2012 Annual Report - Food Processing Ingredients Sector

An Expert's View about Food , Beverages and Tobacco in China

Posted on: 12 Mar 2012

China's GDP climbed back to double digit growth in 2010, and the gross sales value of the food industry in 2010 reached a record RMB5.4 trillion, or $812 billion.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 2/22/2012 GAIN Report Number: China - Peoples Republic of Post: Beijing ATO 2012 Annual Report Report Categories: Food Processing Ingredients Sector Approved By: Ralph Bean Prepared By: Wang Jun, Susan Zhang, Cristal Tang, Lucy Liu, Rex Zhang Report Highlights: China?s GDP climbed back to double digit growth in 2010, and the gross sales value of the food industry in 2010 reached a record RMB5.4 trillion, or $812 billion. Although growth at this pace is unlikely to continue indefinitely, opportunities for U.S. products will continue to grow due to factors including; the rising demand for increasingly sophisticated ingredients; growing consumer emphasis on healthy ingredients; continued appreciation of the RMB; and instability in the price, availability and quality of ingredients from domestic suppliers. General Information: TABLE OF CONTENTS EXECUTIVE SUMMARY SECTION I: MARKET SUMMARY 1.1 Market Overview 1.1.1 Market Growth 1.1.2 Driving Forces 1.1.3 Threats 1.2 Important Food Processing Sectors 1.2.1 Frozen Food 1.2.2 Prepared Meat Food 1.2.3 Snack Food and Chocolate Candy 1.2.4 Baking Industry 1.2.5 Dairy Sector 1.3 Advantages and Challenges 1.4 Regional Development 1.4.1 Northeast China 1.4.2 North China 1.4.3 East China 1.4.4 Southwest China 1.4.5 South China SECTION II: MARKET ENTRY 2.1 Entry Strategy 2.2 Market Structure 2.2.1 Distribution Pattern 2.2.2 Distribution Channel 2.2.3 Distribution Flow 2.2.4 Cold Chain SECTION III: BEST PRODUCTS PROSPECTS 3.1 Prospects Categories 3.2 Example Products Analysis 3.3 Thriving Degrees of Sub Food Sectors SECTION IV POST CONTACTS AND FURTHER INFORMATION EXECUTIVE SUMMARY This annual report reviews the development of China?s food industry in 2010 and the first half of 2011, and examines trends and prospects of the industry for the second half of 2011. In 2010, China brought its Gross Domestic Production (GDP) growth back into the double digits, 10.4 percent, after falling to 9 percent for two years in a row following the outbreak of the global financial crisis. This was achieved through various measures, including the Four Trillion Stimulus Plan ($588 billion), in an effort to transform China?s economy from one based on exports to one driven more by domestic consumption. China?s food industry continued the 30 year trend of rapid growth, with gross sales values in 2010 reaching nearly RMB5.4 trillion ($812 billion): 22 percent higher than the previous year. By the end of 2010, the number of large food processing companies increased by 2,000 to exceeded 41,000. Food exports in 2010 climbed to $41.1 billion, a 26 percent increase over 2009; and food imports reached $21.6 billion, an increase of 45.4 percent compared to 2009. 2011 has proven to be somewhat more difficult: from the start of the year, the Consumer Price Index (CPI) started to climb, jumping by a record of 6.5 percent in the middle of the year. Rising labor costs, coupled with weaker export markets and overall rising prices hit small-sized companies in coastal area, with a growing number of bankruptcies. The final GDP numbers for 2011 are expected by many sources to fall back below 10 percent. Amidst this hardship, rapid growth in the food manufacturing industry is expected to moderate somewhat as higher food prices and labor costs, increased regulation and increasing sophistication among manufacturers reduce margins and increase competition. Despite this, growth is likely to continue as consumers continue to demand more heavily processed foods to save time, and are increasingly willing to pay for attributes such as increased safety. There remains considerable room for consolidation and increased efficiency within the industry. In some respects, this may create more opportunities for U.S. agricultural products, as rising ingredients costs and appreciation of the RMB narrows the gap between imported and domestic products. An obvious example is in China?s imports of U.S. swine meat, which have increased 1,400 percent in 2011 to 158,000 metric tons. The prospects of U.S. food ingredients can be roughly categorized as the follows, in order of their potential in the China market: Strong demand: Those products that are not produced in China but have a large market, or which are produced in China, but where the U.S. product boasts a significant and widely recognized price/quality advantage. Good prospect: Ingredients that have developed a significant price advantage recently, but which are still not widely marketed in China. Potential prospect: Products which are not currently marketed in China, but for which domestic demand is growing, while production remains flat to declining. Conditional good prospect: Products that needs heavy marketing activities in China or efforts in closing price gaps. In general, China is an immense market and able to accommodate more imported food ingredients than it currently does. A substantial number of ingredient products are either not available domestically in significant quantities, or suffer from significant quality issues relative to price. Note: RMB is converted into U.S. dollars at prevailing rates in effect during data collection periods. In 2008, $1 = RMB6.95; in 2009, $1 =RMB6.83; and in 2010, $1 = RMB6.77. SECTION I MARKET SUMMARY 1.1 Market Overview In 2010 China made a critical contribution in stabilizing the world economy. After two years of single- digit GDP growth, China moved back above 10 percent. Growth in food manufacturing was even more impressive. Food industry 2010 at a glance: Gross sales value*: RMB5.4 trillion, or $812 billion % increase than 2009: 24 % of gross industry output value: 9 Number of sized firms**: 41,867 Number of total firms: About 500,000 Firms above RMB10 billion in sales value: 27 Food exports value: $41.4 billion % increase than 2009: 26 Food imports value: $21.6 billion % increase than 2009: 45.4 Number of employee: 6,560,000 *. Not Sales Value, but Gross Industry Output Value, is discussed in China Statistical Yearbook. Sales Value here equals to 98 percent of Gross Industry Output Value based on the indicator of Proportion of Products Sold. All Sales Values hereafter are calculated in this way. ** Firms with annual sales revenue of less than RMB5 million ($740,000). 1.1.1 Market Growth Development of the industry is best illustrated by four indicators: number of firms; gross sales value; output value growth of food industry against agriculture; and growth of manufacturing sectors against the processing sector. Number of firms Figure 1: Growth of Number of Firms in Food Sectors 2003 ? 