly competitive market, the opportunity for biscuits is in gift giving, particularly in association with festivals. Products need premium packaging and strong product promotion appropriate for the market.

� Baking mixes: The market for baking mixes is in the early stages of development as ovens are not yet widely available at home. Cake mixes are more popular than bread mixes and a specific demographic is increasingly baking cakes on the weekend.

� Premium Table Sauces: Soy sauce is the first choice for Chinese households, with increasing popularity of chili and black bean sauces given the familiarity of flavours. Of western style sauces, Worcestershire and mayonnaise are increasingly popular however new flavour combinations may have greater appeal in a saturated market.

� Jams: The market for jams is characterised for a preference for less sweet products. Jam products will benefit from heavy promotion, with orange, strawberry, and mixed fruits the current popular flavours.

The AFGC hopes this Market Insights report assists Australian suppliers to understand the characteristics and export opportunities of the Chinese market and to assess whether their products suit the needs of Chinese consumers or require modification for this market.

PART 1

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THE BIG PICTURE

1.1 DEMOGRAPHICSThe demographic picture of China is well known, and simply staggering. China’s growing population (currently 1.35 billion) is expected to reach 1.384 billion in 2020, with a growth rate of 0.5 per cent (2012). The population is growing older, with 15 per cent aged between 15 and 24, 47 per cent aged between 25 and 54, and 20 per cent aged 55 or older.2 The Chinese Government expects that China will become the world’s most aged society in 2030.

The ratio of urban to rural population is about 52:48.3 China has a high population density, with most densely populated areas located in the Yangtze River Valley, the Sichuan Basin, the North China Plain, the Pearl River Delta, and the Shenyang area in the northeast. Geographic income disparities are an entrenched feature, with an immense contrast between poor rural areas and the wealthier urban, coastal areas.

1.2 ECONOMIC OVERVIEWDespite its developing country status, China recently became the second largest economy in the world. From the initiation of the market reforms in the late 1970s, China continues to shift from a centrally planned to a market-based economy and has witnessed rapid economic and social development.

China’s GDP grew by 7.8 per cent in 2012 (AUD 8.66 trillion) and GDP per capita was AUD 6,412.

TABLE 1: CHINA GDP AND GDP PER CAPITA4

2009 2010 2011 2012

GDP (AUD billion) 5,254 6,243 7,707 8,660

Real GDP Growth 9.2% 10.4% 9.3% 7.7%

GDP per capita (AUD) 3,946 4,666 5,734 6,412

Closely linked to China’s GDP growth is rapidly rising disposable income in urban areas, resulting in a middle-income consumer boom in areas such as Shanghai, Guangdong, Beijing and Sichuan. Urban households earning more than USD 5,000 (AUD 5,263) per year are expected to grow by 24 per cent annually — a growing consumer base for high-quality and high-value imported food.

Research by McKinsey suggests that China’s urban incomes will double by 2022, with more than 22 per cent of China’s urban consumers considered middle class, earning USD 9,000 – 16,000, and 54 per cent considered upper middle class, earning USD 16,000 – 34,000.5

2 Worldbank (2014)3 Worldbank (2014)4 Worldbank (2014)5 http://www.mckinsey.com/insights/consumer_and_retail/mapping_chinas_middle_class

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1.3 FOOD TRADE WITH AUSTRALIA While China is one of the largest agricultural producers in the world, with production estimated at more than USD 947 billion, China is also a large net importer of food, with annual imports valued at AUD 89.8 billion.6 On current trends, China will import almost a third of all food globally available by 2030.7 Around 5 per cent of Chinese merchandise imports are food and beverage products.8

China is Australia’s 3rd biggest export market for food and beverage and the biggest in terms of groceries. China is also Australia’s 7th biggest export market for fresh produce. Australia’s market share of China’s total food imports has been between 3 per cent–4 per cent over the last decade, though has recently trended downward by comparison to other food export nations such as Indonesia, New Zealand and France (Figure 1 below). Australia’s major food and beverage exports into China are dairy, meat, wine, cereals, oils and fats, baked goods, and beverages. Major growth categories are oilseeds, chocolates, cereals, fruits and nuts, meat and gums.9

FIGURE 1: MARKET SHARE OF CHINA'S TOTAL FOOD IMPORTS (SOURCE: UNITED NATIONS STATISTICAL DIVISION)

6 Austrade (2014)7 Economist Intelligence Unit (2014)8 Worldbank (2014)9 Analysis of data from UN Statistical Database ‘Comtrade’ 2014

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FOOD AND BEVERAGE TRENDS

China is currently Asia’s second largest food and beverage market by value, after Japan. As China’s economy grows and appetite for sophisticated consumer products develops, there are significant and growing opportunities for Australian food and beverage companies seeking to enter the Chinese market — particularly at the premium end.

2.1 BROAD TRENDS IN FOOD AND BEVERAGE CONSUMPTION

In China, the total Premium Retail Market for the Selected Product Categories constitutes a considerable market with growth in the range of 4 per cent to 20 per cent expected over the next three years, as set out in Table 2 below.

TABLE 2: MARKET SIZES AND ANTICIPATED 3 YEAR CAGR FOR SELECTED PRODUCT CATEGORIES

Product Category China Market size in AUD million

Expected CAGR for the next 3 years

Snackfood 7,579 N/A

Chocolate 1,579 10% – 12%

Sugar Confectionery 5,789 7% – 8%

Cereal-based Bars 211 8%

Beverages 19,526 N/A

Fruit Juice 1,842 8% – 10%

Tea 4,000 15% – 17%

Premium Cold Beverages 13,684 14% – 20%

Baked Goods 1,526 N/A

Biscuits 1,158 15% – 20%

Baking Mixes 368 5% – 8%

Condiments 6,632 N/A

Premium Table Sauces 5,789 8% – 9%

Jams 842 4% – 5%

› Specific product trends and insights are included in the relevant product category sections .

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A shift in target groups

� Due to the combined effects of an increasing population, longer life expectancy and increasing individual food consumption, China will need to produce or import considerably more food in the future to cover demand.

� A broader middle class – with a higher average age – is increasing interest and consumption of higher quality and imported foods; particularly those with bona fide health claims.

� Single-person households are proliferating, resulting in stronger demand for smaller, “micro” portions in the food and beverage sector.

� With recent relaxation in China’s one child policy, there is expected to be an increase in demand for safe, healthy and organic food and beverages for babies and children.

Food Safety concerns

� Recent food safety incidents– especially related to milk, milk powder and meat – have resulted in food safety being a major concern for the Chinese, and growing demand for brands – particularly imported — that can demonstrate traceability in their supply chains to guarantee safety and authenticity.

Increasing importance of Western style products and health foods

� Western style products are perceived as high quality and more creatively flavoured.

� There is an increasing interest in fresh and better-for-you (BFY) foods, for which consumers pay premium prices. The health food market, which includes food with additional health claims and nutritional supplements, is valued at AUD 103.5 billion and forecast to reach AUD 172.4 billion in 2015.10 A large part of the health food segment is accounted for by organic food - in 2012, the Chinese spent AUD 13.8 billion on organic foods.11

2.2 ATTITUDE TO IMPORTED FOOD AND BEVERAGESince 2009, China has been the world’s third largest importer of goods and services. The key drivers of consumption of imported food and beverage in China are rising incomes and previous domestic food safety incidents. Imported food and beverage is considered good quality, nutritious and — most importantly — safe. Major imported food categories are dairy, meat, wine, snack foods, tree nut products and confectionery.

In response, retailers are increasingly open to imported products in more categories than ever before. The metropolitan areas of Beijing, Shanghai, Guangzhou, Shenzhen, Chongqing and Chengdu offer the largest range of imported foods and beverages, but emerging second tier markets and wealthy coastal cities are growing in appetite for imported food products. The majority of customers are still expatriates and upper-middle income locals.

Suppliers from the US and EU still have a competitive advantage over Australian suppliers in the food & beverage sector, due to deeper experience in the market, and economies of scale creating lower unit costs.

10 HKTDC Research (2013)11 Euromonitor (2013)

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However, Australian products, particularly meat and dairy, are perceived as very safe, providing opportunity to further leverage this reputation to Australian food production more generally. This creates the need for Australian suppliers to position themselves in the premium and gourmet market rather than trying to compete with lower-priced products.

2.3 OUTLINE OF THE FOOD AND BEVERAGE SUPPLY CHAIN China has a very fragmented food and beverage supply chain. Although management across the retail sector has improved recently, most store formats are difficult for foreign manufacturers to penetrate directly. In addition, the distribution generally network lacks consistency and has interrupted transport networks as well as a less sophisticated cold chain.

2.3.1 Retail store formats

The importance of traditional markets has decreased significantly in urban areas; consumers now tend to buy safer food from hypermarkets, supermarkets, specialty and convenience stores. As most Tier 1 and 2 cities are quite saturated with modern retail store formats, Tier 3 and 4 cities are the new focus of retail development. The leading hypermarket and supermarket chains are listed in Table 3 below.

TABLE 3: TOP 10 HYPERMARKET AND SUPERMARKET OPERATORS IN CHINA12

Rank Company Number of stores

2012 Sales (million Yuan)

Sales growth (%)

1 China Resources Vanguard 4,423 941,000 13.8

2 RT-Mart Shanghai 219 724,700 17.7

3 Lianhua Supermarket Holdings 5,120 657,302 -3.4

4 Wal-Mart China 395 580,000 3.6

5 Carrefour China 218 452,739 0.2

6 Nonggongshang Supermarket Group 2,734 303,028 0.2

7 Yonghui Superstores 249 279,300 37.0

8 Tesco China 111 200,000 11.1

9 SPAR Shandong 595 181,880 12.0

10 A-Best Supermarket 116 180,000 2.7

12 China Chain Store and Franchise Association and TradeWorthy research

› Check out Annex II for retailer information and contact details.

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PICTURE 1: SHELF DISPLAY AT TESCO CHINA

Hypermarkets

The Chinese hypermarket format has been largely designed by foreign operators, such as Carrefour Wal-Mart, Tesco, Auchan, Metro and RT-Mart. The proportion of imported food in hypermarkets is increasing with current levels around 60 per cent of total stock. Hypermarkets have a reputation for offering products of superior quality (compared to domestic stores) and greater levels of perceived food safety due, in part, to higher product volumes.

Hypermarkets are a major sales channel for imported products. There is a strong focus on in-store promotion, including free sampling. This trade spend can prove expensive in China, and may include listing fees and agreeing to accept returns of unsold products after promotional campaigns have ended.

Most Australian suppliers will find it difficult to deal directly with hypermarket operators, due to their heavy reliance on a network of favoured distributors. Distributors to hypermarkets tend to be large scale businesses, and may be risk averse when considering entirely new product lines.

Supermarkets

The Chinese supermarket segment is dominated by domestically owned companies with less experience of modern retail practices. The major names are Lianhua with more than 5,000 stores and China Resources Vanguard with almost 4,500 stores. Another player is Suguo with more than 900 stores. The market has a ‘long tail’ of small chain or independent supermarkets. Smaller style stores are the new trend — even for the larger chains. This reflects the desire to shop close to home as most customers do not own their own transport.

The supermarket segment is more price-driven than the hypermarket or convenience store segments, as the target group are lower middle income customers. Import penetration - especially state-owned larger chains – tends to be low. Smaller privately held chains are more likely to look for value in high-margin imports and they typically have better local distribution systems in place.

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Premium supermarkets

Several supermarket and hypermarket operators have invested in high-end stores specialising in imported foods. These offer, on balance, the greatest opportunity for Australian suppliers of high-end food and beverage products.

Responding to the growing demand for health foods and organic and fresh produce, China Resources Vanguard launched Ole as their high-end supermarket chain. They operate more than 20 stores in the large cities, with 70 per cent of their products imported. Other popular specialty supermarket chains are City Shop, Pines and City Super in Shanghai, with 12, 5 and 5 branches respectively in the CBD and high-end residential areas. City Shop stock over 80 per cent imported products on their shelves. Additionally, there are boutique retailers such as BHG in Nanjing, Hisense Plaza in Qingdao, and Jin Bou Da in Zhengzhou that sell imported food and beverages. Specialty supermarkets and boutique retailers are often located adjacent to department stores or in business areas and have been multiplying in first and second tier cities.

As hypermarkets have started to attract lower to middle-class income customers with their promotional activities — including offering free shuttle bus services — many high-end customers have moved to specialty supermarkets to avoid the big crowds.

Convenience stores

Convenience store numbers are growing, but with great geographic imbalance across China – in cities such as Guangzhou and Shanghai, competition is fierce, but in Tier 3 and 4 cities this store format is still developing. Like in the supermarket segment, domestic chains lead the convenience store business — e.g. the Sinopec Group with their Easy Joy stores. Despite this, 7-Eleven has become a strong player in Southern China. There have been regulatory initiatives to increase store coverage. For example, Beijing City offers subsidised loans for the establishment of convenience stores and supermarkets. China’s major convenience store chains are listed in Table 4 below.

The convenience store format differs significantly to the other retail types, since it requires smaller package sizes and single servings. To avoid high packaging costs, exporters now commonly use importers to act as “repackers” who can import products in bulk and then repackage them, including Chinese labels and appropriate packaging for the market.

TABLE 4: TOP 10 CONVENIENCE STORE OPERATORS IN CHINA

Rank Company Store Brand Number of stores in 2012

1 Sinopec Group Easy Joy 20,891

2 PetroChina uSmile 13,000

3 Dongguan Sugar & Liquor Group Meiyija 4,650

4 Zhejiang Gongxiao Supermarket Gongxiao; Jialian 2,115

5 Shanghai Lianhua Quik Convenience Stores Quik 2,031

6 Nonggongshang Group Kedi; Alldays 1,780

7 7-Eleven 7-Eleven 1,732

8 China Resource Suguo Suguo 1,694

9 Guangdong Sun-high Convenience Store Sun-high 1,559

10 Chengdu Hongqi Hongqi 1,336

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2.3.2 Premium HoReCa Market

China’s foodservice industry consists of over 6,500,000 food outlets (formal sector), with Yum! Restaurants being the key franchise player in the market, operating KFC, Pizza Hut and Taco Bell outlets. Currently the demand for outlets in non-standalone locations — such as department stores and petrol stations — is increasing. HoReCa chains will grow over the next decade as they build out networks in lower tier cities. HoReCa chains strongly promote their hygiene and food safety credentials, which will see their popularity increase as disposable incomes increase.

2.3.3 Routes to market

China does not have a consistent nationwide network of transport and cold chain, which means distribution channels change constantly. The channels are complex and vary widely throughout China based on geography, product type and retail sector. Geographically, China can be divided into three regions for supply chain purposes:

� North China, with Tianjin, Qingdao, Dalian and Qinhuangdao harbours

� East China, with Shanghai and Ningbo harbours

� South China, with Shenzhen and Xiamen harbours

From these big import hubs, goods are transported to secondary distribution centres like Harbin, Changchun and Shenyang in the northeast, Xi’an and Zhengzhou in the northwest, Wuhan in central China and Chengdu and Chongqing in the southwest. Tier 3 and 4 cities are serviced from there.

Direct import and distribution

Direct relationships between manufacturers (local and foreign) and retailers is increasing, though still the exception.

PICTURE 2: CHINA – GEOGRAPHICAL DIVISION FOR SUPPLY CHAIN PURPOSES

› Check out Annex IV for important Premium HoReCa Market contacts.

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Australian suppliers can establish a Foreign Investment Enterprise (FIE)13 in China and distribute products directly without any intermediaries. This gives them direct control over the import process into China and creates a direct link into the market. However, this is very time-consuming — building extensive networks and understanding the complex structures of the Chinese market are typically significant hurdles for small and medium-sized enterprises to take this route to the market.

Importers

Another option is to work with importers who can typically assist with the following:

� Checking for quarantine and sanitary requirements

� Transfer of documents

� Assisting with labelling issues

� Invoicing processes

� Warehousing and transportation

� Customs registration and clearance

� Payment of taxes and other fees

� Foreign exchange control

� Securing import quotas

Importers require a license and need to register with China’s Ministry of Commerce (MOFCOM). They can acquire an automatic import license if the product imported is in the product catalogue for automatic import license management. MOFCOM has published a database with certified importers for different product categories, which is available on their website.

