China Trade Offering Potential Of Big New Market For Western U.S. Ag

Help is available to get started or enhance Asia trade effort.

Published on: Jul 1, 2013

Like any business, launching into a new trading effort with China will be difficult, but "we have a wonderful support network for agribusiness to make this happen," says Matthew Tripodi.

"We have on-the-ground teams in many markets around the globe waiting to help," the Euromonitor International government relations manager told Oregon growers.

"There has never been more imported product in the U.S. marketplace, so why think of investing in only the domestic market if you are an American grower," he adds. "You want to diversify, just as you do with your 401k portfolio to plan for retirement.

"This (trade) is about spreading your risk."

China Trade Offering Potential Of Big New Market For Western U.S. Ag
China Trade Offering Potential Of Big New Market For Western U.S. Ag

His observation is that businesses that diversify their global marketplace are more successful.

 Hong Kong is the hub of regional trading with China, Foreign Agricultural Service Hong Kong Agricultural Trade Office director Erich Kuss told Oregon's  "China: A New Frontier for Oregon Agriculture" seminar in Portland.

With no duties on ag products, Hong Kong is a magnet for Pacific Northwest farm trade sent into the area called the Pearl River Delta, which Kuss calls the "richest region of China" and gateway to a 50 million population.

Consider Hong Kong not only the doorway to China, but the regional trade platform to Asia, says the FAS director of ag trade in the area. But shippers may want to avoid nearby Macao, he added, despite the appealing $76,000 per capita income there. The big casino town and its $38 billion a year gaming industry is not a big market for U.S. sales, he observes.

If there is any doubt that China has caught the interest of the FAS thinks China is an important ingredient in the future of U.S. ag export, consider the fact that the USDA agency has no fewer than six offices in the nation, more than in any other country.

"We saw this as a big growth market," said Kuss.

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FAS offers help in connecting U.S. agribusiness with potential buyers, but does not negotiate deals, he explained.

"We will do whatever we can to help you get started," he says of FAS's trade assistance program.

China, the world's largest buyer of food exports, is characterized as a "real growth market" by Paul Swenson, ODA's contracted China representative in Shanghai.

"The Chinese like food from the U.S. and Oregon," he says, "because of its safety, labeling, availability and convenience."

Since the Chinese go shopping four times more than their European and two times more than their U.S. consumer counterparts, new products gain high exposure, said Swenson. In interviews conducted by his firm, 42% of the Chinese shoppers questioned  say they prefer U.S. products over those from competitive nations.

When it comes to growing markets, U.S. agriculture may want to concentrate more on convenience products to be consumed at home, he said. Home consumption is on the rise in China, he reports, while food service  growth is less rapid.

The Chinese market is unlike that of the U.S., with a lot of visitors from mainland China purchasing food items in Hong Kong to take home and resell on the internet at a profit.

Internet retailing has "exploded," he noted, with 513 million people on line in that nation in a 2011 count. Since many shop with their phones, he advised use of  web sites that would work on 5-inch screens.

A "very strong internet delivery system," serves the nation, he added.

On "Singles Day," a Chinese internet shopping event held annually on Nov. 11, $3 billion in product – much of it food and clothing – was charted last year. In the U.S., Black Friday sales last year hit $1.042 billion by comparison.

Another tip is to work the hypermarkets (stores similar to Wal-Mart's) instead of supermarkets, advises Swenson. Also, boutique markets located in office buildings are gaining popularity among younger affluent shoppers, he said.

For more on Asian trade markets, see the July issue of Western Farmer-Stockman.