2010 Source: China Statistical Yearbook, 2004-2011 * Statistics are only available for firms with annual sales revenue in excess of RMB 5 million By end 2010, the total number of food processors and manufacturers reached 41,135, almost doubling in the six years since 2004, and equivalent to an annual growth rate of about 14 percent. The reason behind this fast growth is two-fold: first, the rising demand for processed food products; and second, it is relatively easier to establish a food operation due to the low entry requirements on capital investment and technological abilities. This rapid growth, however, is likely to slow down in the coming years. Multiple factors are likely to contribute to this, including policy and costs restraints. The Food Safety Law effective from June 1st 2009 is a good example on policy side: it has set higher entry bars than ever for food operations, and regulation is only likely to become tougher in the future. Costs concerns include high rising raw materials costs and labor costs. Gross sales value Figure 2: Growth of Sales Value in Food Sectors 2003- 2010 (RMB100 million) Source: China Statistical Yearbook, 2004-2011 *Sales value comes from 98 percent (Proportion of Products Sold) of RMB55,432 ( Gross Industry Output Value) The global financial crisis in 2008 appeared to have minimal impact on China?s food industry, and in 2010 sales values reached RMB5.4 trillion, about five times of the value in 2004, representing an average annual growth of about 25 percent. RMB5.4 trillion equals to about US$800 billion, accounting for about 9% of China?s gross industry output value. This may actually be larger, noting the fact that the data above do not include firms with annual sales revenue of less than RMB5 million ($740,000). When this part is added, it is estimated that the total industry sales value in 2010 could be as high as RMB6.5 trillion ($960 billion). Although both sales revenue and firm numbers increased substantially, it is easy to see that sales revenue growth far outpaces growth in firms, indicating that manufacturers are growing in size or consolidating, and it is expected this trend would continue into the coming years. Growth of food industry in comparison with agriculture* *. Agriculture here refers to agriculture, forestry, animal husbandry and fisheries Figure 3: Growth Rates Comparison between Agriculture and Food Industry 2004- 2010 (RMB100 million) Source: China Statistical Yearbook, 2004-2011 Dating back to 2004, food industry was only about one third the size of agriculture in output value. While agriculture has grown steadily, food industry has grown rapidly and considerably narrowed the gap between the two. Presently, food industry is about 80 percent the size of agriculture. Provided the two keep their current growth rates, food industry is expected pass agriculture in output value by 2013, reaching roughly RMB9 trillion in gross output. Manufacturing sectors against processing sector Official Chinese statistics separate industrial food production into three categories: Food processing, including primary activities such as rice milling, flour milling, oil refining, sugar refining, slaughtering, salt processing, feed processing, and aquatic product processing; Food manufacturing, consisting of packaged food, pastries and confections, dairy products, canned foods, fermented products, and condiments; and Beverage manufacturing, which is the production of alcoholic beverages (i.e., distilled spirits, beer and wine), soft drinks and tea. Figure 4: Proportions of Three Sub Sectors of Food Industry in Sales Value 2004- 2010 Source: China Statistical Yearbook, 2004-2011 Despite its huge size and rapid growth rate, China?s food industry remains more focused on primary processing than in-depth manufacturing, with primary processing actually gaining slightly in recent years. As a result, the ratio of manufacturing output value against processing sector has remained at 1:2, far behind the average ratio of 3:1 in developed countries. Nevertheless, China?s development is different, emphasizing size first and quality second. It appears likely that the development of China?s in-depth food manufacturing industry is just getting started, and that future growth is likely to shift away from primary processing and into manufacturing. 1.1.2 Driving forces Among all the forces that contribute to China?s food industry, deposable income and urbanization are the most important. In addition, food safety has also played a big role recently by lifting demand for high quality food ingredients. Increasing disposable income Disposable income is the engine driving demand for processed foods, rising at a rapid pace over the past 30 years. Figure 5: Per Capita Income and Food Expenditure in China 2004-2010 (RMB) Source: China Statistical Yearbook, 2004-2011 In addition to fueling the overall growth in food expenditures, continued income growth is likely to contribute to a middle income consumer boom in urban areas. Middle-class consumers are quickly becoming more sensitive to quality issues in food, and driving growth in food imports. The number of urban households earning more than US$5,000 a year is estimated to grow annually by 24 percent, creating tens of millions of new consumers for high-value and imported food. However, it has to be noted that real disposable income growth is slowing down due to continued rising prices. The CPI for China in 2010 was 3.3 percent, which cut the actual income growth down to about 8 percent. Provided that 2011 disposable income growth remains about 11 percent, the actual disposable income may be pulled down to about 6 percent, based on the estimated CPI of 5.5 percent in 2011. Urbanization The Chinese government has been supporting urbanization for years, in hopes of generating more jobs to absorb labor freed by modern agriculture and losses in arable land. As a result, the rural population has been dropping as urban population climbs. Figure 6: Urbanization Trends 2003-2010 Source: China Statistical Yearbook, 2011 By end 2010, about 50 percent of China?s population was urban. Over the past seven years, the rural population has dropped by 1.3 percent, or by about 10 million a year. At the same time, the urban population jumped by 3 percent or around 15 to 20 million a year. With urbanization deepening, the traditional preference for fresh food and wet markets is giving way to processed food and supermarkets. This has had profound implications for China?s demand for processed foods. This trend is likely to slow in the coming years: labor shortages in South China and East China, rising labor costs across China indicate that the seemingly endless labor supply from rural areas is beginning to dry up. Food safety As food safety scandals make daily headlines in China?s media outlets, the issue of food and product safety has become a critical area of concern for government leaders, industry associations, food manufactures, and consumers. Safeguarding the food supply is of paramount importance to the government of China. However, while China is paying greater attention to strengthening food safety legislation and enforcement, according to official statistics by the Supreme People?s Procurator, the top food safety prosecuting agency, 220 suspects were accused of manufacturing and selling food unfit for human consumption in the first quarter of 2011 alone, with 113 prosecution in 65 cases. Additionally, in June, 2011, the China Supreme People?s Court authorized use of the death sentence for those (individuals or companies) found guilty of food safety violations that result in human death or serious injury. Implementing this draconian measure to assuage food safety crimes demonstrates the government?s frustration at their inability to enforce food safety regulations. In an effort to support China?s efforts to improve food safety practices and enforcement, the United States Food and Drug Administration and the Foreign Agricultural Service (the diplomatic arm of the United States Department of Agriculture) recently conducted a Food Defense Awareness Roadshow in Beijing, Shanghai, and Guangzhou. In early 2011 United States implemented the Food Safety Modernization Act, securing the safe food supply both domestically and internationally. In addition to advising foreign exporters of the regulation and its requirements, this event helps foreign regulators understand the U.S. approach to food safety, and how it works with modern food supply chain systems, with the potential for adapting some of these approaches to support their own food safety efforts. Such efforts are also likely to increase the appeal of imported ingredients. 