Irish beef is back in China! But how does the Chinese market look now?
Declan Saruwatari, Market Specialist, China
Photo by Wiley Shaw on Unsplash
January 5th, 2023 marked the end of a two and a half year suspension on Irish beef exports to the Chinese market. There have been significant changes in the world and in China’s beef market during our time of suspension, this article will give you a clearer picture on what it’s like on the ground here and where the opportunities are for Irish beef in this hugely valuable market.
China’s experience with Covid-19 has been a rollercoaster to say the least; 2020 and 2021 were relatively open compared to the rest of the world. Disruption was minimal and imported meat volumes were strong, particularly for pork as China dealt with a purge of African Swine Fever (ASF). As cases began to pop up around the country and sporadic snap lockdowns became the norm. China’s Covid-19 controls tightened with extra testing and delays at ports for imported food and increasing numbers of suspensions for meat plants who failed to meet the strict Covid-19 restrictions.
This all changed drastically in December 2022, as China decided to lift all Covid-19 restrictions in the market and subsequently open their border to international travelers again. Authorities also abolished the extra testing at ports for imported meat and removed all Covid-19 controls inspections. This was then followed by the long-awaited news that the suspension on Irish beef had been lifted.
So where does that leave the beef market in China now? Tight supply and slow demand have limited the growth rate of frozen beef imports in China in the past couple of years. Suspension of plants and strict Covid-19 controls have meant countries have been hesitant to rely heavily on the Chinese market. Foodservice remains the primary channel for beef consumption in China, in particular, for frozen beef, making up an estimated 60% of the total consumption (Gira, 2022). However, there has been an active shift of consumption from foodservice to retail channels, especially e-commerce, as consumers stayed in due to the disruption in foodservice. Modern retail is emerging fast for beef with just 15% of beef purchased in retail channels from the traditional wet markets and the rest from supermarkets, specialised meat shops and close to 20% via e-commerce. This rise of e-commerce and specialised stores is part of the changing consumption patterns in China’s expanding middle class, which puts a premium on health and taste. (Gira, 2022). This trend is an excellent fit for Ireland’s grass-fed, sustainably produced beef.
The coming months will be a very interesting time for foodservice in China. After the initial Covid-19 slump in 2020, the foodservice industry grew by 27% in 2021 and has been described as a “V-shaped” recovery. (Gira, 2022) Hundreds of thousands of restaurants closed in 2022 but even more opened in 2021 and 2022. This showed how resilient the industry is and the “V” has now changed to a “W” with the large slump in foodservice in late 2022, anticipated to be followed by another strong recovery in the second half of the year, with a clear rebound already taking place during Chinese New Year.
A key trend in the foodservice sector is that chained restaurants now prefer to use imported beef as quality control is stricter and quality is more uniform (Gira, 2022). During Covid-19 times many restaurants switched to domestic beef due to more reliable supply and the hassle of checks from inspectors if they were using imports. These are no longer concerns. This presents a significant opportunity for Irish beef suppliers as hot-pot restaurants, steakhouses and barbecue restaurants are seeking high quality and reliable imported beef. Some of the key cuts for China of short-rib (karubi), gold coin, shank, shin, heel and rib fingers all are purchased at a premium here where they are lower-value cuts in other markets.
We are incredibly excited about the return of Irish beef to the Chinese market. Bord Bia China have significant reactivation plans in place which will involve, retail promotions, foodservice promotions, customer activations, knowledge seminars and much more. We envisage a slow start to 2023 but as the year progresses, we anticipate that Irish beef can regain some of its previous market share and build significant momentum in China.
Gira. (2022). Gira Asia Meat Club - China Update. Gira.