It is typically more efficient to use an importer in China, particularly due to the regulatory and market complexities. Note that importers may or may not also act as distributors. If they are importers only, they will not attend to issues of in-market marketing and promotion.

Distributors

Distributors typically offer after-sales services and can partner with Australian suppliers for in-market marketing and promotional activities. They may also be licensed importers – which offers significant benefits in terms of a clear path to market.

Another option for Australian suppliers is to engage local agents to market products in China. They typically

13 Corporate forms of FIEs in China are Wholly foreign-owned enterprises (WFOE), Equity/Cooperative joint ventures (EJV/CJV), Foreign-invested companies limited by shares (FICLS), and Foreign-invested partnerships.

› The link to the MOFCOM distributor database can be found in Annex VII.

› Check out Annex III for importer/distributor information and contact details.

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have extended informal networks and are especially important for niche market products and distribution beyond the bigger cities on the Eastern Seaboard.

Australian suppliers seeking to enter Premium supermarkets should consider identifying distributors who ordinarily service the Premium HoReCa industry, as they are typically highly specialised and well networked in relation to a specific product sub-category.

FIGURE 2: ROUTES TO THE MARKET — RETAILERS

PRACTICAL TIPS

Dealing with Distributors

� Communicate your target market clearly

� Do not relinquish your trademark to a distributor

� Make sure that the distributor has a good record of references and has experience in your product category

� Make sure you agree on an appropriate distribution of costs in advance

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Internet retailing

Having the world’s largest number of internet users at more than 480 million, China has witnessed rapid growth in internet retailing. Most Chinese internet retailers target high-income consumers. The online retail market accounted for 6.2 per cent of total retail sales in 2012.14 In addition to domestic retailers who do not operate physical stores, such as TMall and JD, many international retailers have directly or indirectly entered internet retailing business. Wal-Mart launched an internet retailing site for its Sam‘s Club chain back in 2010, and has invested in the rapid growing domestic online supermarket Yihaodian, in 2012 when they bought a 51 per cent stake in the business. Other large international retailers like Carrefour, Metro and Lotus have introduced online operations likewise.

14 iResearch

AUSTRADE INSIGHTS

How to enter Internet Retailing in China?

Australian suppliers can set up their own stores on online retail platforms, such as Yihaodian, Tmall, and JD. However, they all have different business models and approaches to cooperating with potential overseas suppliers, and typically require a physical presence or importer/ distributor or partner in market.

For example, for TMall, if the Australian company has not established a presence in China, they can only set up their stores on the TMall International Channel.

Another example is Yihaodian (www.yhd.com). For Australian companies with products that already have official distributors in China, Yihaodian can use a sale- on-consignment model with those distributors. In such cases the distributor/supplier will decide the retail price (noting it usually has to be more competitive than the offline retail price). Yihaodian will assume responsibility for storage and distribution of the products via its own Distribution Centre in different cities in China, and will charge a commission on their sales revenue to the distributor.

Australian suppliers need to contact each online retailer individually to discuss opportunities, requirements and pricing expectations.

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TABLE 5: TOP 3 ONLINE FOOD AND GROCERY RETAILERS IN CHINA

Internet retailer Details Website

Yihaodian � Biggest food and beverage internet retailer � Wal-Mart bought 51% stake in 2012 � Fresh food delivery service in Shanghai and Beijing (with

expansion plans of this concept)

www.yhd.com

Jd.com � Second largest B2C e-commerce company � Holding stock in their own warehouses

jd.com

Tmall � Owned by Alibaba Group (spun off from Taobao) � Brands can operate their own online stores and manage

distribution themselves � The grocery business line has been introduced recently � A lot of promotional activity for foreign brands and fresh food

from overseas (e.g. seafood from New Zealand or cherries from the US that could be pre-ordered)

tmall.com

Premium HoReCa Market — distribution channels

The Premium HoReCa industry is difficult to penetrate for foreign suppliers, particularly given the sector’s need for rapid product supply and consumption. There are nonetheless significant opportunities in China. Exporters are most likely to enjoy success when they deal through Chinese importer/distributors with strong specialisation and networks among product category managers of the Premium HoReCa chains. These product category managers act as ‘dealers’ by marketing products to individual HoReCa branches.

› Check out Annex IV for information on Premium HoReCa players and their contact details.

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FIGURE 3: ROUTES TO THE MARKET — HORECA

2.3.3 Trade shows

To successfully export to the Chinese market, it is crucial to establish good long-term relationships with distributors, importers and agents, who are often exhibiting at industry trade shows. The following are major Chinese trade shows for the food and beverage sector:

SIAL China

� Shanghai, yearly

� Targets retailers, caterers, HoReCa players, food service businesses, importers and exporters and food manufacturers

China International Import Food Exhibition (FCE)

� Beijing, yearly

� Covers high-end food and beverage manufacturing, with a focus on imported food and beverage

› For more information on these major trade shows, refer to Annex VI.

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China Food and Drinks Fair

� Chengdu, yearly

� Aimed at producers, distributors and purchasers of alcohol, food, soft beverages, flavorings, food additives, food packages and food machines

International Food Exhibition & Import Food Exhibition

� Guangzhou, yearly

� Covers imported foods, nutritional and health foods, wine & spirits, olive and other edible oils, food additives and ingredients as well as food packaging and processing

Food & Hotel China (FHC)

� Shanghai, yearly

� Targets exporters and importers of food and beverage, wholesalers to the hospitality industry; foodservice equipment manufacturers

China International Food Industry Trade Fair (FADS)

� Beijing, yearly

� Aims at large supermarkets and shopping mall operators, the food wholesale market, other retailers, community chain supermarkets and convenience store operators; food trade companies; food manufacturers; the HoReCa industry

� Targets the high-end food and beverage sector

China Agriculture Trade Fair (CATF)

� Wuhan, yearly

� Covers agricultural produce and its distribution network, aiming at producers, traders, importers, and wholesalers

China International Organic Food Industry Expo

� Beijing, yearly

� Covers organic and natural produce and related enterprises – producers, importers, exporters, distributors, wholesale and retail store operators, and the HoReCa industry

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REGULATORY AND TRADING ENVIRONMENTS

3.1 TRADE POLICY POSITION AND APPROACH TO TRADE AGREEMENTSChina has Free Trade Agreements (FTAs) with the Association of Southeast Asian Nations (ASEAN), Chile, Costa Rica, Pakistan, New Zealand, Singapore, Peru, Hong Kong and Macao. Table 6 below summarizes China’s FTAs. FTAs with Switzerland and Iceland are expected to enter into force in 2014. With strong capability in agribusiness and food sectors and the same advantage of being counter-seasonal to China, New Zealand and Chile are the major competitors for Australian suppliers in the Chinese market enjoying FTA advantages.

FTA negotiations with Australia and Norway are underway. Australia-China FTA negotiations are progressing on tariffs and other China market access issues. These include tariff rate quotas, standards and technical regulations.

TABLE 6: CHINA'S FREE TRADE AGREEMENTS

Trade Partner Trade Agreement Effective Date

China-Iceland Planned to come into effect in the second half of 2014

China-Switzerland Signed in July 2013; Has not entered into force yet (planned for mid-2014)

China-Costa Rica 1 August 2011

China-Peru 1 March 2010

China-Singapore 1 January 2009

China-New Zealand 1 October 2008

China-Pakistan 1 July 2007

China-Chile 1 October 2006

ASEAN-China 1 January 2005

China-Macao 17 October 2003

China-Hong Kong 29 June 2003

Under negotiation

China-Australia

China-Norway

China has been a member of the World Trade Organization (WTO) since 2001.

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3.2 TRADE BARRIERS

3.2.1 Tariff Barriers

Since its entry into the WTO in 2001, China has applied tariff rates close to the rates at which it has promised (referred to as “bound” rates). Since accession to the WTO, China has reduced its overall average tariff for agricultural products from 21.2 per cent to 15.3 per cent. However, China still has pockets of high tariff protection — as high as 65 per cent on some key products of interest to Australia.

Tariff classification and reference pricing

A major issue in classifying products is that Chinese customs officers do not follow uniform guidelines and therefore, anticipating border charges has been difficult for exporters. Commonly, delays at customs and excessive fees unrelated to the services received are a major concern.15

3.2.2 Non-Tariff Barriers

China uses various non-tariff border barriers, such as import and export licensing, import quotas and so-called “notice-and-comment” procedures. As import quotas generally do not apply to processed foods in China, the major NTBs experienced by exporters are Notice-and-Comment Procedures.

Notice-and-comment procedures

15 US trade compliance report (2013)

› For individual tariffs applied to the food and beverage categories discussed in this report, please refer to the relevant sections of the report.

› For more details on tariff barriers, please refer to Annex VIII.

PRACTICAL TIPS

� Make sure that you you’re your ingredients lists ready before exporting to China. Customs will make their judgement on product classification based on this.

� Make sure you regularly check bacterial counts - mandatory quarantine checks are carried out during customs clearance, with bacterial counts being the major issue of rejection and subsequent destroying for Australian products.

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These are ad-hoc regulations issued by the China Inspection and Quarantine Bureau (CIQ) with little to no notice, e.g. a particular food category suddenly requires to undergo specific inspections or there is a change in requisite documents. Notice-and-comment procedures released by the CIQ are becoming more prevalent in the process of drafting trade laws, regulations, and departmental rules. This means that regulations can change any time and changes in regulations apply immediately. However, not all trade-related information is made available to the public, which can result in challenging situations at the border exporters cannot prepare for.

Although regulations are routinely published, laws are being passed at different levels — central, provincial, municipal – and can often contradict each other and leave a wide margin of discretion when it comes to apply them properly.

Australian products recently affected include meat and dairy. The best countermeasure to these changes is the establishment of strong relationships with Chinese authorities.

3.3 Overview of food regulation and import standards

Food trade into China is, predictably, heavily regulated. Recent legal changes to China’s Food Safety Law have increased focus on food safety through stricter monitoring and supervision – and severe punishment of offenders. In 2013, China streamlined all domestic food safety regulatory agencies into the China Food and Drug Administration (CFDA).

The Food Safety Law includes the following important features:

� All imported foodstuffs and beverages are subject to inspections by the China Inspection and Quarantine Bureau (CIQ). Each ingredient must be registered and permitted for entry. These procedures can be time consuming and costly. For most imported foods, China has strict documentation requirements related to quality, quarantine, origin and import control. Importers must keep detailed records for at least two years.

Food Safety concerns have led to wide-ranging regulatory changes regarding production and distribution of food. A new Food Safety Law is currently under consideration – requiring active attention. In China, laws (in particular those related to food) can change dramatically without notice.

3.3.1 Registration and Certification

The importing process into China requires licenses and certifications — the most important features are explained below.

› More details on food regulation and import standards can be found at Annex VIII.

› For a detailed overview of registration and certification requirements, please refer to Annex VIII.

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AQSIQ and CNCA registration

� Foreign producers need to register as “foreign exporter producer” through China's General Administration of Quality Inspection, Supervision and Quarantine (AQSIQ). For specific product groups such as meat, a—hygiene certificate is required by the manufacturer that has to be applied for at the Chinese Certification and Accreditation Administration (CNCA).

� All exporters and importers of food and beverage require a permit for quarantine inspection. Packaged animal products or plant products require veterinary or phytosanitary certification. Local AQSIQ offices will assess product samples to check for quality and labelling as well as hygiene standards.

Chinese Food and Drug Administration

� Food and beverage with added health claims are required to be registered with the State Food and Drug Administration (CFDA).

Documentation and certificate of origin

� The importation of goods into China must be well documented, e.g. name, specification, quantities, date of production, batch numbers, use by date, name and contact details of the exporter, name and contact details of the importer, and delivery time need to be recorded and kept on file for two years minimum.

� For several import products, China requires a certificate of origin to accompany the export consignment, issued by the relevant authority in the exporter’s country (e.g. the NSW Business Chamber, VECCI or AIGroup).

Organic Certification

� The certification body for organic produce is the China Green Food Development Centre (CGFDC). The application process can be time-consuming and costly, with costs of up to AUD 47,000.

3.3.2 Labelling

The Chinese consider food labels the most useful source of information regarding health and nutrition issues. “No food additives”, “no preservatives”, “organic”, “sugar free” and similar wordings have become more popular on packaging.

No pre-packaged foods may be imported into China without appropriate Chinese labels. All imported pre-packaged food must be labelled in both English and Chinese (simplified Chinese as used in mainland China).

While on the face of it, over-stickering may spoil the display of imported products, it is preferred to changing packaging and labelling to Chinese style and language. Upper-middle class consumers look for the original packaging as would be used in the source country, as it assures them of the product’s authenticity.

› A full list of labelling requirements and a listing of relevant Chinese Government agencies can be found at Annexes V and VIII.

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SUMMARY — THE OPPORTUNITY IS IN THE DETAIL

The opportunities for Australian food & beverage exports to China are immense and growing fast. But there are no certain paths to achieving success – other than meticulous planning, a strategic approach to entering the market, and patience.

While each manufacturer must uncover their own unique value proposition in the Chinese market — including by comparing their own offering with the prices, packaging, and flavours identified in this report, there are several consistent themes across the products covered in Part II of this report:

� The Chinese processed food and beverage market is very much globalised — your product competition may come from Germany, Russia or a local Chinese manufacturer.

� Australian manufacturers, on the whole, are more likely to be competitive at the premium end of the market – given our limited scale of production and global reputation.

� At the premium end, package sizes are shrinking, and high quality defined-source ingredients (and verifiable health claims) are of growing importance to the Chinese consumer.

� Each exporter must map out their entry strategy – store format, target cities, direct or through distributors. If starting from scratch, premium food producers should target emerging premium supermarkets through experienced importer/distributors – some of which are identified in this report.

The challenges of market entry into China – labelling, import taxes and customs – should not cloud the opportunity. These can be deftly handled by experienced importer/distributors if they are convinced of the unique value to their target buyers.

We hope this report provides the practical insights to bolster confidence about exploring opportunities for your specific products. Part II and the Annexes, in particular, provide deep commercial insights at the specific sub-category level – information which is not available in the public domain.

PART 2

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SNACKFOODS

For the purpose of this report, the category of “Snackfoods” covers chocolate, sugar confectionary and cereal-based bar sub-categories. The total Premium Retail Market size of these snackfood product categories in China was AUD 7.6 billion in 2013.16 Average price range and package size range for the selected sub-categories are set out in Table 7.

TABLE 7: CHARACTERISTICS OF SURVEYED SNACKFOOD SUB-CATEGORIES

Sub-Category HS Code Description of highest current trade growth products

Price Range in AUD

Package Size Range

Chocolates 1806 Filled/unfilled chocolate slabs, bars or specialty chocolates (i.e. boxes)

2.60–6.00 per 100g

75–375g most common: 100g

Sugar Confectionary

1704 Particularly non-cocoa confectionary, such as boiled Sweets, Liquorice, Lollipops, Mints, Pastilles, Gums, Jellies, Chews, Toffees, Caramels, Nougat, but not including chewing gum

Imported: 1.90–2.93 per 100g

Locally produced: 1.20–1.55 per 100g

Imported: 90–365g, most common: 200g

Locally produced: 45–70g

Cereal-based bars

1904 Roasted or unroasted cereal-based snack bars

4.48–4.66 per 6 bars

35g–40g per bar

4.1 CHOCOLATESThe total Premium Retail Market size for chocolate in China was AUD 1.6 billion in 2013 and is forecast to reach AUD 1.8 billion in 2015. The market is expected to grow at a CAGR of 10–12 per cent over the next 3 years.17

Average price range and package size range for chocolate in the Selected Premium Retail Market are set out in Table 8.

TABLE 8: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — CHOCOLATE

Product Category Price Range in AUD Package Size Range

Chocolates 2.60-6.00 per 100g 75-375g, most common: 100g

16 Estimate: Euromonitor and decisionAsia analysis17 Estimate: Euromonitor and decisionAsia analysis

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4.1.1 Key players and brands

Figure 4 sets out the indicative “Share of Shelf” for chocolate brands in the Chinese Selected Premium Retail Market, including premium imported as well as local brands.

