Outline of opportunities in China
An overview of Canada's third-largest trading partner
In 2016, China's GDP stretched to an impressive Can$14.37 trillion, making it the second-largest economy in the world by maintaining approximately 18% of the global economy. With a combined trade of over Can$8.4 billion, China remains to be one of Canada's most influential global trading partners for agri-food and seafood products. Moreover, China's population of over 1.4 billion citizens makes it a substantial market for Canadian export businesses.
The Chinese recognize the importance of health and wellness products as shown by the compound annual growth rate (CAGR) registered by all types from 2011 to 2016, particularly organics, which grew by 33%. Although retail sales of organic products are relatively small compared to fortified/functional foods and naturally healthy products, there is great potential for growth, with sales of organic products forecasted to increase at a CAGR of 16% over the forecast period of 2016 to 2021.
Major sector opportunities in China
Discover more information, strengths, opportunities and considerations for Canadian agri-food and seafood. Read our Asian agri-food market intelligence!
Are you interested in learning about how we select priority sectors?
Sectors were prioritized using a quantitative modeling approach. Using the Global Trade Tracker database, we focused on over 100 products which represented, in 2016, 75% of China's total imports from the world (excluding the products that Canada does not have the capacity to produce), and 99% of Canada's exports to China.
In phase one of the modelling approach, all agri-food and seafood products went through a quantitative assessment, where each product was evaluated based on a series of quantitative criteria (that is, size of market, market growth, Canada's trade intensity, and tariff reductions), all of which were ranked over ten years of historical trade data.
Our analysis focused on assessing opportunities from a strengths and challenges perspective:
- Strengths were defined by high performance in large Chinese import sectors, and high growth.
- Challenges were defined by the issues that industry might face while trying to take advantage of market opportunities.
In phase two, the products were further categorized into nineteen super sectors and were assessed by Agriculture and Agri-Food Canada (AAFC) and ten provincial experts through a survey. The experts assessed the opportunities and identified the challenges that may remain.
All priority agri-food and seafood products are both imported by China and within Canada's capacity to produce and supply internationally.
Growth through processing
As of 2016, Canada supplied Can$2.14 billion in processed foods to China, a figure that has been growing steadily since 2012. High performing products include canola products, pork, beef, and frozen crab. While China is one of the leading markets for commodity exports, it is one of the few markets in the world where Canada can grow exports of processed products, given its wealth and rapidly growing economy.
Processed food exports provide an income multiplier; exporters can compete in a growth environment, which is less sensitive to market share and price point. Margins tend to be higher for processed products. Exporting these products also tends to be less volatile than commodities would be.
Processed foods currently represent 30% of all Canadian agri-food and seafood exports shipped to China.
It is in Canada's interest to position differentiated, high-value, unique and niche products. The Chinese market offers an opportunity for Canadian exporters to position products that consumers identify with Canada, such as bison meat, cranberries, blueberries, ice wine, wild rice, lobster, and maple products. Canadian businesses can take advantage of Canada's brand and positive image to enhance their product offerings to the Chinese market.
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|Low erucic acid canola||27%|
|Edible offal of pork, frozen (excluding livers)||12%|
|Frozen meat of pork||10%|
|Frozen hams, shoulders, and cuts of pork||10%|
|Oilcake and other residuals||9%|
|Others (hides and skin of bovine, frozen boneless bovine meat, etc.)||32%|
|Source: Global Trade Tracker – October 2017|
Canada has a significant comparative advantage in the production of many high quality commodities in the grains and oilseed sectors as well as other areas such as pulses. While the Chinese market has been very responsive to those Canadian products often sold in bulk, there are also great opportunities to extend the value of our quality commodities by identifying ingredient opportunities in high-end processed food products, particularly those in the health and wellness industries, such as pea powder as a gluten-free and high protein substitute for certain flours, especially for consumers with celiac disease.
As of 2016, Canada showed a market share of 4.85% of the Chinese agri-food and seafood market. Products where Canada has a strong presence in the processed food sector have been able to maintain a strong market presence because competitors are more focused on products where Canada has less interest. There is, however, strong competition in beef products, naturally healthy product ingredients, honey, and various oilseed products.
|Country||Percent of total Chinese processed food imports||Top three processed food exports (% share of country's processed food exports)|
|United States||11.74%||Frozen pork offal (17.4%), bovine hides (16.4%), brewing dregs and waste (12.8%)|
|New Zealand||7.28%||Milk and cream (28.8%), frozen cuts of sheep (10.8%), baby foods (10.2%)|
|Indonesia||7.07%||Palm oil (52.0%), palm kernel (16.2%), edible oils (6.7%)|
|Australia||6.11%||Wine (19.6%), fresh beef (15.7%), bovine hides (10.7%)|
|France||5.71%||Wine (37.2%), spirits obtained by distilling wine (24.8%), frozen pork (5.8%)|
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China has strict import requirements for many products and Canadian exporters are responsible for determining these import conditions by working with their Chinese importer. However, the Market Access Secretariat (MAS) of Agriculture and Agri-Food Canada is also available to assist in providing export-related information and support. This service offers a single point of contact with the goal of helping the Canadian food industry and businesses reach international markets. If you have questions about exporting your agriculture or food products, or are looking for support please contact the Market Access Secretariat at email@example.com.
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