1.1.3 Threats A number of different factors have raised concerns that the Chinese economy may face greater difficulty in the future, possibly even an end to the era of rapid growth. Although growth appears unlikely to end, it is clear that these factors will have a substantial moderating effect on China?s future expansion, and will likely affect the food manufacturing industry. Rising food ingredients prices Although food prices are rising globally, the problem in China is amplified by the effects of unrestrained speculation. Starting with mung beans, followed by ginger, apples, peanuts, pork, and so on, a whole list of agricultural products have experienced price increases and fluctuations ranging from 20 - 30 percent to as high as 100 percent or more over the past two years. This has made it extremely difficult for food manufacturers to control costs, and is having a particularly strong impact on smaller companies that have less bargaining power. The impact for imported ingredients is likely to be mixed. Although import prices tend to be more stable, many manufacturers have sufficient capital on hand to invest in their own ingredient production, and price instability is increasing their incentive to do so. This trend is also being influenced by food safety concerns, as large food manufacturers seek to ensure quality by taking ownership and directly controlling the manufacture of their primary inputs. Soaring labor costs As noted earlier, labor shortages and consequent increases in wages have gone from being a seasonal issue in South China to becoming a more nationwide problem throughout the year. Food manufacturing has been particularly dependent on low-cost unskilled labor and salary requests are increasing by as much as 30-50 percent per year in the past two or three years. Shortages of low-cost labor are causing many operations to limit production. Excessive food safety costs A continuous drumbeat of food safety scandals in the local papers have made the Chinese government extremely sensitive to the issue. In response, a wide range of new measures have been introduced to help ensure safety. These are, however, adding considerably to the cost for manufacturers. Dairy has been particularly hard hit. The new dairy food sector policy effective from April 1st 2011 has greatly lifted standards for producers. As a result, it drove about half of dairy food makers out of the market, and left the survivors bearing an additional RMB1 million per month for cost of quality checks and improvements to testing and inspection equipment. For other food sectors, manufacturers have to be extremely cautious in selecting raw materials, in most cases, purchasing more expensive ingredients, to make sure their products are safety problem free, this has imposed substantial additional costs on them. In general, it is likely that the breakneck pace of growth in this industry will slow somewhat, and that a good deal of industry consolidation will take place as nearly all of these factors have a disproportionate impact on the smallest manufacturers. 1.2 Some Important Food Sectors Sectors that may relate to U.S. agricultural products involve frozen food, prepared meats, snack food, bakery and dairy products. 1.2.1 Frozen Food Frozen food is a fairly broad category that includes frozen breads and dumplings, prepared meats, ice cream and so on, although consumers primarily see this category as being comprised of frozen dumplings and breads. In ten years China?s frozen food industry has grown from one overwhelmingly dominated by mom-and- pop stores into a massive, highly modern industry accounting for well over $10 billion in annual sales. The industry is centered around the city of Zhengzhou, home to China?s two largest frozen food manufacturers, San Quan and Synear. Each company commands close to ΒΌ of the market, with roughly 500,000 metric tons in current manufacturing capacity and gross sales of RMB3 billion. Both are adding new manufacturing capacity, and San Quan expects to triple its output within the next five years. These manufacturers are a far cry from their homespun antecedents. They are large corporations whose products are a household name across China, and who have brand names and reputations to protect. San Quan currently exports to twenty different countries, and could easily export more if domestic markets didn?t demand their full attention. With famous names and large investments in their product lines, these companies have a powerful interest in guaranteeing the quality of their products ? including the ingredients they use to manufacture them. Laboratory facilities are extensive and include the latest gas chromatography and other equipment. This need to ensure quality and safety, along with the need to innovate in order to stay ahead of me-too manufacturers, is driving a keen interest in new ingredients, including imports. China?s frozen food industry revolves around several traditional foodstuffs: vegetable and meat dumplings that are boiled, and sweet rice flour balls traditionally stuffed with black sesame sauce. Other products include hun dun (won ton), noodles and frozen steamed breads (mantou). The principal ingredients are simple: wheat flour, pork, fresh vegetables. However, as competition grows, manufacturers are seeking ways to distinguish themselves by offering new tastes and varieties. San Quan is already producing a line of fruit-flavored tangyuan (which traditionally use sweet sesame fillings), including one that uses blueberry fillings imported from the United States. 1.2.2 Prepared Meat Prepared meat, after quick frozen dumplings and breads, is also a rapidly growing food sector. It, too, is built on consumers? demands for convenience has been boosted tremendously by that increasing tempo of modern urban life. Prepared meat foods can be categorized into three sub sectors, depending on production and preservation processes: fresh prepared meats; prepared meats in vacuum packages; and frozen prepared meats. Fresh prepared meats are generally high in quality but short in shelf life, limiting them primarily to regional markets. Throughout China, each region (in some cases each city) has its signature brands. Barring a rapid and dramatic improvement in cold chain logistics, this market is likely to remain heavily fragmented for the time being. Most companies that have successfully expanded beyond one region have done so by establishing new manufacturing facilities in different regions, and adapting their product to local tastes, rather than attempting to ship from the original plant to the target market. Prepared meats in vacuum packages have been on the market for about twenty years, with the main products type being different kinds of sausages. Sausages have helped built many of China?s leading brands, including Shineway, Topin and Yurun. These brands are not only sector leaders, but also giants in China?s food industry with annual sales boasting RMB30 ? 