Exporting packaged food to China: What small businesses need to know
Executive summary
Consumers in China regularly purchase imported foods through online platforms, with the penetration rate of online food and beverage retail growing at an annual rate of nearly 30% in recent years. Cross-border e-commerce allows Chinese consumers to enjoy a variety of snacks and beverages from all over the world with a few taps on their smartphones. From there, it takes about three days for their orders to make its way from bonded warehouses to their door, even if that door is located in a small village on the outskirts of a third-tier city.
The regions of the country that have shown the largest demand for imported packaged food and beverages are developed coast provinces and cities. Despite COVID-19 restrictions in China for the majority of 2022, the active performance of the food industry remained better than that of other industries.
When brands are selling into China, the consumer demographic needs to be considered and segmented in order to be properly targeted for marketing. Demographic and geographic segmentation are frequently used for marketing and brand positioning purposes as consumers’ purchasing habits are more likely to depend on one or both of these factors.
Although consumers in China continue to focus on price and functionality when making their purchasing decisions, their living standards and definitions of value have expanded, causing an increased focus on product quality, brand identity and the purchase experience, and the development of new consumer lifestyle choices.
Though the market is huge, so is the competition, both from China and abroad. Canada is well known for its fresh seafood – anyone who has ever seen a world map knows Canada has the world’s longest coastline. But in the processed food sector, Canada faces a range of different types of competition – both SMEs and multinationals from the US, Europe and Asia.
Products such as maple syrup are widely recognized by Chinese consumers as being associated with Canada, but other Canadian packaged food products have less inherent market recognition. When consumers search online, a dizzying array of thousands of similar products from all over the world are displayed in front of them.
How can Canadian packaged foods build a brand and win in niche markets? Even for recognizable Canadian products such as maple syrup, how can Chinese consumers be convinced to reach for the product for cooking or baking at home, thus expanding the market beyond those with a taste for pancakes?
Trade Commissioners at the Embassy of Canada have been proud to see, and excited to guide more and more Canadian companies looking to offer their products to Chinese consumers. Some of these companies are very successful; while others, unfortunately, are not.
In order to help Canadian companies develop strategies for launching and expanding into China, we have chosen eight major Canadian product categories that Trade Commissioners in Beijing have dealt with the most frequently. In some of them, Canada has a dominant market position, such as for sea cucumber, ginseng, and maple syrup.
Other products may be very popular in Canada, but are currently not yet as well-known by Chinese consumers, such as dried cranberries, dried blueberries, and flaxseed. There are also products such as honey and oatmeal, which are produced in many countries, making it difficult for Canadian manufacturers to differentiate their offerings.
Oftentimes, these products already have their own cultural significance in China, such as being gifted to friends and family during traditional celebrations. A growing awareness and desire for healthiness has pushed many Chinese consumers to seek out food products with proven beneficial health effects.
As a result, there has been increased product diversification when it comes to sea cucumbers and ginseng, while sports nutrition and dried fruits are seeing boosts in sales. Product diversification can also be seen in the oatmeal and flaxseed categories, with different consumption scenarios becoming popularized, causing these food ingredients to be consumed in an increasing variety of methods. Consumers are also turning to maple syrup and honey as more natural and healthier alternatives to sugar, although the maple syrup market in China is still in the early stages.
Chinese consumers are becoming more discerning and knowledgeable about the products they purchase and are willing to invest time into research prior to making a decision about the brand and product they buy.
By examining the landscape painted by these eight examples, we hope that those involved in these specific markets and related sectors can be guided toward effective China market strategies.
To access the full report or for any questions, please contact infocentrechina@international.gc.ca
Disclaimer:
The Canadian Trade Commissioner Service in China recommends that readers seek professional advice regarding their particular circumstances. This publication should not be relied on as a substitute for such professional advice. The Government of Canada does not guarantee the accuracy of any of the information contained on this page. Readers should independently verify the accuracy and reliability of the information.
Content on this page is provided in part by RedFern Digital. RedFern Digital is responsible for the strategic direction, growth, and performance of some of the largest and most successful brands across a dynamic range of categories in the China market, covering Research, Branding, Strategy, Social Media Marketing, E-commerce and Technical Integration.
