eCommerce and fresh food to China
The eCommerce fresh food market is growing in China
In 2020, China’s fresh food market was worth 5 trillion RMB ($1.1 trillion AUD), with online fresh food trade being a new way in which fresh food was being sold to everyday consumers. With 14.6 per cent of the market’s total share and steadily growing, it provides a diversification opportunity for existing Victorian agri-food exporters. This will be the first of a multi-part series to learn about Chinese digital fresh food trade and how Victorian agribusinesses can use this new sales channel to their benefit.
Fresh food market and future trends
Over the last five years, the Chinese fresh food retail market has enjoyed steady growth. In 2020 the market was worth 5 trillion RMB ($1.16 trillion AUD) alone, with the Chinese National Bureau of Statistics (NBS) reporting that fresh food made up, on average, 30.2 per cent of individual spending. Purchasing fresh food is considered an essential part of the Chinese consumers’ buying habits and with an increase in average wages and disposal incomes, this market will continue to rise.
Supermarkets and outdoor markets will remain the main sales channel in China for fresh foods, however the onset of the COVID-19 pandemic has accelerated the development and growth of the online fresh food channel in China, with online fresh food sales now accounting for 14.6 per cent of the total fresh food market compared with only 8.8 per cent in 2019. As this retail channel matures beyond 2021 and consumer behaviour continues to be fostered, online fresh food retail will become a more popular choice for consumers.
Online fresh food ecosystem
In 2021 there were nearly 990 million netizens (users of the internet) in China, with internet penetration reaching 70.4 per cent of the population. Furthermore, 99.67 per cent of internet users are also mobile device users, with coverage development and penetration driving consumer behaviour and fostering a greater number of services available to use.
Even though online fresh food retail was overlooked early on during the Chinese e-Commerce revolution, many big players are now rushing into this space and trying to secure market share. In turn, many different business models have also developed, with names like “prepositioned warehouse”, “community group purchase”, “O2O” and “store warehouse integration”. These different business models satisfy the needs of different consumer segments, therefore it is unlikely to see a dominant market leader developing, but rather this market saturation will continue well into the near future.
Victorian agri-food exporters need to be aware that rising logistics costs and delays with customs clearance in-market means that there is an added risk for the fresh food sector currently. Therefore, unless you have trusted distribution partners and developed supply chains (i.e your product is already in the market), you will need to manage your product’s shelf life carefully or choose products that are less perishable.
(All data courtesy of Chinese National Bureau of Statistics and iresearch.cn)
Further information
To find out more about exporting fresh food, eCommerce or accessing the China market, contact the Pathways to Export team at pathwaystoexport@agriculture.vic.gov.au, or sign up to the newsletter.