FIGURE 4: MAJOR CHOCOLATE BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET

The premium market is dominated by US brands (imported as well as produced locally), with Dove — a Mars product - being the most prominent locally-produced brand. Key imported brands are Hershey from the US, MeiJi (Melty Kiss) from Japan, and Lindt, Ferrero (Rocher and Kinder) and Kraft from Europe. European companies are very successful in this market segment, since they can offer lower prices and have a focus promoting products aggressively, in particular with in-store promotions.

4.1.2 Packaging

The average package size for chocolates in the Selected Premium Retail Market ranges between 75 grams and 375 grams, with 100 gram packages being the most common size. For gift boxes in particular, images of tourist sites or animals on the boxes (e.g. the Great Wall of China or Koalas) appear to work very well in the Chinese market.

› A full list of surveyed package sizes is available at Annex I.

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4.1.3 Price points

The average price for chocolate in the Selected Premium Retail Market ranges between RMB 15–35 (AUD 2.60 – AUD 6) per 100 grams. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent.

4.1.4 Product trends

The major flavours used in chocolates and chocolate bars are milk chocolate, almond, hazelnut or mixed nuts. New premium chocolates are increasingly using local flavours such as green tea and red beans or ginger in the winter season. Low sugar versions are also popular. Chinese premium customers prefer chocolates that are less sweet – with a stronger focus on dark chocolates.

Chocolates boxes are a popular gift item. Australian suppliers should target New Year, spring and May holidays to increase sales volumes. During other seasons, chocolate bars dominate the market.

4.1.5 Marketing and promotion

Common promotions for chocolates in the Premium Retail Market consist of price promotions and bonus packs for customers. Trade promotion and in-store promotion are typically required and form part of the retailers’ trading terms. Our survey of the Selected Premium Retail Markets could not identify any promotions (active during the survey period).

› A full list of surveyed retail prices is available at Annex I.

AUSTRADE INSIGHTS

� Small packages are ideal for people who snack at work (75-100g packages) .

� Gift-packaging (in nice tin or boxes) are also preferred in China as chocolates are typically used as gifts, especially during festival times.

� New competition has arisen in the market, including Russian chocolate that has recently entered retail stores in the North East region of China.

� Australian products are typically niche products (superior quality and higher price). Greater competition in chocolate imports is putting downward pressure on imported product prices, and narrowing the price gap with local brands.

� The recommendation on some chocolate products to store below 18 degrees typically cannot be meet by Chinese stores. Some high-end stores in China struggle to meet this recommended storage condition, even with air conditioning for the hot summer months. There is some consumer reluctance to purchase chocolate if the package includes such a warning.

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4.1.6 Trade barriers

Import duty is assessed on chocolate (blocks, slabs or bars) at a rate of 10 per cent CIF. Import duty is assessed on chocolate (filled blocks, slabs or bars) at a rate of 8 per cent CIF. Importers of chocolate are also required to pay VAT of 17 per cent.

PICTURE 3: SHELF WITH CHOCOLATE GIFT BOXES AT OLE SUPERMARKET


The typical route to the Premium Retail Market for imported chocolates and global brands that are produced locally is through 3rd party distributors, while local brand chocolate is mainly distributed directly by the manufacturers. A “Routes to Market” overview for China is provided at Section 2.3.3.

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Our survey has identified:

� 6 retailers in the Chinese Selected Premium Retail Market with a significant selection of imported chocolates.

� 6 distributors supplying the Chinese Premium Retail Market with a significant selection of imported chocolates.

Our survey has found that the Premium HoReCa channel is not sufficiently developed for the chocolate sub-category.

4.2 SUGAR CONFECTIONERYThe total Premium Retail Market size for sugar confectionery in China was AUD 5.8 billion in 2013. The market is expected to grow at a CAGR of 7–8 per cent over the next 3 years.18

Average price range and package size range for sugar confectionery in the Selected Premium Retail Market are set out in Table 9.

TABLE 9: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — SUGAR CONFECTIONERY


Sugar Confectionery Imported: 1.90–2.93 per 100gLocally produced: 1.20–1.55 per 100g

Imported: 90–365g, most common: 200gLocally produced: 45–70g

18 Estimate: Euromonitor and decisionAsia analysis

› An overview and contact details for retailers and distributors are available at Annexes II and III.

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Figure 5 sets out the indicative “Share of Shelf” for sugar confectionery brands in the Chinese Selected Premium Retail Market, including premium imported as well as local brands.

FIGURE 5: MAJOR SUGAR CONFECTIONERY BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET

The Premium Retail Market is dominated by European brands such as Katjes, Haribo and Perfetti van Melle (e.g. Mentos, Chupa Chups) and local brands like Four Seas and Fujiya.

4.2.2 Packaging

The average package size for imported sugar confectionery in the Selected Premium Retail Market ranges between 90 grams and 365 grams, with 200 gram packages being the most popular size. For locally produced sugar confectionery, the average package size ranges between 45 grams and 70 grams.

› A full list of surveyed package sizes is available in Annex I.

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4.2.3 Price points

The average price for sugar confectionery in the Selected Premium Retail Market ranges between RMB 11–17 (AUD 1.90 – AUD 2.93) per 100 grams for imported brands. Locally produced sugar confectionery in the Selected Premium Retail Market has an average price between RMB 7–9 (AUD 1.20 – AUD 1.55) per 100 grams. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent.

PICTURE 4: SHELF WITH SUGAR CONFECTIONERY AT CITY SHOP


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The major flavours used in sugar confectionery are fruit mixes, watermelon, strawberry, mint and milky flavours. New product trends in the high-end sugar confectionery category are milk candies and chewy candies as well as low sugar content options. The Chinese prefer sugar confectionery that is less sweet than the typical sugar confectionery sold in Australia — this applies specifically for the Northern Chinese. Liquorice is not very popular in the Chinese confectionery market.

Manufacturers are currently seeing a major opportunity in transforming candies and other sugar confectionery into snackfood to be consumed more regularly, e.g. at work. To implement this strategy, it is expected that they will tend to offering less sweet options in this market segment.


Common promotions for sugar confectionery in the Premium Retail Market consist of individual “end aisle gondola displays”, separate from similar products. Trade promotion and in-store promotion are typically required and form part of the retailers’ trading terms. Our survey of the Selected Premium Retail Markets has identified 4 promotions (active during the survey period).


Import duty is assessed on sugar confectionery (not containing cocoa) at a rate of 10 per cent CIF. Importers of sugar confectionery are also required to pay VAT of 17 per cent.


The typical route to the Premium Retail Market for imported sugar confectionery and global brands that are produced locally is through 3rd party distributors, while local brand sugar confectionery is mainly distributed directly by the manufacturers. A “Routes to Market” overview for China is provided at Section 2.3.3.


� 6 retailers in the Chinese Selected Premium Retail Market with a significant selection of imported sugar confectionery.

� 6 distributors supplying the Chinese Premium Retail Market with a significant selection of imported sugar confectionery.

› The details of promotions identified during the survey period are available at Annex I.

Austrade Insights

Make sure you focus on premium ingredients for sugar confectionery as this is essential to be successful in the Chinese Premium Retail Market. Chinese consumers tend to prefer very “smooth” types of confectionery such as milk candy.

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Our survey has found that the Premium HoReCa channel is not sufficiently developed for the sugar confectionery sub-category.

4.3 CEREAL-BASED BARSThe total Premium Retail Market size for cereal-based bars in China was AUD 21 million in 2013. The market is expected to grow at a CAGR of 6–7 per cent over the next 3 years.19

Average price range and package size range for cereal-based bars in the Selected Premium Retail Market are set out in Table 10.

TABLE 10: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — CEREAL-BASED BARS


Cereal-based Bars 1.83–2.83 per 100g 25–50g per bar (4 or 6 bars per package)


Figure 6 sets out the indicative “Share of Shelf” for cereal-based bars brands in the Chinese Selected Premium Retail Market, including premium imported as well as local brands.

FIGURE 6: MAJOR CEREAL-BASED BARS BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET



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The Premium Retail Market is dominated by imported brands such as Corny, Kind, Power Bar Inc, and Slim Secrets.

4.3.2 Packaging

The average package size for cereal-based bars in the Selected Premium Retail Market ranges between 35 grams and 40 grams per bar.

PICTURE 5: CEREAL-BASED BARS ON WANGOOSHOP — A CHINESE ONLINE RETAILER THAT CATERS TO EXPATRIATES

4.3.3 Price points

The average price for cereal-based bars in the Selected Premium Retail Market ranges between RMB 26–27 (AUD 4.48 – AUD 4.66) for 6 bars. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent.


The major flavours used in cereal-based bars are almond, peanut and peanut butter, and mixed nuts. Cereal bars are still not very popular among the Chinese, however, there has been an increase in online retail sales of cereal bars.


› A full list of surveyed retail prices is available in Annex I.

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Only two supermarkets – City Shop and Ole – in the Selected Premium Retail Market currently carry cereal-based bars, which are exclusively imported products. Major demand is highest in expatriate residential areas and Chinese who have returned from overseas are also more likely to be interested in buying cereal bars.


Cereal-based bars are not heavily promoted in the Chinese Premium Retail Market. Our survey of the Selected Premium Retail Markets could not identify any promotions (active during the survey period).


Import duty is assessed on cereal-based bars at a rate of 25 per cent CIF for foods obtained by the swelling or roasting of cereals or cereal products. Import duty is assessed on cereal-based bars at a rate of 30 per cent CIF for foods obtained from unroasted or mixed of unroasted and roast cereals. Importers of cereal-based bars are also required to pay VAT of 17 per cent.


The typical route to the Premium Retail Market for imported cereal-based bars and through 3rd party distributors. A “Routes to Market” overview for China is provided at Section 2.3.3.

Our survey has identified

� 2 retailers in the Chinese Selected Premium Retail Market carrying cereal-based bars with a significant selection of imported cereal-based bars.

� 6 distributors supplying the Chinese Premium Retail Market with a significant selection of imported cereal-based bars.

Our survey has found that the Premium HoReCa channel is not sufficiently developed for the cereal-based bars sub-category.

Austrade Insights

� Current cereal bars on the market are often considered “too sweet” by Chinese consumers.

� Manufacturers have tried to highlight the “instant energy” benefit of cereal-based bars, but this has not been a successful strategy in the Chinese market.

� Make sure you highlight that your product is less sweet, or contains no fat and less sugar than similar products.


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BEVERAGES

For the purpose of this report, the category of “Beverages” covers fruit juice, tea and premium cold beverage sub-categories. The total Premium Retail Market size of these beverage product categories in China was AUD 19.5 billion in 2013.20 Average price range and package size range for the selected sub-categories are set out in Table 11.

TABLE 11: CHARACTERISTICS OF SURVEYED BEVERAGE CATEGORIES


Price Range in AUD Package Size Range

Fruit Juice 2009 Specific product types that represent local trends. For example, this done by examining shelf space allocation at major premium retailers.

Imported: 3.28–4.83 per litre Locally produced: 2.76–3.45 per litre

1-2 litres, most common: 1 litre

Tea 0902 Tea for consumption as warm beverage

Imported: 7.76–8.62 per 100gLocally produced: 1.20–1.72 per 100g

Imported: 50–100gLocally produced: 100–180g

Premium Cold Beverages

2202 Energy Drinks, Ready-to-drink tea (e.g. iced tea), premium non-cola carbonated drinks

6.90–10.35 per litre Energy-type drinks: 100–200mlOther: 250–450ml

5.1 FRUIT JUICEThe total Premium Retail Market size for fruit juice in China was AUD 1.84 billion in 2013 and is forecast to reach AUD 2.1 billion in 2015. The market is expected to grow at a CAGR of 8–10 per cent over the next 3 years.21 Average price range and package size range for fruit juice in the Selected Premium Retail Market are set out in Table 12.

TABLE 12: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — FRUIT JUICE


Fruit Juice Imported: 3.28–4.83 per litre Locally produced: 2.76–3.45 per litre

1–2 litres most common: 1 litre


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Figure 7 sets out the indicative “Share of Shelf” for fruit juice brands in the Chinese Selected Premium Retail Market, including premium imported as well as local brands.

FIGURE 7: MAJOR FRUIT JUICE BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET

The Premium Retail and HoReCa Markets are dominated by local brands like Hui Yuan and Dahu. However, several import brands have established a strong presence in this segment, with Dole, Coca Cola, Tropicana, Santal and Ringo being the major players.

Australian juice such as Berri, Just Juice and Golden Circle Juice has entered the market in major cities such as Beijing, Shanghai and Guangzhou.

5.1.2 Packaging

The average package size for fruit juice in the Selected Premium Retail Market ranges between 1 litre and 2 litres. Fresh juice is commonly available in 1 litre packages, whereas juice concentrate is mostly available in 1.25 litre packages.

Juice packaging in China requires more colourful designs and brighter colours to be successful. Manufacturers are currently moving from cartons to plastic bottles. Small packages (e.g. 250 ml packs) are getting more popular for people who take juice to work or school.

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PICTURE 6: MINUTE MAID DISPLAYED AT END OF GONDOLA — LIANHUA SUPERMARKET

5.1.3 Price points

The average price for imported fruit juice in the Selected Premium Retail Market ranges between RMB 19–28 (AUD 3.28 – AUD 4.83) per litre. Locally produced fruit juice in the Selected Premium Retail Market has an average price between RMB 16–20 (AUD 2.76 – AUD 3.45) per litre. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent. HoReCa players in the Selected Premium HoReCa Market have a 5 per cent–10 per cent margin.



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The major flavours used in fruit juice are apple, orange, tropical mixes and peach, with tropical juice mixes being the major growth category. Orange juice still has a 40–50 per cent market share, which is expected to decrease in the next few years. New trends in the Premium Retail Market, however, are local flavours such as crystal sugar pear, honeysuckle pear and longan red jujube. The leading players that have picked up these new flavour trends successfully are Uni-President Enterprises (crystal sugar pear) and Suntory Holdings (honeysuckle pear and longan red jujube). Those beverages with traditional Chinese tastes are labelled as natural and with health benefits.

Fresh juices are still perceived as being too expensive, even for many customers in the Premium Retail Market.


Common promotions for fruit juice in the Premium Retail Market consist of end gondola displays and product sampling in the form of free small juice packs (e.g. 33ml) attached to a carton or bottle to introduce new flavours. Trade promotion and in-store promotion are typically required and form part of the retailers’ trading terms. Our survey of the Selected Premium Retail Markets has identified 3 promotions (active during the survey period).


Import duty is assessed on fruit juice at rates between 7.5 per cent–30 per cent CIF. Importers of fruit juice are also required to pay VAT of 17 per cent.

Austrade Insights

� Chinese retailers as well as distributors prefer a longer shelf-life for fruit juice (9 months and over).

� Imported Thai and Malaysian fruit juices are becoming increasingly popular as they offer lower priced options.

� For the HoReCa industry, Australian suppliers should target coffee shops. Most of them now sell bottled fruit juices and they typically prefer 500ml glass bottles.

� A new trend in carbonated grape juice as alternative to wine, for consumers who do not drink alcohol or who have alcohol allergies, is emerging. A South Australia winery has been successful with such a non-alcoholic beverage, noting there is currently little or no domestic competition.


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TABLE 13: TARIFF RATES FOR SELECTED TYPES OF FRUIT JUICE

Product Tariff rate %

Frozen orange juice 7.5

Not frozen orange juice 30

Apple juice, Grape juice, Mixtures of fruit juices 20

Pineapple 10


The typical route to the Premium as well as the Premium HoReCa Market for imported fruit juice is through 3rd party distributors, while local brand fruit juice is mainly distributed directly by the manufacturers. A “Routes to Market” overview for China is provided at Section 2.3.3.


� 6 retailers and 4 HoReCa players in the Chinese Selected Premium Retail Market with a significant selection of imported fruit juice.

� 6 distributors supplying the Chinese Premium Retail Market and the HoReCa industry with a significant selection of imported fruit juice.

