China’s food and beverages market is the largest. But to feed the Chinese population, the country also has to import large amounts of food. The country is therefore also ranked fourth largest importer of food in the world with a $1.6 trillion value of imported food in 2012.
Importing food was however only the first step, Chinese companies are now investing in foreign food and beverages companies to meet the gigantic food needs of their country:
In the 70’s the Chinese authorities fixed a goal of self-sufficiency to be reached by the food and beverages market. This explains why there has been an average 30% of annual growth rate since 2009. But, this goal was abandoned in 2013 and import goods and investment in foreign food and beverages companies were encouraged. In 2012 the country surpassed the value of agricultural products importation of the US.
But this is not enough for Xi Jinping who said last year that the country’s imports will hit a value of $10 trillion per year by 2018. And by that time China should also be the world’s largest consumer of imported food according to the Association of Food Industries.
Chinese companies are therefore beginning to buy foreign companies to meet the country’s demand for meat (especially pork that is six times more consumed in China than in the US), corn, wheat, soybean, red wine and processed food. China is ranked world’s largest consumer for most of these goods, and if it is not yet ranked first, it is just a matter of time before it surpasses the current top consumer. Chinese companies are also investing abroad because it is a way for them to launch globally and to acquire knowledge and facilities they do not currently possess.
This is why in the first semester of 2014, 17% of Chinese global mergers and acquisitions were in the food and beverage sector. It all started in 2012, as Bright Food, a really influent Chinese conglomerate bought 60% of the shares of Weetabix which cost $1.9 billion to the Chinese conglomerate. Last year it was Shuanghui International’s turn to spend $4.7 billion to purchase Smithfield Foods, the largest north American pork producer. This February Cofco, known to be the Chinese largest homegrown food processor and grain trader, announced it would buy 51 percent of Dutch grain trader Nidera. In July, Hony Capital also bought the British restaurant chain Pizza Express for $1.54 billion.
This trend is just at its beginning considering China’s food and beverages market hunger for globalization and the needs that the national market still has in many areas concerning food.
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