50 billion. However, most of these companies have focused substantial effort on building their own swine farming and internal supply facilities and have little demand for imported meat products. The third subsector, frozen prepared meats, is where the primary interest in imports appears to be. This is the most recent part of the industry to develop, having started roughly ten years ago, growing to RMB12 billion in sales by 2010. The growth rate of the sector is 35 percent over the past decade, about 10 percent higher than the overall average for food industry. This extremely fast growth is expected to continue for the near future, as the industry remains relatively underdeveloped. The main product types are meat ball or fish ball, for hot pot use or daily cooking, with some variations in ingredients, sizes, and flavors etc. The center of frozen prepared meats is in Shandong province, hosting industry leaders such as Longda, Huifa and Jiashibo etc. Huifa for example, has a history of only 10 years, but has grown its sales to RMB760 million in 2010, boasting an annual increase of 200 percent over the last 6 years. Jiashibo, Huifa?s competitor in the same city and having the same history, is experiencing similar growth. Unlike the giants in the sausage sector, the main manufacturers in the frozen prepared meat sector have not pursued a strategy of vertical integration, leaving them free to source raw materials as they see fit. As they continue to expand, however, sourcing will become an increasingly important issue for them. A second characteristic of this industry sector is the nature of the ingredients demanded: production typically demands not lean muscle cuts, but high-fat parts such as pork collars and bellies, feet and offals. These parts are typically less widely utilized in the U.S., with significant exportable supplies. 1.2.3 Snack Food and Chocolate Candy Snack food is a top three sector in terms of growth rate among all food industry sectors, only after frozen food and health food. There are no official statistics on the size of this market, but it is estimated to be as large as RMB100 billion in sales, with an annual growth rate greater than 25 percent. The snack food sector is characterized by relatively low entry costs but relatively high failure rates. Competition is high, innovation vital, and profit margins thin. Manufacturers try to innovate their products in shape, color, taste, mouth feel and packaging, but have historically avoided imported ingredients out of cost concerns. The basic ingredients utilized in the snack food sector are fairly simple: wheat flour, rice, seafood, flavorings and seasonings, colorings, fruits, nuts, and other regular agricultural products, many of which can be domestically supplied. The largest exception are for tree nuts and certain fruits that are not widely available domestically. The largest sub-sector using these products, apart from the snack roasting sector, is chocolate candy. Demand is, surprisingly, higher in the mid-low end of this sector, as competition is especially fierce, and imported ingredients can help manufacturers add value to their product line and gain an edge on the competition. Mid to low end chocolate candy manufacture is largely clustered in the city of Tianjin, with a history dating back 50 years, when Tianjin, Beijing and Shanghai dominated. Chocolate manufacturing in the other two cities declined in the 1980s as their economies boomed and higher-value industries pushed out these relatively low margin manufacturers. The industry in Tianjin, viewing this as an opportunity, purchased much of the equipment and know-how shed by Beijing and became the number one chocolate candy center in terms of production in China. By the 1980?s and 1990?s Tianjin?s Dagang district alone boasted over 200 manufacturers, but numbers have since declined in the face of competition from high- end imports from Dove, Hershey and Ferrero. Currently, there still exist about 70 chocolate candy producers in Tianjin, producing about 80 percent of chocolate by volume in China. They are mostly small to medium in size, and the bigger ones have a sales volume of ranging from RMB20-50 million a year, with the largest one reaching about RMB100 million a year. Unlike the high end brands, the majority of Tianjin?s chocolate products are not real chocolates, as their major ingredients are cocoa butter substitutes, rather than cocoa butter. This industry is in decline, having lost the first tier city markets to international competitors, and lacking the margins to upgrade facilities or invest in product development. Rising ingredients costs are adding to their difficulties, with most ingredients seeing price jumps of 30-50 percent. Ingredients suppliers that can demonstrate significant product improvements at minimal cost through the use of their products are likely to find a very receptive audience in this industry. 1.2.4 Baking industry Strengths Young, middle-class consumers are changing the complexion of China?s traditionally conservative baking industry, creating new opportunities for imported ingredients. Key factors involved in this change include: Consumers pay greater attention to nutrition and food safety given rampant food safety irregularities uncovered by the media. Inflation has driven the cost of domestic food items up by up to 20-25 percent in the last two years, reducing the difference in pricing between domestic and imported foods. A clear-cut example is with raisins. The price in local high-end retail outlets for branded U.S. raisins 150g sells at $1.7, while Guangdong grown raisins sell at $1.2, and Xinjiang raisins sell at $1.6. The price difference is not noticeable to the average consumer. Retail sales of baking products such as bread, pastries, and cakes have increased from RMB 0.6 billion to 1.2 billion in the last decade with the estimated amount expected to reach 11.1 billion by 2015. This indicates that consumer demand for bakery products is growing at a faster pace than expected only two years ago, as 2010 per capita consumption at 5.1 kg was nearly double the 2008 figure. There is still plenty of room for growth: by comparison, in 2009, average per capita consumption of baked goods was 36.4kg in Britain, and 25.4kg in the United States. Health/Natural ingredients Worthy of separate note is the growing trend toward natural ingredients, driven by an increasing awareness of health issues. Consumers are seeking functionality from their foods, including bakery. Baking products containing dried fruit and nuts, cheeses, meat or other high value or high protein ingredients are popular choices for urban consumers. This trend is supported by higher disposable incomes among middle-class consumers, who are turning to bakery items as a source of snacks, breakfast, dessert, dinner and sometimes lunch (in this order). The consumption of U.S. baking ingredients by the trade, as a whole, have periodically increased in South China in an average of 10-percent increments over the past six years. U.S. almonds, raisins, cranberries, blueberries, and walnuts are among the most popular and widely used by China?s baking industry, while pistachios and pecans, are in the upper echelon as far as higher-end bakery ingredients, used by restaurants and five-star hotels and have proven to add premium value to the restaurant?s reputation, profitability and quality of goods. More than a quarter of consumption is from retail bakery chains, fueling double-digit growth over the last four years across China In South China, vertically integrated bakery chains such as Sunmile in Fujian, Donghaitang in Guangzhou, Bread Talk in Shenzhen have parlayed a strong presence in Taiwan or Hong Kong into a presence on the mainland. Another example of the emerging players is the Guangzhou Crown Maliao Bakery Chain, which has expanded from 80 stores to 107 stores in Guangzhou in a matter of three years; as well as the 85? bakery, a well known Taiwanese bakery chain headquartered in Shanghai and making inroads