5.2 TEAThe total Premium Retail Market size for tea in China was AUD 4 billion in 2013. The market is expected to grow at a CAGR of 15–17 per cent over the next 3 years.22

Average price range and package size range for tea in the Selected Premium Retail Market are set out in Table 14

TABLE 14: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — TEA


Tea Imported: 7.76–8.62 per 100g Locally produced: 1.20–1.72 per 100g

Imported: 50–100g Locally produced: 100–180g



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Figure 8 sets out the indicative “Share of Shelf” for tea brands in the Chinese Selected Premium Retail Market, including premium imported as well as local brands.

FIGURE 8: MAJOR TEA BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET

The Premium Retail and HoReCa Markets are dominated by the international brands Lipton (Yellow Label), Twinings, and Harvey and Sons. A major local brand is Le Er Fu (Ginger Tea). The market for traditional flavours appears to be quite saturated with more than 100 brands.

5.2.2 Packaging

The average package size for tea in the Selected Premium Retail Market is 100 grams or 25 bags of 4 grams for imported teas. The average package size for locally produced teas ranges between 100 grams and 180 grams.


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5.2.3 Price points

The average price for tea in the Selected Premium Retail Market ranges between RMB 45–50 (AUD 7.76 – AUD 8.62) per 100 grams. Locally produced tea in the Selected Premium Retail Market has an average price between RMB 7–10 (AUD 1.20 – AUD 1.72) per 100 grams. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent. HoReCa players in the Selected Premium HoReCa Market have a 5 per cent–10 per cent margin.


Traditional teas like green and white loose leaf are still the most enjoyed teas among the Chinese who prefer “pure” over flavoured teas. New trends in the Premium Retail Market are English Breakfast, Earl Grey, green tea with lemon flavour, Darjeeling and fruit and herbal teas. Imported brands such as Lipton and Twinings have a big demand in the Premium HoReCa Market and among expatriates and Chinese that have accepted Western style drinks. This target group also values the convenience benefit of tea bags.

PICTURE 7: SHELF WITH TEA BOXES AT TESCO CHINA


Austrade Insights

� With ever present food safety concerns and an increasing awareness and fear of pesticides in tea by the Chinese consumer, there is an increasing demand for imported teas that are perceived as safe.

� Imports from India and Sri Lanka are currently the most competitive, due to lower pricing.

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Common promotions for tea in the Premium Retail Market consist of product sampling in the form of free tea bags to introduce new flavours. Trade promotion and in-store promotion are typically required and form part of the retailers’ trading terms. Our survey of the Selected Premium Retail Markets has identified 2 promotions (active during the survey period).


Import duty is assessed on tea at a rate of 15 per cent CIF. Importers of tea are also required to pay VAT of 17 per cent.


The typical route to the Premium Retail Market and the Premium HoReCa Market for imported tea is through 3rd party distributors, while local brand tea is mainly distributed directly by the manufacturers. A “Routes to Market” overview for China is provided at Section 2.3.3.


� 6 retailers and 4 HoReCa players in the Chinese Selected Premium Retail Market with a significant selection of imported tea.

� 5 distributors supplying the Chinese Premium Retail Market and the Premium HoReCa Market with a significant selection of imported tea.

5.3 PREMIUM COLD BEVERAGES (NON-ALCOHOLIC)The total Premium Retail Market size for premium cold beverages in China was AUD 13.7 billion in 2013 and is forecast to reach AUD 15.3 billion in 2015. The market is expected to grow at a CAGR of 14–20 per cent over the next 3 years.23

Average price range and package size range for premium cold beverages in the Selected Premium Retail Market are set out in Table 15.




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TABLE 15: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — PREMIUM COLD BEVERAGES


Premium Cold Beverages 6.90–10.35 per litre Energy-type drinks: 100–200ml Other: 250–450ml


Figure 10 sets out the indicative “Share of Shelf” for premium cold beverage brands in the Thai Selected Premium Retail Market, including premium imported as well as local brands

FIGURE 10: MAJOR PREMIUM COLD BEVERAGES BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET

The Premium Retail Market is dominated by the international brands A&W, Snapple, Dr. Pepper, Rubican, Suntory, Kirin, Red Bull, and Gatorade. A major local brand is Wang Lao Ji. Herbal premium cold beverages like Wang Lao Ji canned herbal tea are produced locally, but many popular refreshment and energy drinks (carbonated and non-carbonated) are imported products from Western countries or Japan.

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5.3.2 Packaging

The average bottle or can size for premium cold beverages in the Selected Premium Retail Market ranges between 100 ml to 200 ml for energy drinks and between 250 ml and 450 ml for all other premium cold beverages.

5.3.3 Price points

The average price for premium cold beverages in the Selected Premium Retail Market ranges between RMB 40–60 (AUD 0.69 – AUD 10.35) per litre. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent.

PICTURE 8: PREMIUM COLD BEVERAGE SHELF AT CITY SUPER


Major flavour trends in the premium cold beverage segment are fruit, roots (e.g. root beer), milk (e.g. juices and iced teas mixed with milk), green and iced teas, herbal and coffee. In addition, there is high demand for energy drinks, with Red Bull – produced locally – being the most popular option. Sugar free and healthy beverages are typically preferred – many consumers are now looking for high vitamin content, fruity flavours and drinks with plant proteins. Younger generations are the major target group for this beverage sub-category, as more than 50 per cent of premium cold beverages are consumed by people aged between 25 and 44 years.



Austrade Insights

� Vitamin concepts are popular: Many manufacturers are now flavouring drinks with peach, pear or orange flavours and add vitamins to their beverages.

� A large share of premium cold beverages are sold in convenience stores (cans and small bottles) and vending machines (e.g. railway stations).

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5.3.2 Packaging

The average bottle or can size for premium cold beverages in the Selected Premium Retail Market ranges between 100 ml to 200 ml for energy drinks and between 250 ml and 450 ml for all other premium cold beverages.

5.3.3 Price points

The average price for premium cold beverages in the Selected Premium Retail Market ranges between RMB 40–60 (AUD 0.69 – AUD 10.35) per litre. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent.

PICTURE 8: PREMIUM COLD BEVERAGE SHELF AT CITY SUPER


Major flavour trends in the premium cold beverage segment are fruit, roots (e.g. root beer), milk (e.g. juices and iced teas mixed with milk), green and iced teas, herbal and coffee. In addition, there is high demand for energy drinks, with Red Bull – produced locally – being the most popular option. Sugar free and healthy beverages are typically preferred – many consumers are now looking for high vitamin content, fruity flavours and drinks with plant proteins. Younger generations are the major target group for this beverage sub-category, as more than 50 per cent of premium cold beverages are consumed by people aged between 25 and 44 years.



Austrade Insights

� Vitamin concepts are popular: Many manufacturers are now flavouring drinks with peach, pear or orange flavours and add vitamins to their beverages.

� A large share of premium cold beverages are sold in convenience stores (cans and small bottles) and vending machines (e.g. railway stations).


Common promotions for premium cold beverages in the Premium Retail Market consist of product sampling. However, our survey of the Selected Premium Retail Markets could not identify any promotions (active during the survey period).


Import duty is assessed on premium cold beverages (mineral waters and waters with added sugar, sweetener etc.) at a rate of 20 per cent CIF. Import duty is assessed on premium cold beverages (other non-alcoholic beverages) at a rate of 35 per cent CIF. Importers of premium cold beverages are also required to pay VAT of 17 per cent.


The typical route to the Premium Retail Market for imported premium cold beverages is through 3rd party distributors. A “Routes to Market” overview for China is provided at Section 2.3.3.


� 6 retailers in the Chinese Selected Premium Retail Market with a significant selection of imported premium cold beverages.

� 7 distributors supplying the Chinese Premium Retail Market with a significant selection of imported premium cold beverages.

� Our survey has found that the Premium HoReCa channel is not sufficiently developed for the premium cold beverage sub-category.


› An overview and contact details for retailers and distributors are available at Annex II and III.

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BAKED GOODS

For the purpose of this report, the category of “Baked Goods” covers biscuit and baking mix sub-categories. The total Premium Retail Market size of these baked goods product categories in China was AUD 1.53 billion in 2013.24 Average price range and package size range for the selected sub-categories are set out in Table 16.

TABLE 16: CHARACTERISTICS OF SURVEYED BAKED GOODS CATEGORIES


Price Range in AUD

Package Size Range

Biscuits 1905 Sweet biscuits (excluding gingerbread, waffles, wafers) Crisp savoury biscuits

3.45-5.17 per 100g

Imported: 90–175g Locally produced: 100–200g

Baking Mixes 190120 Baking mixes and prepared doughs for breads, cakes and biscuits

1.38–2.24 per 100g

450–500g

6.1 BISCUITSThe total Premium Retail Market size for biscuits in China was AUD 1.16 billion in 2013. The market is expected to grow at a CAGR of 15–20 per cent over the next 3 years.25

Average price range and package size range for biscuits in the Selected Premium Retail Market are set out in Table 17.

TABLE 17: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — BISCUITS


Biscuits 3.45–5.17 per 100g Imported: 90–175g Locally produced: 100–200g


Figure 10 sets out the indicative “Share of Shelf” for biscuits brands in the Chinese Selected Premium Retail Market, including premium imported as well as local brands.


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FIGURE 10: MAJOR BISCUITS BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET

The Premium Retail Market for sweet biscuits is dominated by the international players Danisa, Cheez, Kjeldens and Oreo (produced locally). The high-end salty biscuit segment is led by Edo Pack (HongKong) and the local brand Kang Shi Fu, but brands from other Southeast Asian countries are becoming stronger due to price advantages. The Premium HoReCa Market is dominated by Jacob’s (imported) and Kang Shi Fu.

6.1.2 Packaging

The average package size for biscuits in the Selected Premium Retail Market ranges between 90 grams and 175 grams for imported products and between 100 grams and 200 grams for locally produced biscuits.

Chinese customers prefer big packages — even for small amounts of biscuits and are increasingly buying biscuits in metal containers rather than paper boxes. Australian packaging is often perceived as not being “impressive” enough, especially compared to colourful and bright packaging used by Malaysian and Indonesian producers.


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6.1.3 Price points

The average price for biscuits in the Selected Premium Retail Market ranges between RMB 20–30 (AUD 3.45 – AUD 5.17) per 100 grams. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent. HoReCa players in the Selected Premium HoReCa Market have a 5 per cent–10 per cent margin.


Major flavour trends in the salty biscuit premium segment are ginger and cheese. In the sweet biscuit segment, chocolate, vanilla and butter are the major flavours used. Butter biscuits are very popular and manufacturers from Denmark and the United Kingdom still have the largest market shares — even though domestic brands are now creating healthier options by offering butter biscuits with reduced butter content. The major trend in the premium biscuit segment is the use of sugar-free, high-in-fibre, wholemeal and vitamin concepts — manufacturers make use of health claims wherever they can.

In the Premium HoReCa Market, demand mainly exists for savoury biscuits — it is not yet sufficiently developed for the sweet biscuits.


Common promotions for biscuits in the Premium Retail Market consist of product sampling in the form of bonus products or price discounts. Our survey of the Selected Premium Retail Markets has identified 2 promotions (active during the survey period).


Austrade Insights

� Biscuits are typically required to have a long shelf life (minimum 9 months).

� Chinese consumers prefer high-butter content shortbread or cookies.

� Crackers/wafers or biscuit (bread) stick which are designed to be eaten with Cheese or dips are not yet very popular in China, as eating cheese with crackers is still uncommon.

� Especially in the biscuit segment, Australian suppliers would benefit from investing in promotional activities as Australia does not have a strong brand image in this segment. Many Chinese for example, believe that Tim Tams are originally from Indonesia.

� The main holidays and festivals in China offer the option to sell biscuits, often as part of gift hampers. Gift-packaging design is important for this sector, as gifting biscuits is increasingly popular.

› The details of promotions identified during the survey period are available in Annex I.

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6.1.3 Price points

The average price for biscuits in the Selected Premium Retail Market ranges between RMB 20–30 (AUD 3.45 – AUD 5.17) per 100 grams. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent. HoReCa players in the Selected Premium HoReCa Market have a 5 per cent–10 per cent margin.


Major flavour trends in the salty biscuit premium segment are ginger and cheese. In the sweet biscuit segment, chocolate, vanilla and butter are the major flavours used. Butter biscuits are very popular and manufacturers from Denmark and the United Kingdom still have the largest market shares — even though domestic brands are now creating healthier options by offering butter biscuits with reduced butter content. The major trend in the premium biscuit segment is the use of sugar-free, high-in-fibre, wholemeal and vitamin concepts — manufacturers make use of health claims wherever they can.

In the Premium HoReCa Market, demand mainly exists for savoury biscuits — it is not yet sufficiently developed for the sweet biscuits.


Common promotions for biscuits in the Premium Retail Market consist of product sampling in the form of bonus products or price discounts. Our survey of the Selected Premium Retail Markets has identified 2 promotions (active during the survey period).


Austrade Insights

� Biscuits are typically required to have a long shelf life (minimum 9 months).

� Chinese consumers prefer high-butter content shortbread or cookies.

� Crackers/wafers or biscuit (bread) stick which are designed to be eaten with Cheese or dips are not yet very popular in China, as eating cheese with crackers is still uncommon.

� Especially in the biscuit segment, Australian suppliers would benefit from investing in promotional activities as Australia does not have a strong brand image in this segment. Many Chinese for example, believe that Tim Tams are originally from Indonesia.

� The main holidays and festivals in China offer the option to sell biscuits, often as part of gift hampers. Gift-packaging design is important for this sector, as gifting biscuits is increasingly popular.

› The details of promotions identified during the survey period are available in Annex I.


Import duty is assessed on biscuits (sweet) at a rate of 15 per cent CIF. Import duty is assessed on biscuits (savoury, e.g. ginger and roasted bread-type biscuits) at a rate of 20 per cent CIF. Importers of biscuits are also required to pay VAT of 17 per cent.

PICTURE 9: BISCUITS SHELF AT TESCO CHINA


The typical route to the Premium Retail Market and the Premium HoReCa Market for imported biscuits and global brands that are produced locally is through 3rd party distributors, while local brand biscuits are mainly distributed directly by the manufacturers. A “Routes to Market” overview for China is provided at Section 2.3.3.


� 6 retailers in the Chinese Selected Premium Retail Market with a significant selection of imported biscuits.

� 6 distributors supplying the Chinese Premium Retail Market and the Premium HoReCa Market with a significant selection of imported biscuits.

› An overview and contact details for retailers and distributors are available in Annexes II and III.

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6.2 BAKING MIXES The total Premium Retail Market size for baking mixes in China was AUD 368 million in 2013. The market is expected to grow at a CAGR of 5–8 per cent over the next 3 years.26

Average price range and package size range for baking mixes in the Selected Premium Retail Market are set out in Table 18.

TABLE 18: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — BAKING MIXES


Baking mixes 1.38–2.24 per 100g 450–500g


Figure 11 sets out the indicative “Share of Shelf” for baking mix brands in the Chinese Selected Premium Retail Market.

FIGURE 11: MAJOR BAKING MIX BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET

General Mills’ Betty Crockers, Dr Oetker, Duncan Hines and Australian White Wings are the key brands in premium retail. There are currently no local brands in this segment.


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6.2.2 Packaging

The average package size for baking mixes in the Selected Premium Retail Market ranges between 450 grams and 500 grams. For baking mixes, most exporters use stick on labels in Chinese language.

6.2.3 Price points

The average price for baking mixes in the Selected Premium Retail Market ranges between RMB 8–13 (AUD 1.38 – AUD 2.24) per 100 grams. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent.

PICTURE 10: BAKING MIXES SHELF DISPLAY AT CITY SHOP


Baking mixes are not very popular in the Chinese market yet, which is partly due to the fact that most families do not have baking ovens at home yet, but also due to high prices. However, the demand is picking up slowly, with major sales volumes realised in Shanghai. The most popular type of baking mix is cake mix, with chocolate and fudge flavours having the highest demand. In the Selected Premium Retail Market, only three supermarkets — Ole, City Super and City Shop — offer bakery mixes which are exclusively imported products.



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Baking mixes are not highly promoted in the Chinese Premium Retail Market. Our survey of the Selected Premium Retail Markets could not identify any promotions (active during the survey period).


Import duty is assessed on baking mixes at a rate of 15 per cent CIF. Importers of baking mixes are also required to pay VAT of 17 per cent.

