Kerchin Cattle Industrys sheep breeding programme in Chinas Shanxi Province

Agricultural opportunities in China

In June this year, AbacusBio consultants Anna Campbell and Grace Johnstone travelled to the north-eastern provinces in China to explore opportunities in its agricultural industry.

The two-and-a-half week trip included visits to Grand Farm (Alliance Group’s main in-market partner), Kerchin Cattle Industry, and travelling to Jilin province to meet with business entrepreneur, Mr Yang.

A highlight was spending two days with Kelvin Bezuidenhout, an Asia specialist in distribution, detailing and marketing, in Beijing (formerly General Manager of Zespri, Asia).

China is poised to overtake the US as the world's largest economy. AbacusBio has been working with Grand Farm, Alliance Group, Headwaters, Beef + Lamb New Zealand Genetics (formerly Ovita), and GoldKiwi Asia (Singapore) to develop a premium position for Pure South lamb in China.

Travelling with representatives of Alliance Group’s senior management, the visit to Grand Farm’s processing and administration hub in Harbin City, Heilongjiang helps “open the doors” to further develop the brand strategy, building on the Chinese Consumer Taste Panel and Market Survey that was carried out in July 2013.

This was followed by a tour of Grand Farm’s new livestock development in Xilinhot, Inner Mongolia.

“The demand for red meat in China is growing rapidly as the population is increasingly dominated by the middle and upper classes,” Anna says.

“Domestic food scandals, environmental quality, and health concerns are the key drivers for food purchasing decisions.”

“We have received expressions of admiration for New Zealand systems and produce, which is not a surprise given that New Zealand is rated the most trusted source of food by Chinese consumers in Shanghai.”

“The Chinese Government is investing heavily to increase agricultural production. In the case of Grand Farm, the Government has enabled an ambitious project to produce and process beef and lamb in Inner Mongolia,” Grace says.

“What is currently bare land will, within a seemingly impossible timeframe, host large and modern facilities. Notably, these companies are looking outside China for the intellectual property and technology to kick-start productivity”.

However, Anna assures that this should not be viewed as a threat to New Zealand producers.

"By year 2050, meat demand is expected to increase by 70%. New Zealand will not be able to meet this demand, but we can definitely satisfy the quality and safety concerns of the top-end of the market.”

Understanding what drives Chinese consumers and how a brand can be developed in such a huge and dynamic market was behind the two-day session with Kelvin Bezuidenhout.

Visiting a series of leading Beijing marketing teams, “the experience really demonstrated how we move from selling a high-quality commodity product to developing premium brand positioning in China,” Grace reflects.

“One of the most surprising take-home messages is the amount of time a white-collar Chinese consumer would spend researching food purchases,” Anna adds.

“Online shopping and social media are changing the game at a rapid rate.”

“This is something we must use to our advantage by ensuring full and transparent information is available to the consumer and authenticity processes are in place to gain consumer trust and confidence.”

In addition to collaborating with Alliance Group and their partners on the premium market for lamb, AbacusBio was drawn to China by the significant opportunities for New Zealand agri-science and technology.

Positioned mainly in the mining and construction industries, Jilin business entrepreneur Mr Yang has identified China’s agricultural industry as the next growth area and believes there is huge potential to use New Zealand’s technology and expertise through agricultural education programmes.

Kerchin Cattle Industry, an Inner Mongolia company, also expressed enthusiasm to use New Zealand genetics, having recognised the importance and potential of a sophisticated sheep breeding programme. One of the largest and most well-regarded beef producers in China, Kerchin Cattle Industry has recently acquired a Shanxi-based sheep meat processing company.

The visit allowed Anna and Grace to become familiar with their sheep operations and discuss plans to modernise their farm systems.

As Grace’s first foray into the Chinese business world, she was overwhelmed by the size and speed of China’s scale-up.

This message was echoed over the course of the International Meat Secretariat World Meat Congress, which Anna and Grace attended during the last few days of their trip.

Anna and Grace returned, bursting with both the amount of delicious food consumed and enthusiasm for the China-New Zealand agribusiness outlook.

As a follow-up, Anna Campbell and Tim Byrne have recently travelled to Beijing this month to further develop opportunities from the June visit.

AbacusBio will also be working with New Zealand Trade and Enterprise to ensure we gain the best outcomes for New Zealand and to collaborate where possible with other New Zealand businesses.