in South China. Perceptions of bakery items are changing, as they become increasingly regarded as a nutritious and quick alternative to a snack or meal by most middle class consumers. Chinese consumers have become more health conscious and aware of natural and nutritional ingredients. Consumers born in 1970-80s are now purchasing baked goods for their family members, and with continual education advertising the benefits of U.S. ingredients ingredient, suppliers can reinforce the image of U.S. products have in the South China market. Weaknesses The bakery industry is highly fragmented because of product freshness requirements and uneven development of the industry, as well as subtle consumer taste differences in each province. Therefore, each area has its own dominant bakery chains. Limited knowledge by baking professionals on the use and application of U.S. baking ingredients, and low consumer awareness of the wide variety of U.S. bakery ingredients and their benefits remain as the single largest constraint. Insufficient promotion management is another key shortcoming for U.S. bakery ingredients in China. Most of the marketing schemes target traders and media, a slightly narrow approach that is not particularly effective in building demand. Increased focus on end users such as bakery chains, hotels and restaurants would be more effective. Cold chain remains a major barrier. In 2010, China established a national cold chain standard, however at present only 15 percent of food, meat and vegetables are transported and stored in refrigerated facilities. Further development of China?s cold chain logistics will reduce losses to spoilage during transportation and storage, and will hopefully raise food safety standards. Moreover, improved cold chain logistics will increase the availability of U.S. ingredients with shorter shelf-lives such as cheese and fresh fruit. Opportunities Limited competition This year, U.S. bakery ingredients are expected see an increase in demand, not only as markets in second and third tier cities kick in, but also as a result of limitations on export competitors. China imposed a series of restrictions on Japanese agricultural exports out of concerns over possible radiation contamination; likewise Taiwan?s DEHP scandal resulted in a number of barriers being imposed against Taiwanese processed food and beverage exports to China. Traders and retailers that imported from Japan and Taiwan have diverted to other countries. However with recent e coli outbreaks in Europe, the U.S. may be in a position to strengthen its market share. Additionally, the rise of the Australian dollar has also benefited the competitiveness and sales of U.S. bakery ingredients in China. In 2010, consumption of U.S. dried fruit and nuts by the baking industry grew by 12 percent. Demand for better quality ingredients is promising for U.S. suppliers. Fresh baked products are now welcome Unpackaged/fresh bread remained the fastest growing product category, with retail value growth of 9 percent in 2010 reaching RMB8 billion, according to Bakery Industry Association website statistics. More Chinese consumers, especially youth, prefer to consume bread for breakfast and unpackaged/fresh bread is often perceived as being as tasty as these products (see also FAS/China report on ?The Westernization of Chinese Breakfast?). Urbanization of second tier cities Supermarkets and convenient stores growing access to second tier city markets has driven the sector?s growth, helping bakeries to establish a foothold in marketing and expanding into these promising markets. For example, are the bakery chain Maxim?s supplies 7-11 convenient stores, and Queen?s has a counter in Jusco supermarkets. Meanwhile, high-end bakeries and chain stores are eager to differentiate themselves from competitors, and one focus of their strategy is to improve product quality and innovation, creating ample opportunities for high quality U.S. ingredients. Bakeries turn to e-commerce to save costs The convenience of the Internet is leading more consumers to turn to online businesses in China. With the booming cyber economy, people are finding that doing online business is cheaper and less time- consuming. The bakery sector is among the businesses capitalizing on this trend, and includes ebeecake, 21cake, and Waffleboy in the North, Migo in the South. Waffleboy is a pioneer in the online cake business, opening in January 2001 in Beijing. Migo, the first online cake ordering business in Guangzhou, cooperating with nine local bakery outlets and provides catering service to all districts in Guangzhou including suburbs. Though traditional chain stores remain the mainstream purchasing outlets, the sector?s sudden growth is spawning a wide range of different operating models that will strengthen their presence as a whole. Western-style bread and cakes have become daily necessities for many urban consumers, and the bakery industry is undergoing a change. With fierce competition in a new market, operators must rely on quality ingredients to keep consumers satisfied and returning to their outlets. Value and convenience have become the top priorities for China?s urban consumers, with price playing lesser role in many purchasing decisions. Recommendations High quality (value) and health benefits are strong selling points for U.S. ingredients in the China market. A number of helpful suggestions to spur the consumption of U.S. ingredients in the market include: Continued education to both bakers and consumers on the ingredients benefits Launching technical trainings or demonstrations to instruct local chefs the proper usage and application of U.S. ingredients in a creative way. Work with Chinese bakers to develop recipes that suit the local palette and elevate the reputation of the establishments. Facilitate in-store promotions to enhance U.S. ingredient branding as well as encourage new products that utilize U.S. ingredients via chain promotions or/and other periodic training programs throughout China and in particular in major cities. 1.2.5 Dairy Sector Market size The Chinese dairy market is growing rapidly. According to Euromonitor, total dairy sales in China reached $ 27.432 billion in 2010, an increase of nearly 21.8 percent over 2008. The latest statistics show that dairy production during Jan-June 2011 increased by 10.9 percent over the same period in 2010. It is estimated that the dairy market grew another 11.6 percent in 2011. Figure 7: Retail Value of Dairy Markets (RMB million) 2006 2007 2008 2009 2010 Dairy Products 119,194.2 137,705.5 143,821.4 157,944.1 175,235.6 Drinking milk products 52,021.5 58,999.2 59,955.8 62,451.1 67,009.6 Cheese 476.2 559.6 668.7 779.8 916.4 Yoghurt & sour milk drinks 18,975.6 22,962.9 25,195.5 29,143.2 33,280.0 Other dairy products 1,161.2 1,236.7 1,371.4 1,399.5 1,479.7 *Drinking milk products include fluid milk, flavored milk drinks and milk powder etc. Source: Euromonitor (Exchange rate between USD and RMB: 1USD to 6.388RMB) China is the third-largest dairy producer in the world after India and United States, however per capita consumption is less than one quarter of the global average and even lower than many developing countries. Consumption rates vary widely across China, with consumption at its highest in urban areas but dropping to less than 10 percent of the urban total in rural areas. In 2010, U.S. dairy ingredient exports to China exceeded 185,000 MT, falling by 2 percent compared to 2009 but remaining significantly higher than the 145,300 MT imported in 2008. The U.S. continues to be the market leader for whey products, with a market share of 52 percent. Among