PICTURE 11: STICK ON LABELS FOR BAKING MIXES - DUNCAN HINES

Austrade Insights

� Cake mixes are quite popular already whereas bread mixes are less so.

� Success story: Green’s Australia have successfully entered the Chinese Premium Retail Market (pricing: 340g cake mix, chocolate, AUD 5.17).

� Younger women have picked up baking on weekends; they are an excellent target group.

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The typical route to the Premium Retail Market for imported baking mixes is through 3rd party distributors or directly through the retailers’ distribution units. A “Routes to Market” overview for China is provided at Section 2.3.3.


� 3 retailers and 1 HoReCa player in the Chinese Selected Premium Retail Market with a significant selection of imported baking mixes.

� 5 distributors supplying the Chinese Premium Retail Market with a significant selection of imported baking mixes.


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CONDIMENTS

For the purpose of this report, the category of “Condiments” covers premium table sauces and jams sub-categories. The total Premium Retail Market size of these condiments product categories in China was AUD 6.6 billion in 2013.27 Average price range and package size range for the selected sub-categories are set out in Table 19.

TABLE 19: CHARACTERISTICS OF SURVEYED CONDIMENTS SUB-CATEGORIES


Price Range in AUD

Package Size Range

Premium Table Sauces

2103 Table sauces, excluding tomato-based sauces, with a focus on ‘premium’ sauces

1.72–2.59 per 100g

450–500g

Jams 2007 Jams — particularly highest value flavours in each market

0.86–2.59 per 100g

225–350g

7.1 PREMIUM TABLE SAUCESThe total Premium Retail Market size for Premium Table Sauces in China was AUD 5.8 billion in 2013 and is expected to reach AUD 6.3 million in 2015. The market is expected to grow at a CAGR of 8–9 per cent over the next 3 years.28

Average price range and package size range for Premium Table Sauce in the Selected Premium Retail Market are set out in Table 20.

TABLE 20: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — PREMIUM TABLE SAUCE


Premium Table Sauce 1.72–2.59 per 100g 450–500g


Figure 12 sets out the indicative “Share of Shelf” for Premium Table Sauce brands in the Chinese Selected Premium Retail Market, including premium imported as well as local brands.


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FIGURE 12: MAJOR PREMIUM TABLE SAUCE BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET

The competition in the Premium Table Sauce segment is intense. Domestic and Southeast Asian brands compete fiercely in the traditional sauces segment, whereas international brands — in particular US and European brands — compete in the Western style sauces category. The most popular local brand in Premium Table Sauces is Lee Kum Kee, which offers condiments with typical local flavours. Other strong domestic brands are Tai Yuan Huang Pai and Zhang Shi Ji. The most successful international brands are McIlhenney, Kraft, Hunt’s Master Foods, Kewpie and Heinz. The Premium HoReCa Market is dominated by these international brands, local brands are generally not in use.

7.1.2 Packaging

The average bottle content for Premium Table Sauce in the Selected Premium Retail Market ranges between 400 grams and 500 grams.


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7.1.3 Price points

The average price for Premium Table Sauce in the Selected Premium Retail Market ranges between RMB 10–15 (AUD 1.72 – AUD 2.59) per 100 grams. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent. HoReCa players in the Selected Premium Retail Market have a 5 per cent–10 per cent margin.


Soy sauce remains the major sauce used in Chinese households, due to its long-standing presence and its important role in local meals. There is a high demand for Premium Table sauces that contain local flavours such as chili and black bean. However, in the Premium Retail Market, barbecue, tabasco, brown (e.g. HP), cocktail and horseradish sauces — with wasabi sauce being a key contributor — have recently recorded strong growth in both value and volume terms. The major Western style sauces that have been highly successful in the Premium Retail Market are Worcestershire and mayonnaise-based sauces.

In the Premium HoReCa Market, chili-based and other traditional Chinese sauces remain in high demand, but as in the Premium Retail Market, Western style sauces — especially mayonnaise-based — are enjoying strong growth.


Premium Table Sauce are not highly promoted in the Chinese Premium Retail Market. Our survey of the Selected Premium Retail Markets could not identify any promotions (active during the survey period).


Import duty is assessed on Premium Table Sauce (sauces and mixed condiments) at a rate of 21 per cent CIF. Importers of Premium Table Sauce are also required to pay VAT of 17 per cent.


Austrade Insights

� Exporters should use transparent bottles to make the product as visible as possible.

� Current trends are healthier products (e.g. low fat options) as well as spicy flavours.

� Australian suppliers should focus on new flavour innovations — the traditional sauce market is fairly saturated by domestic products.

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Australian suppliers should also note that table sauces in plastic bottles or with plastic lids may have longer customs clearance times due to currently thorough inspections for residues (e.g. DEHP plasticiser). If residues are found, consignments will either be destroyed or sent back to their country of origin. This is due to recent issues with residues that were found in olive oil bottles and lids.

PICTURE 12: PREMIUM TABLE SAUCE SHELF DISPLAY AT LIANHUA


The typical route to the Premium Retail Market and the Premium HoReCa Market for imported Premium Table Sauce is through 3rd party distributors or directly through the retailers’ distribution units. A “Routes to Market” overview for China is provided at Section 2.3.3.


� 6 retailers and 4 HoReCa players in the Chinese Selected Premium Retail Market with a significant selection of imported premium table sauces.

� 5 distributors supplying the Chinese Premium Retail Market and the Premium HoReCa market with a

significant selection of imported premium table sauces.


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7.2 JAMSThe total Premium Retail Market size for jams in China was AUD 842 million in 2013. The market is expected to grow at a CAGR of 4–5 per cent over the next 3 years.29

Average price range and package size range for jams in the Selected Premium Retail Market are set out in Table 21.

TABLE 21: OVERVIEW OF PACKAGING AND PRICE POINT RANGES — JAMS


Jams 0.86–2.59 per 100g 225–350g


Figure 13 sets out the indicative “Share of Shelf” for jam brands in the Chinese Selected Premium Retail Market.

FIGURE 13: MAJOR JAM BRANDS IN THE CHINESE SELECTED PREMIUM RETAIL MARKET

The Premium Retail Market is dominated by imported jams from Europe, the US and Japan, with Mott’s and Staud’s currently leading the segment. Other popular import brands are Mc Cormick, Movenpick, Smucker, Anne’s Feinste, Bonne Maman and Rigoni Di Asiago. Domestic brands are still rare in the Premium Retail and HoReCa Markets.


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7.2.2 Packaging

The average packaging size for jams in the Selected Premium Retail Market ranges between 225 grams and 350 grams. In the Premium HoReCa Market, smaller packaging sizes between 25 grams and 28 grams are preferred.

7.2.3 Price points

In the Selected Premium Retail Market, prices for jams vary strongly. The average price for jams in the Selected Premium Retail Market ranges between RMB 5–15 (AUD 0.86 – AUD 2.59) per 100 grams. Retailers in the Selected Premium Retail Market enjoy retail margins in the range of 5 per cent–12 per cent. HoReCa players in the Selected Premium Retail Market have a 5 per cent–10 per cent margin.


For the Chinese premium retail sector, jams should not be too sweet and be rather tangy to be successful. The most popular flavours currently are orange, strawberry and mixed fruits. In the Premium HoReCa Market, blueberry jams are also in high demand.

PICTURE 13: JAMS SHELF DISPLAY AT CITY SHOP



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Jams are currently not highly promoted in the Chinese Premium Retail Market. Our survey of the Selected Premium Retail Markets could not identify any promotions (active during the survey period).


Import duty is assessed on jams (in airtight containers) at a rate of 5 per cent CIF. Import duty is assessed on homogenised jams at a rate of 30 per cent CIF. Importers of jams are also required to pay VAT of 17 per cent.


The typical route to the Premium Retail Market and the Premium HoReCa Market for imported jams is through 3rd party distributors. A “Routes to Market” overview for China is provided at Section 2.3.3.


� 6 retailers in the Chinese Selected Premium Retail Market with a significant selection of imported jams.

� 6 distributors supplying the Chinese Premium Retail Market and the Premium HoReCa Market with a significant selection of imported jams.


ANNEXES

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Prem

ium

Ta

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sauc

esM

ayon

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ain/

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ain,

sw

eet

10 ja

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e sh

elf

400

g18

.8R

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5

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ed G

oods

Salty

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cuit

Oni

on

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on F

lavo

red

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pac

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225

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rack

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Oni

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250

g14

.5R

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0.0

2

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

65

CITY

SUP

ER

Dat

e co

llect

ed: 2

6 Fe

b 20

14

Stor

e: C

ity S

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St

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Add

ress

: Hua

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rodu

ct in

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atio

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clud

ing

man

ufac

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r, di

strib

utor

and

impo

rter,

is a

vaila

ble

in s

epar

ate

docu

men

ts o

n th

e A

FGC

web

site

ww

w.a

fgc.

org.

au

PRO

DUCT

CA

TEG

ORY

SUB

-C

ATEG

ORY

BR

AN

DFL

AVO

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SHEL

F PR

ESEN

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PAC

K S

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PRIC

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Bak

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BISC

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Cho

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hip

Cho

cola

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choc

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8-10

box

es in

2 ro

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175

g49

.5R

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0.28

BISC

UIT

Dut

ch C

aram

el

Twis

tca

ram

el, c

hoco

late

cara

mel

, cho

cola

te8-

10 b

oxes

in 2

row

s20

pcs

49.5

RM

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48

BISC

UIT

Gen

eva

Cho

cola

tech

ocol

ate

8-18

box

es in

2 ro

ws

175

g38

RM

B0.

22

Bake

ry M

ixes

Fros

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Cho

cola

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hoco

late

, fud

geC

hoco

late

, fud

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8 bo

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in 3

row

s50

0g

50.5

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10

Bake

ry M

ixes

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Cho

cola

te, v

anilla

choc

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5-8

boxe

s in

3 ro

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456

g52

RM

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Bake

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cho

cola

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8 bo

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in 3

row

s45

6g

37.5

RM

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BISC

UIT

Mon

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lives

/Fro

mag

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ist O

lives

/Fro

mag

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-16

boxe

s in

2 ro

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100

g29

.8R

MB

0.30

BISC

UIT

Edo

Salti

ne c

rack

er/

Che

ese

crac

ker/

Alm

ond

crac

ker/E

do

Prem

ium

cra

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pas

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Salti

ne/A

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w; 3

0-32

box

es

in 4

row

s (p

rom

otio

n ar

ea)

141

g19

.8R

MB

0.14

BISC

UIT

Saltl

etts

Sesa

me/

brez

elSe

sam

e/br

ezel

10-1

2 ba

gs in

2 ro

ws

150

g14

.8R

MB

0.10

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

66

PRO

DUCT

CA

TEG

ORY

SUB

-C

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BR

AN

DFL

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F PR

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PAC

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Bra

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Num

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fron

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stra

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rry c

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late

, va

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cho

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8-10

box

es in

2 ro

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150

g21

.5R

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0.14

Cho

cola

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iss

Cho

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tech

ocol

ate

milk

cho

cola

te w

ith

nuts

5-8

bars

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row

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23.9

RM

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24

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cola

teC

ioco

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Al

Latte

Cho

cola

teda

rk c

hoco

late

5-

8 ba

rs in

2 ro

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200

g55

.9R

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0.28

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-12

cans

in 4

row

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0g

20R

MB

0.13

suga

r co

nfec

tiona

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tjes

drop

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uris

h 5-

7 ba

gs o

n 8

hook

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25R

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Bev

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(non

-al

coho

ic) /

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Frui

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rang

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nge

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nge,

app

le10

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bottl

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elf

250

ml

6R

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0.02

Frui

t Jui

ceAl

bico

cca

Ora

nge

10-2

0 ca

rts o

n on

e sh

elf

1000

ml

28R

MB

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Frui

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ple

Juic

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ple

Ora

nge,

pin

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le10

-15

bottl

es o

n on

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elf

720

ml

88R

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0.12

tea

Earl

grey

tea

Tea

Engl

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kfas

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10-1

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ne s

helf

520

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9R

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0.36

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of

flavo

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96

tea

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tea

tea

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she

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53R

MB

0.53

Prem

ium

col

d dr

inks

Snap

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Appl

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ple,

stra

wbe

rry,

pear

15-2

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3m

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Prem

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col

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Frap

puch

ino

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frapp

uchi

noFr

appu

chin

o, c

affe

la

tte10

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bottl

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n on

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elf

281

ml

22R

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0.08

Prem

ium

col

d dr

inks

Ool

ong

Tea

no

suga

roo

long

tea

flavo

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bottl

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elf

350

ml

6R

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0.02

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

67

PRO

DUCT

CA

TEG

ORY

SUB

-C

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ORY

BR

AN

DFL

AVO

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SHEL

F PR

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PAC

K S

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PRIC

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Bra

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Num

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the

fron

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loca

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live

oil

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10 b

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lf50

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live

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Cla

ssic

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10 b

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lf10

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09

Jam

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Pres

erve

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10-1

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elf

225

g42

.5R

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0.19

Jam

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Berry

Blue

Ber

rybl

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wbe

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each

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370

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Jam

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ne s

helf

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ch ro

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47.5

RM

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19

Prem

ium

ta

ble

sauc

eTa

basc

o Pe

pper

sau

cePe

pper

Pepp

er, g

arlic

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per

mix

,gre

en p

eppe

r1

shel

f 5 ro

ws,

5-6

bot

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ach

60m

l20

.5R

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0.34

Prem

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ta

ble

sauc

eH

icko

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BQ

Sauc

eH

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radi

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ry, t

radi

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500

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38R

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Prem

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ta

ble

sauc

eBa

rbec

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Sauc

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Trad

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al B

BQ,

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stic

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AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

68

CITY

SHO

P

Dat

e co

llect

ed: 8

Mar

201

4 St

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The

Mal

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long

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cum

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the

AFG

C w

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ww

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c.or

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PRO

DUCT

CA

TEG

ORY

SUB

-C

ATEG

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BR

AN

DFL

AVO

UR

SHEL

F PR

ESEN

CE

PAC

K S

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PRIC

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Bra

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Num

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the

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ased

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pac

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Bak

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UIT

Land

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Cho

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disp

laye

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full

shel

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25

box

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38R

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0.19

BISC

UIT

Che

ez-It

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es;S

wis

s,

amer

ican

,che

ddar

Swis

s Am

eric

an

Che

ddar

disp

laye

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20

box

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68R

MB

0.21

25

BISC

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ster

Sp

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Fein

ster

Spe

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le

benk

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imi

cont

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Fein

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200

g35

RM

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175

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BR

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Num

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darje

erlin

g

Earl

Gre

y, d

arje

erlin

g,

engl

ish

brea

kfas

t tea

5 sh

elfs

, aro

und

15 p

acka

ges

20ba

gs42

-108

RM

B2.

1

tea

Jasm

ine

tea

Jasm

ine,

gre

en te

a w

ith le

mon

Gre

en te

a w

ith le

mon

, Ja

smin

e1

shel

f, ar

ound

10

boxe

s50

g18

.2R

MB

0.36

4

tea

Dar

jeer

ing

Dar

jeer

ing

Dar

jeer

ing

half

of o

ne s

helf,

5 bo

xes

20ba

gs37

RM

B1.

85

Prem

ium

col

d be

vera

ges

Dr.P

eppe

r So

daH

alf s

helf,

aro

und

24 c

ans

330

ml

11R

MB

0.03

3333

333

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

70

PRO

DUCT

CA

TEG

ORY

SUB

-C

ATEG

ORY

BR

AN

DFL

AVO

UR

SHEL

F PR

ESEN

CE

PAC

K S

IZE

PRIC

E R

AN

GE

PRIC

E

Bra

nd o

f the

su

b-ca

tego

ry(m

entio

n al

l flav

our)

Top

3 fla

vour

sTO

TAL

Num

ber o

f pro

duct

di

spla

y in

the

fron

t row

of t

he

shel

f. Pl

ease

take

pho

togr

aph

in g

ram

sin

loca

l cu

rren

cy, b

ased

on

pac

ksiz

e

(by

1gr,

or

1m

l)

Bev

erag

es

(non

-al

coho

ic) /

R

TD

(con

t.)

