China has thousands of small-scale food manufacturers and many do not invest in food safety certification, said Huang Dejun, director of Beijing Orient Agribusiness Consultancy (BOABC). “Domestic food companies don’t pay so much attention to food safety. The difference between foreign and domestic food firms is quite clear,” he said.
Huang was speaking at a meeting of food and agribusiness leaders outside Beijing to promote quality in the global food chain. Much of the discussion at the closing press conference focused on China. The country is now the third largest supplier of food and agricultural products to the US but has been racked by food safety incidents in recent years, including last year’s melamine scandal that left at least six infants dead and thousands of others ill.
Conference participants stressed that China is not alone in facing food safety incidents but they recognized that the huge nation faces sizeable obstacles in improving standards.
Safe food
“The Chinese consumer is going to have to realize the value of safe food. Larger companies putting [food safety and quality] programmes in place are having difficulties convincing consumers to pay more for those products,” said Vincent Paez, director of food safety business development at Thermo Fisher Scientific.
Thad Simons, chief executive of animal nutrition firm Novus, pointed out that “there are companies in China following excellent processes”. But frequent faking of labels and certificates means Chinese consumers have no reason to believe this is the case. “The consumer doesn’t know who to trust right now.” Simons said retailers could play a role in building consumer trust in safe brands.
Also, the government needs to back intellectual property, said Brady Sidwell, head of advisory at Rabobank’s north-east Asia office. “Companies would be willing to invest in food safety if the consumer is prepared to pay more, which they will. But, if there’s no brand protection and the company can’t protect its premium, then there’s no incentive for them to invest,” he said.
Opportunities
Despite such issues, participants said interest in investing in China remains strong. Yangjun Lu, senior financial analyst at GIC, said foreign firms see “only the opportunities” in the Chinese market.
China has few nationwide food brands but market consolidation will force companies to pay greater attention to brand development and food safety, said Huang. The country’s food and agriculture sector could be worth $1.5 trillion but two-thirds of the market has not yet been explored, he added.
Small and medium-sized firms need more training on food safety, said Huang. “We hope we can learn from these foreign companies and draw on experience from abroad.”
The US Food and Drug Administration opened offices in China earlier this year, which is expected to help Chinese firms improve standards for the export market.
Participants at the meeting, organised by US-based consulting and investment firm GIC group and BOABC, proposed to establish a global food safety forum to improve industry collaboration on the issue.