market access issues, China?s request ? starting in April 2010 ? to renegotiate requirements for the U.S. health certificate is a major challenge to future expansion of U.S. dairy exports to China. Many suppliers postponed shipments to minimize risk and local buyers tended to switch to other suppliers. In 2010, China?s imports of milk powder rose 51 percent in volume to 514,000 MT, while value soared 92 percent to US$1.9 billion. This growth is due to increased dairy consumption, solid demand for qualified infant formula and import prices that are competitive with local raw milk prices. U.S. milk powder exports increased in both volume and value; however at present the U.S. holds a minimal 3 percent market share, as New Zealand and Australia dominate this market segment. In 2010, the value of sales of other dairy products, mostly condensed/evaporated milk, grew some 6 percent in 2010 to reach RMB1,480 million. The foodservice channel is likely to be the key focus of certain categories since most Chinese consumers do not know how to use dairy products like cream at home. In late 2009 and early 2010 the melamine scandal continued to unfold. While all melamine- contaminated milk powder should have been destroyed, the media uncovered cases where it was mixed into new dairy products. The destruction of the original contaminated products was not well monitored in some areas. Consumer confidence in domestic dairy products has not yet recovered. Foreign suppliers aggressively tapped into the market - and ?imported? came to be seen as a guarantee of food safety or at least ?free of melamine.? Distribution channels of dairy products In China, nearly 80 percent of dairy products are purchased in retail channels. Supermarkets and hypermarkets have become the major outlet for all varieties of dairy products. For cheese products, yogurt and take-home ice cream, the supermarkets? role is even more important due to consumer?s confidence in their comparatively better cold chain facilities. Larger supermarkets and convenience stores also contributed to their increased share in the distribution channel. Major manufacturers are also competing in the food service channel with specially designed brands. Brands such as Angli from Sanyuan, Yiran from Yili, LOOK from Bright Dairy, and Muge from Mengniu are designed to target the food service channel. Although profits in food service may be higher than in retail channels, manufacturers face high entrance fees from hotels and restaurants, and delayed payment. Hotels and restaurants normally pay after they sell the products. This has constrained the sales volume of the dairy products through food service channels. The yoghurt bar is a restaurant format that has become popular with younger consumers in first tier cities. Competing with juice bars and ice-cream bars, yoghurt bars offer frozen yoghurt and yoghurt drinks of various flavors. These yoghurt bars are generally located in Central Business District (CBD) zones, catering to young white-collar workers. Their floor space is typically limited, and they have few seats, as most consumers choose take the products to their offices or homes. Major product category trends Fluid milk There are currently more than 2,000 companies in China involved in fluid milk production. Fierce competition has kept profit margins extremely narrow. At the national level, UHT milk holds about 70 percent of the market by volume, thanks to its availability in markets far from the manufacturing site and comparatively lower retail price. But in big cities where the cold chain infrastructure is better established, pasteurized milk occupies more than 70 percent of the market. Inner Mongolia is the largest production area for fluid milk products in China, and is expected to account for 19.2 percent of total industry revenue in 2011. In the last two years, traditional pasteurized milk manufacturers such as Bright began to invest in the UHT milk sector heavily, while traditional UHT milk manufacturers such as Mengniu have built up farms and pasteurized milk production lines in areas adjacent to major consumer markets including Shanghai and Guangzhou. The previously heated debate about whether UHT or pasteurized milk was ?more nutritious? or ?safer? is no longer seen in the media. UHT milk imports boomed in the wake of the melamine scandal, as parents sought to ensure a safe supply of milk for their children. New Zealand, though Fonterra, remains the largest foreign supplier, but German UHT milk is also present in substantial quantities. Organic UHT milk has seen considerable increase in sales, and U.S. UHT milk has made significant inroads in the past year. Figure 8: Sales Value of Fluid Milk 2006-2010 (RMB) 2006 2007 2008 2009 2010 Fluid milk 52,021.5 58,999.2 59,955.8 62,451.1 67,009.6 Source: Euromonitor Cheese Mainland China and Hong Kong imported more than 37,000 MT of cheese in 2010, an increase of 22 percent over 2009. U.S. cheese exports reached 4,218 MT, a 52 percent increase over the previous year, yielding a market share of 11 percent. In 2010, local dairy manufacturers began to use U.S. bulk cheese for processed cheeses for the first time. Also, the number of U.S. cheese varieties available in the market has increased. As a niche product, distribution channels for cheese are still limited. Supermarkets/ Hypermarkets sold 93 percent of the cheese in 2010. Cheese products are normally placed in a chilled case with other dairy products. Only a small number of brands are generally presented. Figure 9: *Sales Value of Cheese 2005-2010 RMB million 2005 2006 2007 2008 2009 2010 Processed Cheese 402.81 476.16 559.61 668.67 779.83 916.44 Source: Euromonitor (Exchange rate between USD and RMB: 1vs 6.388) The cheese market maintained robust growth in 2010. Although not a part of the traditional Chinese diet, the concept that cheese is a good source of protein and calcium has found its way into the middle class consumers? mind. One driving factor has been successful consumer education and the prevalence of Western food, another factor benefiting the market is the overall recovery of the dairy industry following the melamine scandal in late 2008. According to Euromonitor, the sales value of cheese in at retail grew by 17.5 percent in 2010. Most of the cheese in China is imported. In 2010, New Zealand was the biggest cheese exporter to China, taking 47.65 percent of the import cheese market, followed by Australia (20.04 percent) and United States (12 percent). China also imports cheese from France, Italy and Denmark, as well as other countries. The ratio between spreadable and unspreadable processed cheese was about 38.9 percent to 61.1 percent in 2010. Cream cheese dominated the spreadable processed cheese market. For unspreadable cheese, the most frequently available products are Mozzarella, Monterey Jack, Cheddar, and Parmesan cheese. Leading domestic dairy companies including Bright Dairy, Sanyuan and Yili have all launched cheese processing lines. They have also run very successful consumer education programs. In 2010, Bright Dairy led cheese sales with 51 percent of the market, followed by Anchor and Pikifou. The top five brands occupy over 85 percent of the cheese market. Many foreign brands are available in supermarkets in China. 