Prem

ium

col

d be

vera

ges

A&W

Roo

tbee

rH

alf s

helf,

aro

und

24 c

ans

330

ml

10R

MB

0.03

0303

03

Prem

ium

col

d be

vera

ges

Spar

klin

g R

ubic

on G

uava

Man

go, G

uava

Hal

f she

lf, a

roun

d 24

can

s33

0m

l13

.8R

MB

0.04

1818

182

Sauc

es /

Con

dim

ents

/ Sp

read

s

Oliv

e O

ilEx

tra V

irgin

O

live

oil

1 Sh

elf,

arou

nd 3

0 Bo

ttles

1000

ml

108

RM

B0.

0225

Oliv

e O

ilEx

tra V

irgin

O

live

oil

1 sh

elf,

20 b

ottle

s10

00m

l10

8R

MB

0.10

8

Oliv

e O

ilEx

tra V

irgin

O

live

oil

70%

of s

helf,

10-

15 b

ottle

s50

0m

l13

8R

MB

0.27

6

Jam

sAp

ple

Sauc

e O

rigin

alAp

ple

2 sh

elf,

arou

nd 5

0 ja

rs68

g38

RM

B0.

5588

2352

9

Jam

sW

aldf

ruch

tBl

uebe

rry, S

traw

berry

Wal

dfru

cht,(

wild

ber

ry)

1 sh

elf,

arou

nd 2

0 ja

rs25

0g

42R

MB

0.16

8

Jam

sR

ed R

aspb

erry

Ras

pber

ry1

Shel

f, ar

ound

15

jars

510

g72

RM

B0.

1411

7647

1

Prem

ium

Ta

ble

Sauc

esH

P Sa

uce

1 Sh

elf,

2 ro

ws

arou

nd 2

0 bo

ttles

255

g22

.5R

MB

0.08

8235

294

Prem

ium

Ta

ble

Sauc

esBu

lls E

ye

Swee

t and

Ta

ngy

BBQ

Sa

uce

Trad

ition

al B

BQ s

auce

Swee

t and

tang

y,2

row

s on

one

she

lf, 3

bot

tles

in

each

510

g45

RM

B0.

0882

3529

4

Prem

ium

Ta

ble

Sauc

esTa

basc

o Pe

pper

Sau

ceG

reen

pep

per,G

arlic

pe

pper

Pepp

er, g

arlic

pep

per,

gree

n pe

pper

1 sh

elf,

arou

nd 3

0 bo

ttles

in 5

row

s60

ml

20.5

RM

B0.

3416

6666

7

Bak

ed G

oods

Salty

Bis

cuits

Che

dsC

heds

, Sco

ttish

fing

erC

heds

, Sco

ttish

fing

ers

2 ro

ws

on o

ne s

helf,

7 in

eac

h ro

w25

0g

58R

MB

0.23

2

Salty

Bis

cuits

Dig

estiv

eN

atur

alN

atur

al3

row

s on

1 s

helf,

aro

und

5 in

eac

h40

0g

15R

MB

0.03

75

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

71

OLE

Dat

e co

llect

ed: 3

Mar

201

4 St

ore:

Ole

St

ore

Add

ress

: Jin

g An

Ker

ry C

entre

Bui

ldin

g B

NB

: ful

l pro

duct

info

rmat

ion,

incl

udin

g m

anuf

actu

rer,

dist

ribut

or a

nd im

porte

r, is

ava

ilabl

e in

sep

arat

e do

cum

ents

on

the

AFG

C w

ebsi

te w

ww

.afg

c.or

g.au

PRO

DUCT

CA

TEG

ORY

SUB

-C

ATEG

ORY

BR

AN

DFL

AVO

UR

SHEL

F PR

ESEN

CE

PAC

K S

IZE

PRIC

E R

AN

GE

PRIC

E

Bra

nd o

f the

su

b-ca

tego

ry(m

entio

n al

l flav

our)

Top

3 fla

vour

sTO

TAL

Num

ber o

f pro

duct

di

spla

y in

the

fron

t row

of t

he

shel

f. Pl

ease

take

pho

togr

aph

in g

ram

sin

loca

l cu

rren

cy, b

ased

on

pac

ksiz

e

(by

1gr,

or

1m

l)

Bak

ed G

oods

BISC

UIT

Cre

pe

Den

telle

2 R

ows

on 5

she

lfes,

8 b

oxes

in

each

row

90g

38R

MB

0.4

2

BISC

UIT

Cho

carre

Cho

clat

e, p

lain

Cho

cola

te, p

lain

2 ro

ws

on 6

she

lfs, 8

box

es in

eac

h ro

w10

0g

34.9

RM

B 0

.35

BISC

UIT

Man

aCoo

kies

Mix

ed fr

uits

, C

hoco

late

, Pla

in1

row

on

6 sh

elfs

, 8 b

oxes

in e

ach

row

175

g25

RM

B 0

.14

Bake

ry M

ixes

Cho

cola

te

Fudg

eVa

nilla

, Dev

ils fo

od,

Rai

nbow

Vani

lla, d

evils

food

, ra

inbo

won

e fu

lls s

helf,

aro

und

60-7

0 bo

xes

540

g52

RM

B 0

.10

Snac

kfoo

dsC

hoco

late

No

suga

r ad

ded,

Dar

kD

ark,

dar

k w

ith

Alm

onds

dark

cho

cola

te,

dark

cho

cola

te w

ith

alm

onds

5 ro

ws

on o

ne s

helf,

6 b

ars

in e

ach

row

100

g45

RM

B 0

.45

Cho

cola

teSw

iss

Milk

Milk

cho

cola

te,

haze

lnut

Milk

Cho

cola

te,

haze

lnut

5 ro

ws

on o

ne s

helf,

6 b

ars

in e

ach

row

100

g19

.5R

MB

0.2

0

Cho

cola

teC

ream

y M

ilkD

ark,

cof

fee

coca

oD

ark,

cof

fee

coca

o9

row

s 5

bars

in e

ach

row

100

g29

.8R

MB

0.3

0

Suga

r C

onfe

ctio

nary

Frui

t Rol

lsM

ixed

Fru

itM

xed

fruit

20-3

0 ba

gs o

n tw

o sh

elfs

164

g19

.9R

MB

0.1

2

Suga

r C

onfe

ctio

nary

Dam

la

Cen

ter fi

lled

stra

wbe

rry

fruit

Che

w

Mix

ed fr

uit,

stra

wbe

rryM

ixed

frui

t, st

raw

berry

50 b

ags

on 5

han

gers

90g

6R

MB

0.0

7

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

72

PRO

DUCT

CA

TEG

ORY

SUB

-C

ATEG

ORY

BR

AN

DFL

AVO

UR

SHEL

F PR

ESEN

CE

PAC

K S

IZE

PRIC

E R

AN

GE

PRIC

E

Bra

nd o

f the

su

b-ca

tego

ry(m

entio

n al

l flav

our)

Top

3 fla

vour

sTO

TAL

Num

ber o

f pro

duct

di

spla

y in

the

fron

t row

of t

he

shel

f. Pl

ease

take

pho

togr

aph

in g

ram

sin

loca

l cu

rren

cy, b

ased

on

pac

ksiz

e

(by

1gr,

or

1m

l)

Snac

kfoo

ds

(con

t.)Su

gar

Con

fect

iona

ryG

old

Bare

nM

ixed

frui

ts, m

ixed

fru

it w

ith li

quor

ish,

sa

uer m

ango

Mix

ed fr

uits

, mix

ed

fruit

with

liqu

oris

h,

saue

r man

go

2 ro

ws,

10

bags

in e

ach

100

g10

.5R

MB

0.1

1

Cer

eal B

ars

Cho

cola

te

Cho

cola

te, m

ixed

frui

tch

ocol

ate,

mix

ed fr

uit

5 ro

ws,

4 b

oxes

in e

ach

25g

x6

bars

, 15

0g

g28

RM

B 4

.67

Cer

eal B

ars

Mue

sli B

arM

uesl

i, m

ixed

frui

tsM

uesl

i,, m

ixed

frui

t4

row

s on

2 s

helfs

, 4 b

oxes

in e

ach

row

180g

(6

ba

rs)

bar

27.8

RM

B 4

.63

Cer

aBr

eak

n'Bo

ost

Cer

eal B

ar3

row

s on

2 s

helfs

,5 b

oxes

in e

ach

125

g24

.5R

MB

0.2

0

Bev

erag

es

(non

-al

coho

ic) /

R

TD

Frui

t Jui

ces

Ora

nge

Apel

sine

Ju

ice

Appl

e, p

ine

appl

e,

oran

geO

rang

e,ap

ple,

pi

neap

ple

Arou

nd 2

0 bo

ttles

spe

rad

over

5

shel

fs10

00m

l18

.9R

MB

0.0

2

Frui

t Jui

ces

Ora

nge

Juic

eO

rang

e, L

emon

, App

leO

rang

e, a

pple

, lem

onAr

ound

20

bottl

es s

pera

d ov

er 5

sh

elfs

1000

ml

19.8

RM

B 0

.02

Frui

t Jui

ces

Gra

pefru

itPi

neap

ple,

Exo

tic,

grap

efru

itG

rape

fruit,

pin

eapp

le,

Exot

icAr

ound

15

bottl

es s

prea

d ov

er 4

sh

elfs

1000

ml

29.5

RM

B 0

.03

Tea

Afte

rnoo

n te

aEn

glis

h br

eakf

ast t

ea,

earl

grey

, gre

en te

a 15

box

es o

n on

e sh

elf

125

g85

RM

B 0

.68

Tea

Earl

Gre

y Su

prem

eEn

glis

h br

eakf

ast t

ea,

earl

grey

, En

glis

h br

eakf

ast t

ea,

earl

grey

10-2

0 bo

xes

40g

189

RM

B 4

.73

Tea

Man

go

Stra

wbe

rryM

ango

Stra

wbe

rryM

ango

Stra

wbe

rry8-

10 b

oxes

on

one

shel

f10

0g

26R

MB

0.2

6

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

73

PRO

DUCT

CA

TEG

ORY

SUB

-C

ATEG

ORY

BR

AN

DFL

AVO

UR

SHEL

F PR

ESEN

CE

PAC

K S

IZE

PRIC

E R

AN

GE

PRIC

E

Bra

nd o

f the

su

b-ca

tego

ry(m

entio

n al

l flav

our)

Top

3 fla

vour

sTO

TAL

Num

ber o

f pro

duct

di

spla

y in

the

fron

t row

of t

he

shel

f. Pl

ease

take

pho

togr

aph

in g

ram

sin

loca

l cu

rren

cy, b

ased

on

pac

ksiz

e

(by

1gr,

or

1m

l)

Sauc

es /

Con

dim

ents

/ Sp

read

Oliv

e O

ilEx

tra V

irgin

O

live

Oil

25 b

ottle

s on

2 s

helfs

500

ml

61R

MB

0.1

2

Oliv

e O

ilEx

tra V

irgin

O

live

Oil

25 b

ottle

s on

2 s

helfs

750

ml

88R

MB

0.1

2

Oliv

e O

ilEx

tra V

irgin

O

live

Oil

15 b

ottle

s75

0m

l93

RM

B 0

.12

Bev

erag

e /

RTD

Prem

ium

col

d D

rinks

Red

Bul

l Ex

tra35

Can

s on

one

she

lf25

0m

l10

.9R

MB

0.0

4

Prem

ium

col

d D

rinks

Stra

wbe

rrySt

raw

berry

, wild

ber

ry,

mix

ed fr

uits

30

-40

Bottl

es o

n 3

shel

fs47

3m

l16

.9R

MB

0.0

4

Prem

ium

col

d D

rinks

Vita

min

Su

pply

10 b

ottle

s50

0m

l3.

8R

MB

0.0

1

Sauc

es /

Con

dim

ents

/ Sp

read

Jam

sBe

ry H

imbe

re

Ras

pber

ryR

aspb

erry

, Kiw

i, Bl

ue

Berry

Ras

pber

ry, b

lue

berry

Ki

wi

30 ja

rs o

n 1

shel

f25

0g

68R

MB

0.2

7

Jam

sSt

raw

berry

(F

reza

)St

raw

berry

, Blu

e be

rry, a

pple

Stra

wbe

rry, B

lue

berry

, app

le20

jars

on

1 sh

elf

325

g38

RM

B 0

.12

Prem

ium

Ta

ble

Sauc

esSi

chua

n H

ot

Spic

y C

hili

Sauc

e

Chi

liC

hili

30 ja

rs o

n 2

shel

fs23

0g

19.9

RM

B 0

.09

Prem

ium

Ta

ble

Sauc

esLo

uisi

anna

Th

ick

Chi

li Sa

uce

Roa

sted

G

arlic

Roa

sted

Gar

licR

oast

ed G

arlic

30 b

ottle

s on

one

she

lf88

ml

15R

MB

0.1

7

Prem

ium

Ta

ble

Sauc

esTa

basc

o Pe

pper

Sau

ceO

rigin

al, g

reen

pe

pper

, pep

per g

arlic

30 b

ottle

s on

2 s

helfs

60m

l21

.8R

MB

0.3

6

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

74

PRO

DUCT

CA

TEG

ORY

SUB

-C

ATEG

ORY

BR

AN

DFL

AVO

UR

SHEL

F PR

ESEN

CE

PAC

K S

IZE

PRIC

E R

AN

GE

PRIC

E

Bra

nd o

f the

su

b-ca

tego

ry(m

entio

n al

l flav

our)

Top

3 fla

vour

sTO

TAL

Num

ber o

f pro

duct

di

spla

y in

the

fron

t row

of t

he

shel

f. Pl

ease

take

pho

togr

aph

in g

ram

sin

loca

l cu

rren

cy, b

ased

on

pac

ksiz

e

(by

1gr,

or

1m

l)

Bak

ed G

oods

Salty

Bis

cuits

Sala

ti cr

acke

rsa

lati,

cer

eal &

se

sam

e, n

on s

alat

i, in

tegr

ali

Sala

ti, c

eral

&ses

ame,

in

tegr

ali

112b

oxes

, 4 s

helv

es, 7

laye

rs in

ea

ch s

helf

and

4 bo

xes

each

laye

r25

0g

25.8

RM

B 0

.10

Salty

Bis

cuits

EDO

pac

k sa

ltine

cr

acke

r

salti

ne, s

eaw

eed,

ch

eese

, pre

miu

m

(orig

inal

), po

tato

, al

mon

d

Salti

ne, c

hees

e,

seaw

eed

112b

oxes

, 4 s

helv

es, 7

laye

rs in

ea

ch s

helf

and

4 bo

xes

each

laye

r14

1g

22R

MB

0.1

6

Salty

Bis

cuits

Aust

ralia

n W

heat

C

rack

er

Switz

erla

nd m

ilk,

Hok

kaid

o sa

ltine

, Au

stra

lian

whe

at, o

at

Switz

erla

nd M

ilk,

Hok

kaid

o Sa

ltine

, Au

stra

lian

Whe

at

112b

oxes

, 4 s

helv

es, 7

laye

rs in

ea

ch s

helf

and

4 bo

xes

each

laye

r16

0g

18.8

RM

B 0

.12

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

75

AN

NEX

II —

KEY

RET

AIL

ERS

IN TH

E C

HIN

ESE

PREM

IUM

RET

AIL

MA

RKET

Stor

e Fo

rmat

Nam

eD

etai

lsN

umbe

r of S

tore

sC

onta

ct D

etai

lsIn

clud

ed

in R

epor

t U

nive

rse?

