The romantic King of Bavaria, Ludwig II, would be proud of his beloved Neuschwanstein Castle. Nowadays, his architectural work of art is flocked by thousands of Chinese pilgrims every year. What he would never have expected, though, is that when most of them return to China they carry with them cases of milk powder. At the Munich central railway station, the Mueller shop now declares a long-term limitation on the purchasing of infant milk powder.
Since 2008’s Melamine scandal, Chinese consumers have turned to overseas milk powder as an alternative to domestic supply. The damage that this event wreaked on consumer trust severely impaired the Chinese milk industry, while contributing towards the formation of today’s food consumption habits in China.
The rapid growth of the economy in the past decade has nourished the world’s largest emerging urban middle-class – children of the 1980s to 1990s, who are mostly single-children due to the country’s ‘one-child’ policy, which kicked-off around 35 years ago. Compared to the previous generation, they are better-educated, and no longer short of materials, including an abundant food supply. Yet while they require more assurances regarding public food safety, the supply profile of today, in general, hardly meets such demand.
According to Ipsos’ 2015 survey, Chinese consumers are now taking unprecedented care over food safety and health. Meanwhile, traditional concerns, such as flavour and price, have faded. An overwhelming 85 per cent of respondents reported that food safety is consumers’ primary consideration when buying food or dining outside, with food health ranking second (78 per cent). The survey further indicates consumers with higher household income prefer food products with a high brand recognition. Significantly, families with a monthly income in excess of CNY 7,000 believe that higher brand recognition can deliver higher food safety assurance.
Green or organic food consumption has gradually become an urban trend, and city residents would rather pay a higher price tag for a basket of safety and health assurance. Seventy-nine per cent of the respondents reported that they would accept a price increase of 10 per cent for this assurance; 52 per cent agreed on a 11 to 30 per cent increase; while 21 per cent said they would accept an increase of 31 to 50 per cent. This reflects a stratification of food consumption similar to the early market of ‘Bio’-labelled products in Germany, despite the community still not being fully aware of green or organic concepts.
In addition to green or organic food consumption, the survey also unveils a growing tendency for foreign food purchases in the past five years. Half of the respondents regard most imported foodstuffs to be more trustworthy than domestically manufactured products.
The upgrading of China’s food consumption towards safer and healthier foods seems quicker than expected. Many native agri-food initiatives have accelerated investments in brand and safety enhancement. The WH Group’s recent acquisition of Smithfield Foods—the largest pork producer in the US—is highly symbolic in this sense: with China’s pork supply-demand ratio approaching 1.0, the company has introduced this well-known household name to China, which is targeting middle-class consumers here.
Nowadays, Chinese consumers often go shopping without carrying a physical wallet, relying instead on their Smartphones. Alipay, Wechat pay and Apple pay have all transformed payments into non-cash transactions, which can take place all the way from the luxury café to the wet market. The boom of e-commence and the logistics industry has also profoundly changed food shopping habits. One in five young people under the age of 30 in Shanghai buy food online at least once a week. For the top three e-commence platforms—Taobao, Tmall and JD—on average over 50 per cent of their annual revenue is contributed by food shopping. It indicates that food raw materials and products are now circulating faster than ever before, and that supply channels have become ever more complicated. Adding to this complication is increasing consumer awareness – consumers are now complaining that meal ordering platforms are short of transparency for raw material preparation and kitchen processing. And around 84 per cent of Chinese consumers are also reportedly opposed to genetically-modified food.
The Chinese Government launched its Made in China 2025 plan in 2015, partly aimed at upgrading and modernising supply chains, and during 2017’s Two Sessions, Chinese Premier Li Keqiang re-stressed the importance of food safety for the whole nation’s sustainable development. To feed 1.35 billion with healthier and safer food is undoubtedly one of the government’s top tasks. The National Food Safety Law, revised in October 2016, is deemed to be historically the most stringent. Chinese leaders have vowed to tackle food counterfeiting and pollution. According to the top leaders, China will strategically undertake supply-side reform in the agriculture and food manufacturing sectors. President Xi Jinping himself stressed the importance of supply-side reform and food security, saying, “Ensuring food security has always been the top priority concerning the national economy and people’s livelihoods, and we urge the further perfecting of policies and boosting crop production capacity.”
Theoretically, the modern food supply chain goes from field to shop or table, so hazards at each step may aggregate and migrate into end products, and eventually the hand of consumers. It is imperative for food quality and safety assurance to guarantee step-wise monitoring of the whole supply chain. This form of monitoring has proven to be one of the most effective methods in several European economies, with the kernel of such a mechanism lying in traceability systems and the level of transparency. Chinese law makers must introduce this concept into the latest legislation, additionally emphasising public trust-building and third-party supervision integration.
German society benefits from the third-party supervision in relation to food safety. Providing independent monitoring services, a professional certification body can help food enterprises standardise manufacturing processes, and benchmark against European food safety principles. Furthermore, by holding a third-party certificate, enterprises will win consumers’ trust and thus reap market rewards.
In general, China has successfully tackled the issue of food shortage over the past three decades and is resolute in meeting people’s growing demand for healthier and safer food. The latest legislation on food safety provides the chance to embed supply chain monitoring from the field to shop or table. All stakeholders, including investors, governmental agencies and third-party bodies should cooperate to prevent any loopholes in monitoring, so that food safety for Chinese people can be effectively guaranteed.
SGS is the world’s leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. Its agriculture and food industry expertise and global experience delivers efficient services to help safeguard quality and safety throughout the whole food supply chain，from farm to folk in all principal food segments. SGS deliver comprehensive and cost-effective control solutions including testing, auditing, inspection, certification, technical solutions, training, etc. The integrated package of measures to assist in continuously improving the culture of food safety，quality and sustainable development.