11 U.S. cheese brands had entered the China market by the end of 2009. Brands including Land O?Lakes and Sargento performed very well. Other major import cheese brands are Kraft from various countries, Mainland from New Zealand, President and Cantorel from France, Bega from Australia, Emmi from Switzerland, Feta from Germany, Arla from Denmark, and Kerry Gold from Ireland. Domestic cheeses are primarily purchased by health-conscious young parents who believe that cheese will improve the health of their children. Consumers of foreign brands are mainly foreigners living or traveling in China and returnees from abroad. It is forecast that China?s cheese market will continue to grow rapidly in the next five years, and that growth will spread from 1st tier city markets to 2nd and 3rd tier markets. Ongoing economic development will increase Chinese consumers? purchasing power, and make high-priced cheese products more acceptable for mass consumers. Yoghurt The yoghurt market maintained its consistently strong growth in China in 2010. Yoghurt value sales increased by 14 percent in 2010, to exceed RMB33 million. Even though the unit prices went up for both drinking and spoon-able yoghurts in 2010, pro/pre biotic spoon-able yoghurt is expected to record the strongest value growth. The increase of 38 percent was due to growing interest from leading players. Thanks to long-term consumer education programs, Yoghurt is widely perceived as a health product that is good for digestion and weight control. This appeals to Chinese white collar consumers. Flavor innovation with new ingredients such as jujube, herbs, and cereals contributed greatly to sales growth. Most health innovation is likely to focus on adding healthy ingredients such collagen for skin benefits, fibre for digestion, and lower fat content for slimming purposes. Figure 10: *Sales of Yoghurt Values Break Down by Categories RMB million 2005 2006 2007 2008 2009 2010 Drinking Yoghurt 1,227.38 1,519.70 1,871.54 2,015.81 2,230.99 2,469.27 Spoonable Yoghurt 602.48 695.48 778.10 834.85 988.02 1,111.73 Hangzhou Wahaha Group has overtaken Bright Dairy & Food Co.Ltd to be the number one player in yoghurt, accounting for almost 14 percent of value sales in 2009. Hangzhou Wahaha Group, Bright Dairy and Mengniu, were the domestic leaders in this sector in 2010. Imported yoghurt enjoys a stable but small growth rate among expatriates or returned overseas Chinese. Emmi from Switzerland, Elle & Vive from France, Yoplait from Australia and FAGE from Greece are frequently available brands on the shelves of import food supermarkets/stores. Milk powder Milk powder production increased to $1,864.2 million in 2010. In 2009, China found it difficult to export milk powder to overseas markets. Meanwhile, due to low prices in international markets, a large quantity of low-priced milk powder was imported into China. Milk powder imports during Jan-Oct, 2011 amounted to 379,000 metric tons, representing an increase of 14.5 percent by volume compared with same period in 2010. The import value reached US$ 1.39 billion, an increase of 25.5 percent by 2010. Eighty two percent of the milk powder imported during the first ten months of 2011 was from New Zealand. Infant formula powder sales grew steadily. High value-added infant formula milk powder markets in China are nearly monopolized by multinational giants from Europe, the United States, and Australia. Apart from the advantages in technology, foreign companies also enjoy a competitive edge in branding and channel management. In addition, foreign brand infant formula also enjoys higher degree of trust among Chinese consumers in a product category where trust issues are critical for consumers. Foreign infant formula brands increased their prices several times during the past year, but concerns about food safety have made young parents in China less price sensitive. The top 5 international brands - International Nutrition (Dumex), Mead Johnson (Enfagrow, Enfapro, Enfachild, Enfaschool), Abbott Nutrition International (Gain, Similac), Nestle (Lactogen, Neslac), and Wyeth (Promise, S-26, Bright Promil) - took over 50 percent of the market. Beingmate overtook Yili (Inner Mongolia), Shengyuan (Shandong), Yashili from (Guangdong), and Wonder Sun (Heilongjiang) to become the star performer among domestic brands. 1.3 Advantages and Challenges Advantages Challenges China is the world?s largest food market and also Fragmented markets in a geographically large a large processor of many food categories that nation with underdeveloped logistics and supply both domestic and export markets. infrastructure as well as cold chain system. Upscale food makers eagerly look for high Food processing, retail and HRI sector as well quality ingredients that add value to their as distribution channels in less developed areas products, and leading food makers are more lag far behind those in the affluent coastal likely to use imported ingredients to develop new region, hampering further penetration. products. Increasing concerns about food safety and health Incomplete Chinese standards and discrepancy creates more opportunities for high quality between Chinese standards and U.S. ones may ingredients create technical barriers to trade. A large number of emerging city markets offer Increasing commodity prices and logistics costs tremendous opportunities for growth. offset depreciation of the U.S. dollar. The appreciation of the Chinese RMB will make Increased access for imports has resulted in U.S. products more competitive in this price greater competition from other exporting sensitive market. countries. TBT and SPS issues impact trade. China is a good base for value-added processing. Logistics and distribution channels in many emerging city markets still lag, and are a particular barrier for dairy products and fresh fruit. Various age groups, such as infants and the Basic agricultural production is not well elderly, are driving demand for safer and integrated with the commercial food processing healthier foods. sector. Effectiveness of the Food Safety Law and Chinese consumers are price-sensitive: imported establishment of the State Food Safety products have difficulty competing with Commission will create a friendlier environment domestic substitutes on price alone. for the food processing industry. Urbanization and lifestyle changes favor Infringement of intellectual property rights consumption of more processed food. remains a serious concern in China. High-income earners favor products that can Imports are regarded as expensive. Price- improve their quality of life, and are willing to sensitive consumers are less willing to buy pay a higher price. imported products without knowing their value. Imported goods and raw materials from the U.S. High rising costs is to impede the rapid growth are generally regarded as high in quality. of the industry. After two decades of fast development, the industry is likely to slow down. 1.4 Regional Development China?s food processing industry is intensively located in the most developed affluent regions along the coast, with Beijing, Shanghai and Guangdong being the centers. Southwest China, which hosts Chengdu and Chongqing, two of the top emerging city markets in China, is also developing rapidly in food industry. 