Exporting to China: a guide for Australian beef producers

In recent years, there's been a dramatic shift in food and beverage consumption patterns across China, due to a combination of factors: rising living standards, widespread access to the internet and more choices, locally and globally.

Consumers in China’s burgeoning new middle class, especially millenials, are increasingly worldly, wealthy and inclined to try new western foods and flavours. They are also a discerning market: they know what they want and if a product meets their requirements, they're prepared to pay a premium for it.

Today's Chinese consumers are looking to buy imported produce that is reliably safe, high-quality, nutritious and fresh, comes in modern packaging, and is convenient to use and purchase.

Typically, these consumers will do extensive research to determine whether a product meets their needs, using branding information, online reviews and where possible, in-store inspection, to inform their purchasing decisions.

Hence, it's important that any producer looking to export produce from Australia to China tailors their products, packaging, branding messages and distribution methods to Chinese consumers' preferences. 

Opportunities

Australia is perceived by Chinese consumers as having a clean, green environment and a reputation for safe, high-quality products and brands. This gives Australian producers a market advantage.

This is especially the case in relation to red meat (notably, beef), dairy products, fresh fruits (citrus, table grapes, cherries and, more lately, stone fruits and mangoes), seafood (particularly saltwater shell fish – oysters, crabs and live/frozen lobster and abalone) and wine.

Wheat, barley, beer, infant formula, processed and ‘convenience’ foods, confectionery, snack products and condiments are also promising markets.

With stiff competition from other nations, it's important to play to our strengths, differentiating our produce on the basis of its safety, quality and eco-friendly credentials through better labelling, marketing and branding messages. 

Access

Market access for Australian products, especially fresh goods, is still a big issue, even with the China Australia Free Trade Agreement (ChAFTA).

In effect since 20 December 2015, ChAFTA affords better market access for most products, and has already lowered tariff barriers to bilateral trade in goods including agricultural and F&B products significantly, with the average tariff for agricultural products now around 15 percent; however, tariffs for some key ag products remain as high as 65 percent.

Under ChAFTA, the tariffs levied on beef pre-ChAFTA (12%) will be eliminated over nine years, with tariffs on beef offal (12%) progressively reduced to zero over four to seven years.

Staged tariff reductions are scheduled over the next decade; for more information about these, visit China MOFCOM website, available in Chinese and English, and the Department of Foreign Affairs and Trade website.

Quarantine and protocol requirements remain barriers to market entry for fresh produce, but these are being streamlined. Australia has legal market access for citrus, mango, cherries, table grapes and Tasmanian apples and nectarines, and is seeking market access for other summer fruits.

Exporters should “confirm the eligibility of their product to enter the Chinese market before engaging in commercial activities with Chinese customers or directly investing in a business opportunity”, states Austrade. It recommends you make initial enquiries to your local Australian Quarantine and Inspection Service (AQIS) office or directly to Austrade.

Industry standards

All foodstuffs and beverages imported into the PRC require detailed documentation and inspection by the China Entry-Exit Inspection and Quarantine Bureau (CIQ). In 2015, after several food safety scares, stricter regulations were put in place regarding F&B categories.

Exporters need to double- and triple-check what’s needed as requirements change frequently. You can find the English translation of the China Food Safety Law 2015, which covers all imported food products, on the US Department of Agriculture website (PDF).

Find out more from Austrade’s webinar on China New Food Safety Law from August 2015:

• China New Food Safety Law: Comprehensive Compliance Guidance (PDF)
• Watch a recording of this webinar

All imported pre-packaged food must be labelled in simplified Chinese; you can also label it in English to differentiate it from local produce.

In general, adhere to the General Standard for the Labelling of Pre-packaged Food (GB7718-2011), available from the US Department of Agriculture website (PDF). 

All foreign food distributors and producers importing food products into China must:

• register with state entry-exit inspection and quarantine authorities;
• record the foods imported and distributed in China; and
• keep these records for at least two years.

Any ingredients or components not registered in China, must be registered as ‘new-to-China’ components; however, those with import histories pre-dating the new Food Safety Law should be allowed entry.

