Good news from China visit
Happy exporters are back from Food & Hotel China (FHC) in Shanghai, an event marked by the visit of Secretary of State for the Environment Liz Truss to China. The five major UK pork processors all now have representation in mainland China, a testimony to our commercial progress. They are highly positive regarding prospects and report brisk sales.
Following the visit of Prime Minister Xi, the UK government is aiming for food and drink exports to China to rise to £800m by 2020. We are more circumspect.
There are structural difficulties with UK food exports, we are too late for saturated markets and we have capacity constraints.
Taking these points in turn, UK food exports are still dominated by SMEs, some very active and enterprising, but with limited scope and financial/marketing capability, the exception being the spirits sector, to some extent the beer and fizzy drinks sectors and, of course, meat.
Many large food producers are now foreign-owned or UK retail-focused with limited interest in export. Secondly, the Chinese market is maturing fast and is rapidly becoming saturated, with the public – even in smaller cities – becoming more sophisticated. Take baby formula, for example, where the market is now well covered by European or New Zealand product and where Chinese firms are now slowly regaining market share. Finally, capacity is a big issue. Our pork sector is growing, but at a measured rate and we are short of offer in areas, such as canned food.
In addition, the cuts in Defra and UKTI budgets do not tally with such expansion. We are facing challenging direct competition in China from countries such as the USA, Canada, Spain, Germany, Denmark and France, which benefit from financial support and committed political support.
Yes, we will raise the level of UK food and drink exports to China, with pork the star product, but we may fall short of this ambitious target.
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