Supe

rmar

ket

Hyp

erm

arke

tTe

sco

UK

supe

rmar

ket c

hain

, car

ry fr

esh

prod

ucts

and

impo

rted

prod

ucts

, m

ainl

y fro

m U

K

115

outle

ts, 1

0 in

Sha

ngha

iR

oom

921

, Bui

ldin

g 16

, Chi

na C

entra

l Pla

ce,

No

89 J

iang

uo R

oad,

Cha

oyan

g D

istri

ct, B

eijin

g, 1

0002

5

Ph.:

+86

10 5

203

7821

Yes

Con

veni

ence

st

ore

Tesc

o Ex

pres

sU

K su

perm

arke

t cha

in, c

arry

fres

h pr

oduc

ts a

nd im

porte

d pr

oduc

ts,

mai

nly

from

UK

N/A

Roo

m 9

21, B

uild

ing

16, C

hina

Cen

tral P

lace

,

No

89 J

iang

uo R

oad,

Cha

oyan

g D

istri

ct, B

eijin

g, 1

0002

5

Ph.:

+86

10 5

203

7822

Yes

Supe

rmar

ket

City

Sho

pH

igh

end

supe

rmar

ket,

focu

sed

on

impo

rted

good

s. O

ver 8

5% o

f City

Sh

op‘s

pro

duct

s ar

e im

porte

d.

City

Sho

p ca

rries

nea

rly 3

,000

Am

eric

an fo

od a

nd n

on-fo

od

prod

ucts

12 s

tore

s, 1

0 in

Sha

ngha

i and

2

in B

eijin

gR

m. 1

701,

Hai

sen

Int’l

Man

sion

, 146

9 Ka

ng D

ing

Roa

d,

Shan

ghai

Ph.:

+862

1-62

3270

70

Supp

lier E

mai

l: in

fo@

city

shop

.com

.cn

Yes

Supe

rmar

ket

City

Sup

erH

K su

per m

arke

t cha

in, i

s ex

pand

ing

in C

hina

and

als

in

Shan

ghai

. Foc

us o

n im

porte

d go

ods

as w

ell a

s lo

cal b

rand

s.

5 st

ores

in S

hang

hai

Rm

. 150

5, 1

258,

Yuy

uan

Roa

d , C

hang

ning

dis

trict

, Sh

angh

ai

Ph.:

+862

1 51

75 8

208

Yes

Supe

rmar

ket

Pine

sSm

all S

hang

hai b

ased

cha

in,

focu

sed

on h

igh-

end

and

impo

rted

food

, cat

erin

g m

ainl

y to

fore

igne

rs.

This

is s

imila

r to

BHG

in B

eijin

g.

5 st

ores

in S

hang

hai

No

18, L

ane

896

Jian

He

Roa

d, 2

0033

6 Sh

angh

ai, C

hina

Fax:

+86

21

6262

756

5

Yes

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

76

Stor

e Fo

rmat

Nam

eD

etai

lsN

umbe

r of S

tore

sC

onta

ct D

etai

lsIn

clud

ed

in R

epor

t U

nive

rse?

Hyp

erm

arke

t Su

perm

arke

t C

onve

nien

ce

stor

e

Lian

hua

Chi

na’s

larg

est g

roce

ry c

hain

, w

ith m

ost o

utle

ts lo

cate

d in

ne

ighb

orho

ods

with

a la

rge

fore

ign

popu

latio

n —

Lia

nhua

st

ocks

mai

nly

impo

rted

good

s.

The

Gro

up o

pera

tes

in th

ree

mai

n re

tail

segm

ents

— h

yper

mar

kets

, su

perm

arke

ts a

nd c

onve

nien

ce

stor

es

5120

11th

- 15

th fl

oors

Sic

huan

Roa

d (N

orth

) Roa

d, S

hang

hai

2000

80 C

hina

.

Ph.:

+86

21 6

393

7700

Yes

Supe

rmar

ket

Chi

na

Res

ourc

es

Vang

uard

—

Ole

Ole

is C

hina

Res

ourc

es V

angu

ard

(Gov

ernm

ent-o

wne

d) s

peci

alty

su

perm

arke

t cha

in.

mor

e th

an 2

0N

o

Supe

rmar

ket

SPAR

Sh

ando

ngSh

ando

ng J

iajia

yue

Gro

up C

o. L

td

is a

larg

e ch

ain

grou

p sp

ecia

lizin

g in

sup

erm

arke

t cha

ins

(SPA

R)

as w

ell a

s co

verin

g lo

gist

ics

and

dist

ribut

ion,

food

pro

cess

ing,

w

hole

sale

s of

agr

icul

tura

l pro

duct

s an

d fo

reig

n tra

de b

usin

ess.

The

y ha

ve s

tore

s in

34

citie

s.

595

Suite

150

1, J

in H

ang

Tow

er, N

o. 8

3 W

anha

ngdu

Roa

d

Jing

An

Dis

trict

, Sha

ngha

i 200

040,

PR

of C

hina

Ph.:

+86

(0)2

1 62

88 8

799

No

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

77

AN

NEX

III —

KEY

DIS

TRIB

UTO

RS IN

THE

CHI

NES

E PR

EMIU

M R

ETA

IL M

ARK

ETN

ame

Det

ails

Prod

uct T

ypes

Key

Bra

nds

Con

tact

Det

ails

DKS

H C

hina

A le

adin

g m

arke

t exp

ansi

on c

ompa

ny a

nd d

istri

buto

r in

Asia

. DKS

H C

hina

has

10

regi

ster

ed b

ranc

h of

fices

and

64

bus

ines

s lo

catio

ns a

cros

s C

hina

, inc

ludi

ng S

hang

hai,

Beijin

g, T

ianj

in, C

heng

du, C

hong

qing

, Gua

ngzh

ou,

Shen

zhen

, Wuh

an, F

uzho

u, H

angz

hou,

Wuh

an, a

nd X

i'an

Wid

e pr

oduc

t ra

nge

Wid

e ra

nge

Uni

t 220

8, In

nov

Tow

er, B

lock

A, 1

801

Hon

gmei

Roa

dSh

angh

aiPh

. +86

21

5383

881

1W

ebsi

te: w

ww.

dksh

.com

.cn

Goo

dwel

l Foo

dsLe

adin

g C

hine

se im

porte

r and

dis

tribu

ter o

f foo

d pr

oduc

ts. A

ppro

x 2,

500

SKU

s ac

ross

diff

eren

t cat

egor

ies.

Wid

e pr

oduc

t ra

nge

Berri

, Leg

go’s

, Ar

la, D

ilmah

, Ba

hlse

n, L

emno

s,

Frito

s, C

alvo

27F,

NO

.228

MEI

YU

AN R

OAD

,EN

TER

PRIS

ES

SQU

ARE,

SHAN

GH

AI 2

0007

0,C

HIN

APh

one:

+86

216

086

3200

E-m

ail:

good

wel

l_sh

@go

odw

ellc

hina

.com

Web

site

: ww

w.go

odw

ellc

hina

.com

Feng

kuan

gyua

nshi

ren

Com

pany

Ltd

Shen

zhen

bas

ed im

porte

r and

dis

tribu

ter o

f foo

d pr

oduc

ts. D

istri

butio

n m

ainl

y fo

cuse

d on

Sou

th C

hina

.W

ide

prod

uct

rang

eM

iste

r Nut

, R

isto

n, E

litol

i,

Hon

eyla

nd, M

aric

h C

hoch

olat

es :

Alm

ond

Roc

a

Ph.:

+86

0755

869

6778

5

Shan

ghai

Sha

nlon

g in

dust

rial C

o Lt

d.Sh

angh

ai b

ased

med

ium

siz

e im

porte

r of f

orei

gn fo

od

prod

ucts

, dis

tribu

tes

natio

nwid

e.W

ide

prod

uct

rang

eH

ersh

eyKr

aft -

Tang

, Sug

us,

Max

wel

l Hou

se

Cof

fee,

Tob

lero

ne,

Lipt

on, K

norr,

Pe

rfetti

van

Mel

le

Ph.:

+86

21-5

2527

733

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

78

Nam

eD

etai

lsPr

oduc

t Typ

esK

ey B

rand

sC

onta

ct D

etai

ls

Sino

dis

Impo

rter a

nd d

istri

buto

r of v

ario

us fo

od a

nd b

ever

age

prod

ucts

Wid

e pr

oduc

t ra

nge

Bega

, Arn

ott's

, Pa

uls,

Bar

illa,

Alpe

n, D

r Oet

ker

Roo

m 1

705

Zhon

gyu

Plaz

a,G

ongt

o Be

i Roa

d 6A

,Cha

oyan

g D

istri

ct, B

eijin

g 10

0027

Ph.:

+86

10 5

166

8747

Emai

l: in

fo@

sino

dis.

com

.cn

Web

site

: ww

w.si

nodi

s.co

m.c

n

Vand

erge

eten

Impo

rter a

nd d

istri

buto

r of b

eer a

nd c

hoco

late

s, w

ith

offic

es in

Bei

jing

and

Gua

ngzh

ouC

hoco

late

, Bee

rTo

bler

one,

Cot

e D

'Or

Leffe

, Ste

lla A

rtois

Roo

m 7

07, S

anlit

un S

OH

O, G

ongR

en T

iTu

Cha

ngEa

stR

oad,

Cha

oyan

g D

istri

ct, B

eijin

gPh

.: +8

6 0

5935

939

0Em

ail:

cont

act.b

j@vd

gcn.

com

Web

site

: ww

w.vd

gcn.

com

Uni

wor

ld In

tern

atio

nal

Impo

rter a

nd d

istri

buto

r of s

nack

food

s an

d be

vera

ges,

se

rvin

g th

e w

hole

sale

and

reta

il se

ctor

sBe

vera

ges

(incl

. Ju

ice)

, Dai

ry, S

ugar

C

onfe

ctio

nery

, C

erea

l, Bi

scui

ts

Pfan

ner,

Har

ibo

Roo

m 2

05 B

uild

ing

B, J

iuxi

anqi

ao M

iddl

e R

oad,

C

haoy

ag D

istri

ct, B

eijin

gPh

.: +8

6 10

529

3 48

60Em

ail:

impo

rt@ui

tfood

.com

Web

site

: ww

w.ui

tfood

.com

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

79

AN

NEX

IV —

KEY

PLA

YERS

IN C

HIN

A’S

PR

EMIU

M H

ORE

CA

MA

RKET

Nam

eD

etai

lsB

ranc

hes

Prod

uct C

ateg

orie

sC

onta

ct D

etai

lsD

rei K

rone

n 13

08G

erm

an b

eer b

rew

ery

and

rest

aura

nt c

hain

with

mul

tiple

bra

nche

s al

l ov

er c

hina

(Bei

jing,

Sha

ngha

i, Ti

anjin

) cur

rent

ly e

xpan

ding

into

tier

2

citie

s(W

uhan

, Han

gzho

u). C

ater

ing

to b

oth

wes

tern

cus

tom

ers

and

upsc

ale

loca

l Chi

nese

con

sum

ers.

8 ou

tlets

Beve

rage

s (in

cl. t

ea),

prem

ium

tabl

e sa

uce

Chi

na V

iew

5, 1

/F, G

ongt

i Don

glu

Al

lan

Duf

fy

Food

and

Bev

erag

e D

irect

orEm

ail:

info

@dr

eikr

onen

1308

.com

Ph.:

+86

21 5

5215

355

Saiz

eriy

aSa

izer

iya

is a

Jap

anes

e ap

prox

imat

ion

of a

n Ita

lian

styl

e re

stau

rant

. The

y cl

aim

to h

ave

100s

of l

ocat

ions

in J

apan

, the

re a

re 7

in S

hang

hai,

mos

tly

loca

ted

in s

hopp

ing

mal

ls. F

ood

is s

impl

e an

d ch

eap

(10r

mb

past

a/6r

mb

glas

s of

win

e). K

now

n to

be

the

chea

pest

wes

tern

food

to g

et in

Chi

na.

52 o

utle

ts in

Sha

ngha

i an

d 41

in G

uang

zhou

(in

clud

ing

Saiz

eriy

a Ex

pres

s)

Beve

rage

s (in

cl. t

ea),

prem

ium

tabl

e sa

uce,

br

ead

mix

es

No.

32 W

anha

ngdu

Roa

, 2nd

floo

r, Sh

angh

ai,

2000

3-0,

Chi

na

Yum

bra

nds

Yum

! Bra

nds,

Inc.

or Y

um! i

s a

Uni

ted

Stat

es-b

ased

For

tune

500

co

rpor

atio

n. Y

um! o

pera

tes

or li

cens

es T

aco

Bell,

KFC

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za H

ut a

nd

Win

gstre

et re

stau

rant

s w

orld

wid

e. P

rior t

o 20

11, Y

um! a

lso

owne

d Lo

ng

John

Sile

ver’s

and

A&W

rest

aura

nts.

KFC

of 4

600

outle

tsPi

zza

Hut

– 1

000

outle

tsBe

vera

ges

(incl

. tea

), pr

emiu

m ta

ble

sauc

eYu

m! B

rand

s In

c., C

hina

Div

isio

n.

12F–

19F,

2 G

rand

Gat

eway

,3

Hon

gqia

o R

d, S

hang

hai

2000

30,P

.R.C

hina

.Ph

. +(8

6 21

) 240

7-77

77Ba

kers

Piz

zaPi

zza

rest

aura

nt w

ith a

loca

tion

arou

nd s

hang

hai a

nd T

ier 2

citi

es li

ke

Han

gzho

u an

d ot

her t

ouris

t des

tinat

ion

area

s to

cat

er fo

reig

ners

Less

than

10

in to

tal

Beve

rage

s (in

cl. t

ea),

prem

ium

tabl

e sa

uce

Roo

m15

05, N

o.18

, Lan

e126

5,

Zhon

gsha

nxi L

u, C

hang

ning

D

istri

ct. T

el. +

86 (0

)21-

5783

0503

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

80

AN

NEX

V —

KEY

GO

VERN

MEN

T BO

DIES

Gov

ernm

ent B

ody

Res

pons

ibili

ties

Web

site

Gen

eral

Adm

inis

tratio

n of

Qua

lity

Supe

rvis

ion,

Insp

ectio

n an

d Q

uara

ntin

e of

the

PRC

(AQ

SIQ

)

Nat

iona

l qua

lity

cont

rol f

or im

ports

and

exp

orts

(qua

rant

ine

cont

rol)

resp

onsi

ble

for e

nsur

ing

the

safe

ty o

f im

porte

d an

d ex

porte

d fo

odN

atio

nal s

tand

ardi

satio

n of

regu

latio

nsLi

cens

ing

and

certi

ficat

ion

for

impo

rters

and

exp

orte

rsPr

oduc

t sam

plin

g an

d as

sess

men

t of w

heth

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gred

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nfor

m w

ith

ingr

edie

nts

list,

asse

ssm

ent o

f lab

ellin

gSa

nita

ry c

ertifi

catio

n

ww

w.a

qsiq

.gov

.cn

or: e

nglis

h.aq

siq.

gov.

cn

Chi

na E

ntry

and

Exi

t Ins

pect

ion

and

Qua

rant

ine

Bure

au (C

IQ) –

pro

vinc

ial

bran

ches

of A

QSI

Q

Rep

rese

ntat

ion

of n

atio

nal a

nd p

rovi

ncia

l lev

els,

com

mitt

ee o

f Gov

ernm

ent a

nd

indu

stry

offi

cial

s, p

rovi

ding

a c

ondu

it be

twee

n th

e G

ener

al A

dmin

istra

tion

of

Qua

lity

Supe

rvis

ion,

Insp

ectio

n an

d Q

uara

ntin

e (A

QSI

Q) a

nd th

e

Chi

nese

indu

stry

Beijin

g:w

ww

.bjc

iq.g

ov.c

nSh

angh

ai:

ww

w.s

hciq

.gov

.cn

or: w

ww

.shc

iq.g

ov.c

n/en

glis

hG

uang

zhou

:w

ww

.gz.

gdci

q.go

v.cn

Chi

na C

usto

ms

Offi

ce (C

CO

)C

usto

ms

clea

ranc

ew

ww

.cus

tom

s.go

v.cn

or: e

nglis

h.cu

stom

s.go

v.cn

Beijin

g:be

ijing

.cus

tom

s.go

v.cn

Shan

ghai

:sh

angh

ai.c

usto

ms.

gov.

cnor

: sha

ngha

i1.c

usto

ms.

gov.

cn/D

efau

lt.as

px?t

abid

=881

3G

uang

zhou

:gu

angz

hou.

cust

oms.

gov.

cnC

hina

Foo

d an

d D

rug

Adm

inis

tratio

n (C

FDA)

