On 1 October 2019, China Customs relaxed the registration procedure imported prepackaged foods newly entering the China market. As this new policy brings more convenience to food importers in China, it will heat up this already competitive market in China.
Lower Price, Longer Hours
It is ten o’clock at night and two elderly Chinese wander into Master, an import food store. A young foreigner is also in the shop looking at the variety of imported beers. Meanwhile, Wang Yaming, the Anhui-province migrant who is in charge of the import food store in downtown Shanghai, is refilling product shelves after an already long day.
Wang Yaming (the man in red T-shirt), the Anhui-province migrant who is in charge of the import food store in downtown Shanghai, is refilling product shelves after an already long day.
The row of stall shops, dry goods and vegetable sellers closed hours ago. But this shop with its hundreds of varieties of import food, from Italian grape seed oil to Indonesian latte coffee and French wine to American nuts, are fully stocked into the cramped twenty square-meter store.
“I have no other choice but to work hard every day,” Wang says. “Because the competition is too fierce these days.”
The import food products in Wang’s store are labeled as “super low price.” The store is fighting to survive in a market that already has thousands of similar stores in Shanghai alone. Since the Shanghai Pilot Free Trade Zone was established in 2013, China government has been alleviating tariffs on import food and offering support to ramp up international trade. Many, like Wang, have been encouraged to join this business trend.
“It is definitely good news for us,” Wang comments on the new policy. “Before the paperwork took quite a long time, which directly affected sales. Especially for importing food from Japan, which usually has shorter expiration dates.”
On October 6th, 2019, Products from Italy are discounted in the import food store Master in Shanghai, China.
While the elderly Chinese scan the shelves for bargains with a critical eye on the ingredient labels, the foreign white collar worker selects a tall can of pilsner beer from Germany for a mere 7 RMB (about $1USD). Several years ago, these import food products were only available in premium supermarket or luxury places, at double or triple this cost.
More Responsibility on Importers
Rather than requiring food importers to go through strict paper-work procedures to apply for customs clearance, China Customs’ new policy intends to bring more convenience and higher efficiency for food importers.
“However, changing supervision system doesn’t mean that there is no supervision,” Hu Beibei, a lecturer from International Trade Institute in Shanghai University of International Business and Economics says. “In fact, the new policy sets up a higher benchmark for food importers.”
International traders in China will not only be responsible for establishing the liabilities and supervision agreements with business partners overseas, they must now rely on themselves to assure their import food is qualified under China Customs regulations.
An anonymous source in the Australian import foods market notes that previously the China Customs requirement for import food was rather strict. In the face of the complicated application procedures for customs clearance, they would circumvent customs on behalf of some of their products through “grey markets” and only apply for about half of their products properly.
In the White Paper of Food Safety from May 2017 to June 2019, released by Shanghai Intermediate Third People’s Court, more than fifty percent of its food-related court cases dealt with disqualified import foods. Under the cover of providing personal purchasing services overseas, mostly on e-commerce platforms like Taobao, these import foods were brought into China without proper safety examinations.
“The new policy means the government will put more enforcement into cleaning up the import food market grey areas.” Hu says.
Foreign Tastes in The Local Market
“My store tried to sell German rye bread,” Wang recalls. “But the grannies living here disliked it. They claimed it had the stinky smell of rotten food.”
On October 6th, 2019, Import food store Master remains open late in Shanghai, China.
Aside from the preference for rice or noodles, Chinese consumers tend to reject genetically modified foods like many soybean oils. As import food is expanding, from its launch in the Yangtze River Delta and Pearl River Delta areas to interior regions, even impoverished Inner Mongolia and Xinjiang provinces, the difference between western and eastern culture is being intensively explored.
“When the food importers translate the ingredients into Chinese,” Hu says. “It is significant to localize the language for the Chinese market.”
It is a critical matter for these stores to choose the right mix of products that local consumers are ready to try. This involves much experimentation and poorly translated specifications on the contents may mean locals will refuse the product.
Only a few blocks away from Wang’s there is a rival import food store. This store joined one of the most popular import food chains, Dishikangte, a phonetic translation from the English word Discount, which boasts about 1,200 franchised stores in Shanghai, Jiangsu and Zhejiang.
“International snacks have been a tough sell in this neighborhood during the summer time,” the Discount proprietor says. “We hope the winter will bring us more chances to sell import foods.”
Reflecting this challenge, this Discount location is only half-stocked with foreign brands. The other stock is made up of popular domestic food product brands.
According to the National Statistics Bureau, Chinese residents’ per capita disposable income reached 15,294RMB ($2,249) in the first half year of 2019, increasing 8.4% year-on-year. To target their customers in daily life, these import food stores prefer locations in nearby neighborhood complexes over busy shopping streets.
“Alongside with escalating urbanization in China,” Hu explains. “It is a trend for people in third- and fourth-tier cities to catch up with the new life style.” As opposed to merely fulfilling the basic need of hunger, the present Chinese shoppers seek nutrition and health foods as the new consumer culture.
As the clock strikes 11p.m., Wang closes his store. He walks home through the now quiet streets carrying a case of Thailand snacks.
“Since there are subtle taste differences in these snacks,” says Wang. “I like to try out these foods before I introduce them to my customers.”