Foreign food manufacturers must register with the General Administration of Quality Supervision Inspection and Quarantine of the People’s Republic of China (AQSIQ).

Manufacturers of meat, dairy products and seafood, are subject to stricter accreditation requirements for registration and may also be subject to on-the-spot accreditation by Chinese government officials. The Certification and Accreditation Administration of the People’s Republic of China (CNCA) carries an up-to-date list of approved foreign manufacturers and facilities with regard to meat, dairy products, infant formula and seafood.

Decree 55, issued by China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) as part of the Food Safety Law and in force since 2012, requires all Australian exporters and agents as well as Chinese importers to complete an online registration form. It includes prescribed food commodities such as:

• meat and meat products;
• aquatic products;
• egg and egg products;
• dairy products;
• bee products. and
• other non-prescribed foods such as biscuits and beverages.

Detailed manuals on the registration process exist, but only in Chinese.   This is an area where it is important to engage independent expertise to assist with documentation and ensure you have provided all the information required. The NSW Australian Business Chamber (a formal  partner of NSW Farmers) can assist in this regard and has an office in China.  

E-commerce

E-commerce offers substantial potential for Australian primary producers looking to export foods and beverages to mainland China, with Austrade estimating that between five and 10 percent of retail food in China is sold online.

Australian beef marketed on TMall by a Chinese importer

Alibaba

 

Online trading with China has expanded exponentially in recent years, and Australian F&B exporters are already working with major e-commerce sites such as JD.com, Alibaba, (including Taobao and Tmall), Amazon and providers specialising in F&B products, such as Yihaodian.

Widespread uptake of wi-fi services across China, along with growing consumer demand for greater convenience and choice, are fuelling e-commerce sales of imported premium goods.

Moreover, better cold-chain logistics, particularly in China’s first-tier cities, now allow for same-day delivery of imported beef, milk and fruit. Numerous online marketplaces, including Yihaodian, Fruitday and Yiguo, now deliver Australian food, including fresh produce, directly to Chinese consumers’ doors

Austrade recommends that new exporters work with online marketplaces or shopfronts as “a cost and time effective way to test the market, build a brand profile and gain consumer feedback”.

Pilot cross-border policies, now in force at several ports across China, allow many products to be held on consignment in ‘bonded warehouses’ to be sold online directly to consumers. In these instances there’s no requirement for the Australian exporter to comply with regular import standards or to pay duties and taxes.

For practical advice and tips on China’s e-commerce marketplaces and how to access them, check out Austrade’s e-commerce in China: A guide for Australian business.

Distribution channels

Distribution channels for exports into China are complex and exporters rely on various intermediaries: licensed import agents, distributors, wholesalers and sub-distributors.

In the F&B sector, Chinese distributors tend to specialise, hence are unlikely to have the extensive distribution networks to justify exclusivity. Selecting a suitable, reputable partner and the right market is crucial: Austrade advises adopting “a multi-party approach … underpinned by both an on and offline strategy”.  

An independent party such as  Australian Business Consulting Solutions can provide advise about suitable markets and reputable intermediaries and distribution partners. 

A key factor to consider is the volume of produce and the specific market being targetted.  Small beef exporters, for example, may elect to focus on developing a premium  consumer brand for sale on ecommerce channels. Dealing with an ecommerce major such as Alibaba or JD.com can help streamline and reduce the complexity of importation, distribution and marketing processes.  Another model being used to small beef exporters is to partner with distrubutor that specialises in the restaurant trade in a particular city.

 

Australian beef distributed by a Hangzhou firm specialising in the premium food services market

NSW Farmers

 

Market access for beef

According to Meat & Livestock Australia (MLA) in its recent Red meat market snapshot: China, general requirements for exporting beef to China are that all such beef must be HGP-free and can be exported only through China-approved establishments, though the Australian beef sector is working with the Chinese government and industry to streamline the supply chain, such as by having more accreditation inspections.

In July 2014, Australia became the only country granted access to China for chilled beef, with an initial 10 plants approved to export. Edible offal sourced and processed meat products are not yet eligible for export to China.