1.4.1 North East China Northeast China, collectively referred to as ?Dongbei? consists of the three provinces of Liaoning, Jilin and Heilongjiang. The heartland of the region is Northeast China Plain. This region has a total population of 107,400,000 people, accounting for 8 percent of China?s total population. As the first part of China to develop heavy industry owing to its abundant coal reserves, Northeast China, on the whole, is more urbanized than most other areas. The main cities, Shenyang, Changchun, Harbin and Dalian, all have populations of several million inhabitants. Northeast China is an important agricultural region as well, producing the bulk of China?s corn and soybeans, as well as other commercial food grains and economic crops for export throughout China. Liaoning Liaoning has the largest economy of Northeast China. Its nominal GDP for 2010 was 1.83 trillion Yuan (ca. US$270 billion), making it the 7th largest in China. Its per capita GDP was 41,782 Yuan (US$6,172). Among the three provinces of Northeast China, Liaoning is the largest in terms of GDP. The main agricultural products include corn, sorghum and soybeans. The region around the port of Dalian produces three-quarters of China's exported apples and peaches. Beer - People in northeast China have a long tradition of drinking beer, especially in the summer. There are 17 beer breweries in Liaoning, 10 of them owned by China Resources (Snow Flake). China resources accounts for 60 percent of the total beer production of Liaoning, followed by Harbin, Tsingtao, Yanjing and some minor local brands. Seafood - Seafood processing is one of Liaoning?s food processing industries and is mostly concentrated along the coastal cities of the Bohai Sea, especially in Dalian. Some processing plants buy aquaculture products from US and/or Russia and re-export them to the U.S., EU and Japan after processing. Liaoning Province Dalian Ocean Fishery Group Corporation is one of the largest seafood processors in China. Dairy - Liaoning Huishan Group is the fourth largest dairy producer in China. In addition, Yili, based in Inner Mongolia, recently established a liquid milk and yogurt production base in Shenyang, Liaoning. Jilin In 2010, the nominal GDP of Jilin province totaled 857.71 billion Yuan (US$134.02 billion), with per capita nominal GDP of 31,306 Yuan (US$4,891) in 2010. Jilin's agricultural production is centered on rice, maize, and sorghum. Rice is mostly cultivated in the eastern parts; Changbai Mountains are an important source of lumber. Herding of sheep is an important activity in the western parts. Jilin Province is one of the major commercial grains producing areas of China and it has been enjoying the highest per capita grain possession rate over China for many years consecutively. Meat processing Jilin Haoyue Halal Meat Co. Ltd is the largest beef producer all over China, even in Asia. Its beef exports account for 50 percent of the total China?s beef exports. Heilongjiang In 2010, Heilongjiang's nominal GDP was 1023.5 billion Yuan (US$150.51 billion); its per capita GDP was 26,006 Yuan (US$3,824) The agriculture of Heilongjiang, heavily defined by its cold climate, is based upon crops such as soybeans, maize, and wheat. Commercial crops grown include beets, flax, and sunflowers. Beer - Harbin beer (belongs to Anheuser-Busch InBev), the earliest beer brewery set up in China (the year of 1900), is another strong brand over northeast, even China. It has a market share of 66 percent in Harbin and about 5 percent over China. Dairy - Heilongjiang has the greatest number of milk cows and the highest production of milk among all the province-level divisions of China. Wondersun Dairy Co. Ltd, a subsidiary of Beidahuang Agriculture Co. Ltd, is one of the largest dairy producers in northeast China, and Beidahuang Agriculture Co. Ltd is at present the largest agricultural product company all over China. Figure 11: Major Provinces? Food Processing Industry in Northeastern China by Province 2010 P Number of Annual Sales (1 billion rovinces Categories Enterprises RMB) Food Processors 1822 202.94 L Food Manufacturers 454 36.73 iaoning Beverage Manu 282 26.55 facturers Food Processors 851 116.27 Food Manufacturers 186 155.41 Jilin Beverage Manu 232 261.06 facturers Heilongjiang Food Processors 267 84.29 Food Manufacturers 41 115.45 Beverage Manu 32 78.03 facturers Sources: Statistical Yearbook 2010 of the reported provinces 1.4.2 North China North China is home to 15 provinces, special municipalities and autonomous regions, with a combined GDP of roughly $1.98 trillion (slightly less than Brazil). The region covers nearly half of the land area of China, stretching from the Pacific coast of Shandong province, to the border of Afghanistan in Xinjiang. The provinces within the region vary so much geographically, socially, economically and culturally, it is hard to talk about them as a whole. North China?s food processing industry is clustered in the east part of the region on the North China Plain: Shandong, Hebei, Henan, Beijing and Tianjin. This region dominates China?s meat processing, seafood processing, and beer industries, and is a major player in instant noodles and dairy products. The food processing industry benefits from its location in China?s breadbasket, with Henan province dominating wheat and pork production, while Shandong is a major force in fruit and garlic production as well as fisheries. ATO/Beijing is in the final stages of identifying and cataloging the major players in various segments of North China?s food manufacturing industry. Meat processing Meat processing is a major industry of the region. Henan is the largest meat processing province in China. It is estimated that 5 out of 10 of packages of ham sausages produced in China are made in Henan Province alone. Henan Shineway Group (Shuanghui), the largest meat processor in China, has also been the champion of China?s top 100 food processors since 2005. Jinluo, located in Shandong province, is also a major player in meat processing in China. Frozen food Henan is also the largest province for frozen food manufacturing, and is home to a number of well- known brands such as Synear and Sanquan. These two companies each manufacture about 300,000 tons of frozen tangyuan, dumplings and hundun (wonton) and similar products, valued at roughly RMB5 billion. It is estimated the total frozen food market is as big as $10 billion a year in China. Topin Group, also headquartered in Henan, is a leader in frozen vegetables and other lightly processed frozen foods, and is increasingly finding a role as a cold logistics and warehousing services provider for other companies. Instant noodle and flour products Henan and Hebei are two of the major instant noodle manufacturing provinces in China. Master Kong in Tianjin, Baixiang in Henan, and Jinmailang of Hebei are among China?s top producers of instant noodles and noodle foods in China. Competition in this market segment is fierce, and while producers are under pressure to keep costs low, they are actively seeking ways to innovate and introduce new products and flavors. Seafood Seafood processing is one of North China?s major food processing industries and is mostly concentrated along the coastal cities of the Bohai and Yellow Seas, especially in Shandong and Liaoning provinces. The majority of imported seafood products is processed in these areas then re-exported to the U.S., Japan and EU etc, however an increasing proportion of the processed product is remaining in China. Fishballs for use in hotpot and heavily processed squid products are among the products in high demand. Beer Beer production is among the most significant processing industries in the region. Tsingdao and Yanjing, the 2nd and 3rd largest beer brands in China, are both located in the region. Shandong province, the home province of Tsingdao beer, produced the largest volume of beer in 2008. Yanjing Beer occupied a dominant 50 percent market share in North China, and more than 90 percent of the Beijing market. Snack food Among the three snack food manufacturing centers, two are located in the region. One is Rongcheng in Shandong province, a manufacturing center of seafood snack foods; and the other is Luohe in Henan province, which hosts the larg
Posted: 12 March 2012

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