Cold Chain Logistics

An Expert's View about Food Processing in China

Last updated: 15 Mar 2011

Summary

The cold chain industry’s development and growth is an essential next step in China’s food industry. Both the amount of food wasted through spoilage, and the public health incidents caused by poor storage facilities has hindered China’s domestic food industry and its reputation in the international market. On June 1, 2009, China passed a Food Safety Law that strengthened food safety requirements and cold-chain systems. Implementation of the Food Safety Law means that China’s cold chain markets today are at a threshold of historic growth, and present a great market opportunity for American expertise and technology. China’s vast market for perishable goods rests on a population of 1.3 billion and a rapidly growing economy. Development of preservation processes to ensure freshness and the market for refrigeration equipment have emerged as engines of economic development – there is a wide gap between China’s current cold storage and refrigerated warehouse capacity compared to that of developed countries. China’s refrigerated warehouse capacity is currently growing 10 percent annually, with huge potential for even greater growth due to the popularization of cold chain logistics and demand for food safety among the Chinese public.

 

Market Demand

China’s current cold storage capacity isn’t sufficient to meet demand for such facilities. The lack of capacity is particularly acute in south China where locals have a taste for high-value imported fruits and seafood. In the last six years, the total number of perishable products exported from the US to China has doubled, with most of these products needing to be shipped in cold storage facilities to preserve freshness. With a dynamic economic environment and the relatively high purchasing power of consumers in South China, the consumer demand for imported fruit and food is quite large. Therefore, in South China and Guangdong province especially, many large-scale construction projects for cold storage warehouses and distribution centers are under way.

 

The Chinese government has also placed an emphasis on expanding the country’s agricultural output in order to correct the economic imbalance between industrial eastern and agricultural western China. Due to a lack of a cold chain infrastructure, close to 30% of Chinese agricultural products go to waste during transportation. According to the International Cold Storage Association, only a fraction of the products requiring temperature control in China were handled correctly.

 

Within China, the amount of food requiring cold chain processing is very large and still growing. The changing of consumer preferences toward international cuisine as well as the popularization of frozen convenience foods have all created ample opportunities for cold chain suppliers. Additionally, the increasing disposable income of the average Chinese consumer means more people are able to dine out, creating an increased demand for fresh meat, aquatic products, and other perishable goods. Although China has had significant advancements in its own cold chain development, opportunities still exist for American companies to get in the ground floor and help set standards for cold chain facilities in China.

 

 

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Posted: 30 November 2010, last updated 15 March 2011

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