Under ChAFTA, the tariffs levied on beef pre-ChAFTA (12%) will be eliminated over nine years, with tariffs on beef offal (12%) progressively reduced to zero over four to seven years. However, with stiff competition from other nations, MLA advises that Australian beef producers work to further differentiate their product “based on other dimensions of competitive advantage and focusing on expanding the high-value segments of the market”.

Inspection and quarantine: dairy products

It’s illegal to import unregistered overseas dairy products into China. Following Announcement 53, a registration system has been adopted by AQSIQ for overseas enterprises exporting dairy products to China: to gain registration, you must submit comprehensive documentation on your enterprise’s capability, including test reports on any products to be exported.

You can access a list of registered dairy facilities online at the Certification and Accreditation Administration of the People’s Republic of China (CNCA) and information on the registration system (Announcement 53 ) via the USDA website.

For more information, download Austrade’s Implementation Measures for Inspection, Quarantine and Supervision of Imported and Exported Dairy Products (PDF).

Organic foods

Generally, Chinese certification systems and those of foreign nations are not mutually recognised.

Organic products not certified by a Chinese certifying body can’t be labelled ‘organic’ or anything similar. To ensure quality and compliance, Chinese authorities verify consignments in accordance with the PRC’s New Certification Regulations on Domestic Organic Products.

Any imported products either declared or labelled ‘organic’ go through a rigorous ‘import verification process.

Typically, it takes 3-6 months and A$10,000+ to apply for and get a Chinese organic certificate, Austrade says, but organic products including beef, wine and infant formula, attract a premium in China that may make it worthwhile. A Chinese organic certificate can be verified through China’s Food and Agriculture Products Certification Information System (CNCA), which lists 25 certification agencies in China approved by the Administration to certify organic labelling.

Both Australian Certified Organic (ACO) (see the ACO media release) and National Association for Sustainable Agriculture Australia Limited (NASSA) (see the NASSA media release) have signed agreements with Chinese certifiers and can provide Australian-certified organic producers more streamlined, cost-effective packages for certified-organic food certificate application.

These agreements smoothed access for exporters of Australian certified-organic produce, including beef, wine, milk, dried fruits, nuts, citrus, wheat flour and coffee, to lucrative Chinese markets.

If organic products are imported into China without a Chinese organic certificate, but display ‘organic’ on their packaging, labels, instructions or promotional materials, this will be reported as a ‘major issue’, says Austrade. If these products can’t be modified to allow for them to be legally imported as ‘conventional’ produce, they will be destroyed or re-exported.

About Austrade

The Australian Trade and Investment Commission – Austrade – provides information and advice to help Australian companies reduce the time, cost and risk of exporting, and offers various services to exporters in growth and emerging markets. Austrade also administers the Export Market Development Grant Scheme. 

The EMDG scheme, designed to encourage Australian SMEs to develop export markets, reimburses up to half of eligible export promotion expenses above $5,000 (if total expenses are $15,000+), with up to eight grants available to each eligible applicant.

Austrade works with various consultants who can prepare EMDG claims on behalf of businesses, and with industry associations including the Export Consultants Association Incorporated, the Export Council of Australia, the Australian Chamber of Commerce and Industry and Australian Industry Group as well as various sector-specific organisations.

More information

As a first port of call, contact your industry association. You can also get advice, support and a wealth of specific information, including contacts and links to key regulations, from the Australian Trade and Investment Commission (Austrade): its consultants are available on 13 28 78 (within Australia) or via email at info@austrade.gov.au Click here for a list of Austrade offices worldwide.

Read more about exporting foods and beverages to China:

Austrade: Exporting food and beverage to China 
Austrade: Doing Business in China
Austrade: e-commerce in China: A guide for Australian business
Australian Department of Agriculture and Water Resources - Manual of Importing Country Requirements
China Customs
China Ministry of Agriculture
China Ministry of Commerce
General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China
China Agriculture Science
Asialink Business tips for maintaining good business etiquette in ChinaMLA
MLA's Red meat market snapshot: China
China Dairy (in Chinese)
Wine China