Dra

fting

law

s an

d re

gula

tions

on

adm

inis

tratio

n an

d su

perv

isio

n of

food

saf

ety,

m

edic

al d

evic

es, d

rugs

and

cos

met

ics

Form

ulat

ion

of re

gula

tions

on

food

adm

inis

trativ

e lic

ensi

ng a

nd im

plem

enta

tion

ww

w.s

fda.

gov.

cnor

: eng

.sfd

a.go

v.cn

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

81

Chi

na G

reen

Foo

d D

evel

opm

ent

Cen

ter (

CG

FDC

)O

vers

ees

orga

nic

food

sta

ndar

dsD

evel

opm

ent o

f gre

en fo

od p

olic

ies

and

stan

dard

s, tr

adem

ark

gree

n lo

go

man

agem

ent

ww

w.g

reen

food

.org

.cn

Chi

na N

atio

nal A

ccre

dita

tion

Adm

inis

tratio

n (C

NC

A)M

anag

emen

t and

coo

rdin

atio

n of

cer

tifica

tion

issu

es, e

.g. r

egar

ding

exp

orte

r re

gist

ratio

n fo

r spe

cific

pro

duct

cat

egor

ies

ww

w.c

nca.

gov.

cn

Min

istry

of C

omm

erce

(MO

FCO

M)

Impo

rter r

egis

tratio

n as

“for

eign

trad

e op

erat

or” a

nd re

gist

ratio

n of

impo

rts

(par

ticul

arly

mea

t and

dai

ry)

Form

ulat

ing

polic

y on

fore

ign

trade

, exp

ort a

nd im

port

regu

latio

ns, f

orei

gn

dire

ct in

vest

men

ts, c

onsu

mer

pro

tect

ion,

mar

ket c

ompe

titio

n an

d ne

gotia

ting

bila

tera

l and

mul

tilat

eral

trad

e ag

reem

ents

ww

w.m

ofco

m.g

ov.c

nor

: eng

lish.

mof

com

.gov

.cn

AFG

C M

ARK

ET IN

SIG

HTS:

CHI

NA

82

AN

NEX

VI —

MA

JOR

FOO

D A

ND

BEVE

RAG

E TR

ADE

SHO

WS

IN C

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ANNEX VIII — FOOD REGULATION AND TRADE BARRIERS

3.2 OVERVIEW OF FOOD REGULATION AND IMPORT STANDARDSFood trade into China is, predictably, heavily regulated. Recent legal changes to China’s Food Safety Law have increased focus on food safety through stricter monitoring and supervision – and severe punishment of offenders. In 2013, China streamlined all domestic food safety regulatory agencies into the China Food and Drug Administration (CFDA).

The Food Safety Law includes the following important features:

Under China’s Food Safety Law, all imported food products, food additives and food-related products are subject to the national food safety standards of China. China's current Food Safety Law was adopted on 28 February 2009 and was made effective from 1 June 2009. The law has been enacted to improve food safety in China through stricter monitoring and supervision, tougher safety standards, recall of substandard products and severe punishment of offenders. The laws are applicable to both imported and domestically produced food and cover production and trading of food and food additives, packing materials, vessels, detergents and disinfectants for food and equipment used in food production, food additives and food-related products used by food producers and traders, and safety management of food, food additives and food related products. In 2013, China streamlined all domestic food safety regulatory agencies into the China Food and Drug Administration (CFDA).

All imported foodstuffs and beverages are subject to inspections by the China Entry-Exit Inspection and Quarantine Bureau (CIQ). Quarantine and inspection of food and beverage items can be complicated and challenging, and is often time consuming and costly. All foreign food distributors and producers that import food products into China are required to register with the appropriate authorities. For those ingredients or components not registered in China, it is required to apply to the CIQ to register them as new-to-China components. Any food or food ingredient that has had an import history prior to the new Food Safety Law will be allowed entry even if there is no Chinese standard.

For most imported foods, China has strict documentation requirements related to quality, quarantine, origin and import control. These can vary dependent on the individual products and product categories. Products also have to meet packaging requirements, pre-clearance, treatment options, labelling requirements, and container conditions - accessing up-to-date information on requirements can be difficult at times. Importers must record the foods imported and distributed in China, and must keep those records for a minimum of two years.

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Food Safety concerns have been leading to the introduction of new regulations and an increase in food and beverage imports, but have also resulted in increased non-tariff barriers with additional testing and requirements. In October 2013, the CFDA released a draft of a revised Food Safety Law and asked for public input. The revised version includes more severe punishments for violating food safety regulations and new standards for manufacturing and distribution to be expected. Exporters to China should make sure to stay updated on the amendment process.

3.3 TRADE BARRIERS

3.3.1 Tariff Barriers

Since its entry into the World Trade Organization in 2001, China has applied tariff rates close to the rates at which it has promised (referred to as “bound” rates). Since accession to the WTO, China has reduced its overall average tariff for agricultural products from 21.2% to 15.3%. However, China still has pockets of high tariff protection — as high as 65% on some key products of interest to Australia.

Tariff classification and reference pricing

A major issue in classifying products is that Chinese customs officers do not follow uniform guidelines and therefore, anticipating border charges has been a difficult for exporters. Commonly, delays at customs and excessive fees unrelated to the services received are a major concern.30

Chinese customs officers continue to use arbitrary forms of reference pricing. Following the WTO accession, China’s customs valuation regulations had been amended and transaction prices should now be applied. Nevertheless subjectivity remains an issue, as reference pricing is still accepted as alternative measure when customs officers consider transaction pricing to not be suitable. The Government decides on benchmark prices for all products that enter China and has a reference price list — which is not publicly available — that customs officers can use to value goods. Alternatively, they can use their own experience and compare prices of goods to prices of similar or the same type of goods they have dealt with before. If the product prices of exporters are too far away from the relevant benchmark price, customs officers will substitute an alternative and usually higher valuation instead.

30 US trade compliance report (2013)

Practical Tips

� Make sure that you have ingredients lists ready before exporting to China. Customs will make their judgement on product classification based on this.

� Make sure you regularly check bacterial counts - mandatory quarantine checks are carried out during customs clearance, with bacterial counts being the major issue of rejection and subsequent destroying for Australian products.

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3.3.2 Non-Tariff Barriers

China uses various non-tariff border barriers, such as import and export licensing, import quotas and so-called “notice-and-comment” procedures. As import quotas generally do not apply to processed foods in China, the major NTBs experienced by exporters are Notice-and-Comment Procedures.

Notice-and-comment procedures

Notice-and-comment procedures released by the CIQ are becoming more prevalent in the process of drafting trade laws, regulations, and departmental rules. This means that regulations can change any time and changes in regulations apply immediately. However, not all trade-related information is made available to the public, which can result in challenging situations at the border exporters cannot prepare for.

Although regulations are routinely published, laws are being passed at different levels – central, provincial, municipal – and can often contradict each other and leave a wide margin of discretion when it comes to apply them properly.

3.3.2.1 Registration and Certification

The importing process into China requires licenses and certifications – the most important features are explained below.

AQSIQ and CNCA registration

Foreign producers need to register as “foreign exporter producer” through AQSIQ, which can be done online.31 The registration number received is valid for four years and needs to be stated on the packaging of the imported products. For specific product groups such as meat, a hygiene certificate is required by the manufacturer that has to be applied for at the Chinese Certification and Accreditation Administration (CNCA).

Importers are required to register products online through AQSIQ and they are also required to have a relevant business license for the relevant product categories they are dealing with. In addition, importers, distributors and agents need to be registered as “foreign trade operator” with MOFCOM.

All exporters and importers of food and beverage require a permit for quarantine inspection which must be also applied for at the Chinese quarantine authority (AQSIQ) representative office prior to any shipments. Packaged animal products or plant products require veterinary or phytosanitary certification. Local AQSIQ offices (CIQs) will assess product samples to check for quality and labelling as well as hygiene standards.

Chinese Food and Drug Administration

Foods and beverages with added health claims are required to be registered with the State Food and Drug Administration (CFDA) and sampling and quality checks can be expected to take longer.

Documentation and certificate of origin

The importation of goods into China must be well documented, e.g. name, specification, quantities, date of production, batch numbers, use by date, name and contact details of the exporter, name and contact details of the importer, and delivery time need to be recorded and kept on file for two years minimum.

31 Refer Annex VII

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For several import products, China requires a certificate of origin to accompany the export consignment, issued by the relevant authority in the exporter’s country (e.g. the NSW Business Chamber, VECCI or AiGroup). Australian suppliers should collaborate with their importers on the certificate of origin, since they are better informed about the Chinese standards to satisfy quarantine and customs authorities.

Organic Certification

The certification body for organic produce is the China Green Food Development Center (CGFDC). The process can be time-consuming and costly. Australian suppliers have paid up to AUD 47,000, for instance, to be certified organic by Chinese authorities – compared to costs of about AUD 2,000 in Australia for organic certification. However, exporters who obtained certification in the past, have been very successful in increasing sales volumes in the Chinese market, being able to label those as “organic”.

3.3.2.2 Labelling

The Chinese consider food labels the most useful source of information regarding health and nutrition issues. “No food additives”, “no preservatives”, “organic”, “sugar free” and similar wordings have become more popular on packaging.

No pre-packaged foods may be imported into China without appropriate Chinese labels. All imported pre-packaged food must be labelled in both English and Chinese (simplified Chinese as used in mainland China). The updated general standard for the labelling of pre-packaged food (GB7718-2011) is applied to the labelling of all pre-packaged foods directly or indirectly offered to consumers. The following minimum information is required on all food packaging:

� Standard name of foodstuffs

� List of ingredients

� Quantitative labelling of ingredients (percentage of ingredient)

� Net weight and configuration

� Name, address and contact info of manufacturer and local agent or distributor

� Production date, use by date and guidance for storing

� Generic name of the food additives as used in the national standard

� Quality grade

� Food production license number

� Code of the product standard

� Special contents if there are any (e.g. irradiated food, genetically modified, nutrition list for baby food or diet food)

Requirements often change and it is encouraged that Australian suppliers re-confirm requirements for labelling and other product certifications with their Chinese importers or relevant departments prior to dispatch of goods for export.

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ANNEX IX — SOURCES OF FURTHER INFORMATION

INDUSTRY ASSOCIATIONS

Australian Food and Grocery Council (AFGC)

The Australian Food and Grocery Council (AFGC) is the leading national organisation representing Australia’s food, drink and grocery manufacturing industry.

W: www.afgc.org.au

Contact Details:

Level 2, Salvation Army Building, 2–4 Brisbane Ave, Barton ACT 2600 P: 02 6273 1466 F: 02 6273 1477

Australian Chamber of Commerce and Industry (ACCI)

ACCI is Australia's largest business association, speaking at a national and international level on behalf of the nation's peak State and Territory Chambers of Commerce and Industry and National Industry Associations from all sectors of the economy.

W: www.acci.asn.au

Contact Details:

ACCI Canberra

Commerce House, Level 3, 24 Brisbane Avenue, Barton ACT 2600 P: 02 6273 2311 F: 02 6273 3286 E: [email protected]

Australian Industry Group (Ai Group)

The Ai Group is a peak industry association in Australia which represents the interests of businesses in an expanding range of sectors including the food industry.

W: www.aigroup.com.au

Contact Details:

Sydney 51 Walker Street, North Sydney NSW 2060 Postal Address: PO Box 289, North Sydney NSW 2059 P: 02 9466 5566 F: 02 9466 5599

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Department of Foreign Affairs and Trade (DFAT)

DFAT provides foreign, trade and development policy advice to the government and works with other government agencies to coordinate Australia’s global, regional and bilateral interests.

W: www.dfat.gov.au

Contact Details:

R.G. Casey Building, John McEwen Crescent, Barton ACT 0221 Australia P: +61 2 6261 1111 F: +61 2 6261 3111

Export Council of Australia (ECA)

The ECA is the industry body for the Australian export community. It supports sector specific associations that represent business engaged in international trade and makes representations to and on behalf of exporters to decision makers.

W: www.export.org.au

Contact Details:

Export House, Level 2, 22 Pitt Street, Sydney NSW 2000 P: 02 8243 7400 E: [email protected] F: 02 9251 6492

Food Innovation Australia Limited (FIAL)

FIAL is an industry-led, government funded initiative to accelerate commercially-driven collaboration and innovation in the Australian food industry.

W: www.fial.com.au

Contact Details:

S6 Bld2 Tech Enterprise Ctr., La Trobe Uni 2 Research Av., Bundoora VIC 3086 P: 03 9479 6043 E: [email protected]

AUSTRALIAN TRADE CHAMBERS AND STATE GOVERNMENT OFFICES

Australian Trade Commission (Austrade)

The Australian Trade Commission in China provides information, advice and services for Australian exporters.

W: www.austrade.gov.au

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Contact Details:

Austrade Beijing 21 Dongzhimenwai Street, Sanlitun, Beijing P: +86 10 8532 8686 F: +86 10 6532 4606

Austrade Chengdu Room 410, Crowne Plaza Chengdu City Center, 31 Zongfu Street, Chengdu P: +86 28 8678 6128 F: +86 28 8678 6228

Austrade Guangzhou 12/F Development Center, 3 Linjiang Dadao, Zhujiang Xincheng, Guangzhou 510623 P: +86 20 2887 0188 F: +86 20 2887 0201

Austrade Hangzhou Suite 5F-J, Zhongtian Mansion, 173 Yu Gu Road, Hangzhou P: +86 571 8517 3529 F: +86 571 8763 1984

Austrade Hong Kong Suite 2404, 24th Floor, Harbour Centre, 25 Harbour Road, Wan Chai P: +85 2 2588 5302 F: +85 2 2827 4145

Austrade Kunming Room 2202, Hongta Mansion, 155 Beijing Road, Kunming Yunnan P: +86 871 6356 1002 F: +86 871 6356 1020

Austrade Nanjing Suite 1163, World Trade Centre, Jinling Hotel, 2 Han Zhong Road, Nanjing Jiangsu P: +86 25 8471 1178 F: +86 25 8470 1068

Austrade Qingdao Room 1001, Crown Plaza, 76 Middle Hong Kong Road, Qingdao P: +86 532 8575 3585 F: +86 532 8577 8960

Austrade Shanghai

2101 CITIC Square,1168 Nanjing Road West, Shanghai P: +86 21 6103 5656 F: +86 21 6321 1222

Austrade Shenyang Room 2604, 26th floor Office Tower, L’Avenue 10 Huigong Street, Shenyang P: +86 24 2278 8269 F: +86 24 2278 8280

Austrade Shenzhen

Shenzhen, Shenzhen Guangdong P: +86 755 6135 2118 F: +86 755 6135 2135

Austrade Wuhan Room 1308B, New World International Trade Tower I, 566 Jianshe Road, Wuhan Hubei P: +86 27 8548 6700 F: +86 27 8576 0026

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New South Wales Trade & Investment

W: www.business.nsw.gov.au

Contact Details:

Australia

Level 47, MLC Centre, 19 Martin Place, Sydney NSW 2000 P: +61 2 9338 6600 F: +61 2 9338 6950 E: [email protected]

Department for Manufacturing, Innovation, Trade, Resources and Energy — South Australia

W: www.dmitre.sa.gov.au

Contact Details:

Level 9, The Conservatory, 131–139 Grenfell Street, Adelaide, South Australia 5000 P: +61 8 8303 2400 F: +61 8 8303 2410 E: [email protected]

Victorian Government Business Offices (VGBO)

W: www.business.vic.gov.au

Contact Details:

CBD — Inner Melbourne Region

121 Exhibition Street, Melbourne VIC 3000 P: (+61 3) 9651 9239 F: (+61 3) 9651 9505 E: [email protected]

Department of State Development — Western Australia

W: www.dsd.wa.gov.au

Contact Details:

1 Adelaide Terrace, East Perth, Western Australia 6004 P: +61 8 9222 0555 F: +61 8 9222 0505

Trade and Investment Queensland (TIQ)

W: export.qld.gov.au

Contact Details:

ASEAN Contact

ANZ Tower, 16th Floor, Jl. Jend Sudirman Kav 33A, Jakarta Marah Hoessein Salim, Trade and Investment Commissioner P: + 62 21 5790 5620

Australian Food and Grocery Councilwww.afgc.org.au

AFGCMARKET INSIGHTS: CHINA

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