Anzco Foods Limited: Pursuing the Chinese Market

Politics

-New Zealand is allowed to supply China with beef and lamb, along with Argentina, Australia, Brazil and Uruguay.

-Under New Zealand’s Free Trade Agreement with China, tariffs on sheep meat were eliminated in 2016.

-New Zealand is the main supplier of sheep meat to China, together with Australia and Uruguay having increased the amount of sheep meat exported to China since 2007.

Economy

-New Zealand only produces 6% of the world’s sheep meat, but contributes to 38% of the global trade. 90% of the sheep meat produced is exported.

-New Zealand sheep meat depends on exporting, exposed to exchange rate risk and fluctuation in international commodity prices.

-The price of sheep meat traded is set in US dollar so constant variation and volatility on the exchange rate alters export price signals in New Zealand dollar terms.

-value adding initiatives and fixed price contracts with suppliers to minimize the risk and optimize the greatest return.

Social

-Noteworthy trend in the Chinese economy: increased urbanization, higher income and higher living standards.

-If China’s GDP growth continues, by 2025 approximately 485 million people (59%) will be upper middle class.

-Chinese consumers with higher incomes are demanding better quality products and are willing to pay for it.

-They are spending more on better cuts of meat: 37% was spent on pork, 22% on aquatic products, 19% on poultry, 12% on beef and 10% on sheep meat.

-Chinese hotels are pushed to buy more imported produce from developed countries because it is considered to be higher quality.

-90% of Chinese consumers are worried about food safety.

-Chinese consumers are interested in more convenience foods because they have less time to prepare meals.

-Spending more money eating out.

-When eating at home, prefers cooked, semi-prepared and packaged foods. Frozen processed foods are becoming more popular.

-90% of all quick frozen food products are purchased through retail distribution.

-Supermarkets, hypermarkets, convenient stores and boutiques stores were fast replacing wet markets in big cities, amongst affluent shoppers.

- Private food labels have one percent of the market but their role is growing because consumers believe that branded products are superior.

-There is a difference in consumption in the Northwest and the East and between urban and rural areas.

Technology

-Requiring implementing food safety systems at farm level.

-90% of the meat products were shipped without cold chain facilities.

-China’s fragmented logistics industry has hindered cold-chain development for high-value, temperature sensitive products.

-The quick-frozen products industry had developed rapidly in China due to improvements in the cold chain infrastructure and rising domestic refrigerator ownership.

-Country-of-origin branding tended to be lost when imported raw materials were incorporated into further processed products.

-Most hypermarkets have a reputation for offering high quality products, greater convenience and better quality control and traceability.

Legal

-Chinese government had introduced new environment laws and regulations that limit chemical inputs and set minimum levels for soil air and water pollutants.

Environment

-Chinese consumers are more aware of the environment.

-The majority of Chinese consumers are not willing to pay a premium for green products or are willing to shoulder the cost for certified traceable food.