The Business Opportunities in China Trade Talk, held Nov. 2 in Fargo and Jamestown and Nov. 3 in Bismarck, drew 60 participants from around the region, representing the value-added agriculture, machinery, grain storage, government and education industries.
Market experts Kellie Holloway Jarman, Project Manager for China Business Information Center, U.S. Commercial Service, and Jorge Sanchez, Director of FAS Guangzhou, met face-to-face with North Dakota companies to discuss opportunity’s in the fastest growing international market.
Holloway Jarman began the program with a discussion of commercial aspects of the Chinese economy. China is the second-largest economy in the world and in 10 years is slated to surpass the U.S. to become the largest economy. Currently, China is the U.S.’ third largest foreign export market, with exports to China exceeding $91 billion in 2010.
One of the most noteworthy statistics is the growth of US exports to China since 2000. In the last decade, China has far outperformed other US export markets, with an export grown of 468 percent. In North Dakota, exports to China have grown from $5 million in 2000 to $24 million in 2010.
So what is the future for commercial exporters in China? According to Holloway Jarman, China is not a short-term market or one that should be entered without due diligence, but the developing market provides tremendous opportunity for US exporters.
Holloway Jarman said the key to capitalizing on Chinese markets is diversifying and focusing on the second and third-tier cities, those cities outside of the larger metropolitans of Beijng and Shanghai that are currently experiencing a surge in population and a rapid increase in the purchasing power and taste sophistication by the middle class. These up-and-coming markets include Guangzhou, Tianjin, Wuhan and Xi’an, amongst others.
Working on its 12th Five-Year Plan, China has highlighted a “New Magic 7”, the top commercial industries that are expected to grow in the next five years. These industries include: new energy, energy-saving and environmental protection, biotechnology, new materials, clean-energy vehicles, high-end manufacturing and next generation information technology.
Value-Added Ag Opportunities
Sanchez discussed opportunities in China for North Dakota’s food producers. Currently, China is the world’s largest ag producer by volume, but there is an increased demand for higher value products for processors and domestic consumers. Additionally, there is a growing demand for protein but not enough arable land to feed the country. Today there are 10.9 Chinese persons to feed per hectare of arable land, more than twice the world average of 4.4. Due to increasing population, most of the country’s arable land is now used for urban development.
Sanchez said the potential in China is extraordinary.
“Despite challenges, no market matches China’s potential, especially for high-value products,” Sanchez said. “Continued rapid economic growth will create unprecedented expansion in China’s food demand.”
Sanchez also highlighted the opportunity for products such as value-added, organic, and pre-packaged snack foods. The focus in China should be less on bulk commodities from the US and more on exports of value-added and consumer-ready products.
For both the commercial and food industries, the opportunity lies in the middle class, which has experience tremendous growth since joining the WTO in 2001.
Companies interested in pursuing exports to China need to be prepared for regulatory hurdles. Good relations with buyers and provincial leaders is key to being successful in the Chinese market.
Companies that are interested in learning more about their specific opportunities in China can explore the market further by participating in the NDTO-led China Trade Mission in March 2012. This Trade Mission will also give interested food companies the opportunity to participate in Food Ingredients China, the leading ingredients tradeshow in the country, March 28-30 in Shanghai.
To learn more about opportunities in China or the China Trade Mission, call NDTO (701) 231.1150.