Presentation on theme: "Food Consumption and Marketing in China A perspective on China’s rapidly changing food economy."— Presentation transcript:
Food Consumption and Marketing in China A perspective on China’s rapidly changing food economy
The Traditional Chinese View of Food A meal is composed of two major components: grain (rice—fan) and vegetables (dishes—cai) Grain is the most important ingredient, but a meal without dishes is boring and tasteless, so both should be consumed in moderation. Freshness of vegetables, fruits, and meat is a very important factor for Chinese consumers. There is a strong connection between foods and health, and waste and over-eating are discouraged.
Historical Factors Food supplies have not always been abundant Inter-regional transportation was costly and difficult Cold chain systems and household refrigeration were often lacking Diets were influenced by regional availability of foods. Urban and rural diets show significant differences in consumption of grain and livestock products.
Implications for Food Marketing Consumers shop daily for fresh ingredients and buy in small quantities Supply chains are short, and consumers may buy directly from producers Quality and food safety attributes of food are determined by experience and reputation Mass media marketing is not important
Key Historical Facts In the Qing dynasty and during the first 40 years of communist rule, farmers were “taxed” heavily to provide food for urban residents. Over several decades, the gap between rural and urban incomes and food availability widened. Collectivization of farms in the 1950s reduced incentives for productivity growth in agriculture, and food scarcity increased with population growth Rural diets in the 1970s were largely vegetarian. More than 300 million people in China did not receive adequate nutrition on a regular basis.
Recent Trends in Chinese Food Consumption Rapidly growing consumption of livestock products Increased consumption of fruits and higher-quality vegetables Rising consumption of processed food products and food prepared away from home. Declining consumption of rice, potatoes, and other staple grain and starchy foods Rising concern for food quality and food safety. Rise of supermarkets as a major force in food retail
Factors Driving Dietary Change Agricultural and commercial marketing policy changes Income growth Foreign direct investment and the growing role for multi-national firms Urbanization Rapid modernization of food processing, transportation, and retailing systems
Reform and Opening With the adoption of the household responsibility system (HRS) in 1981, China’s agricultural production boomed, and the availability of agricultural produce and food greatly increased. The early 1980s and mid- to late 1990s were likely periods of structural change in food consumption in urban China as a result of the introduction of the dual- track marketing system and the elimination of food rationing. The opening of China’s food processing and retailing sector to foreign direct investment (FDI) has facilitated the rapid modernization of China’s food processing and distribution systems and created an environment that fosters food product innovation
Dietary Transformation During income-induced dietary diversification, economic prosperity enables consumers to afford a more varied and balanced diet and to demand nutritionally superior products. A critical implication of globalization is the severing of the link between diets and the local availability of resources and local habits. ─Prabhu Pingali, 2004.
Engel’s Law at Work: Rural Households Yuan/Person Share
Engel’s Law at Work: Urban Households Yuan/Person Share
Foreign Direct Investment Million USD Source: IMF Percent
Factors Hindering Supermarket Growth Consumer demand for freshness Wet markets still dominate markets for fruit and vegetables and meat Distribution networks are still under- developed Consumer shopping patterns still favor more frequent trips with smaller purchase quantities