The Current State of the Organic Market in China | GON

2012 has been a turning point for the organic market in China

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Picture: organic regulations were implemented in order to stamp out the irregularities.

2012 has been a turning point for the organic market in China, when the new organic regulations were implemented in order to stamp out the irregularities. After the initial pain, the market has recovered and started to go on a healthy path. Along this new path, we also assist at new developments. Since the new organic rules came into force in March 2012, China’s organic market has seen big changes, among other factors, food safety issues also have played a role in this development. Though the Chinese consumers still question how authentic organic food products are and if they can be 100% organic, given the widespread environmental pollution and food safety issues, organic food are embraced by more and more Chinese people. Lots of work has been done by the Certification and Accreditation Administration of China (CNCA) – the authority regulating organic products in China – and organic certifiers, to explain to the public the new and strict organic rules and to promote public understanding of what is organic. Moreover, since at the current stage of development the Chinese organic market still concentrates on primary agricultural products, the implementation of such rules have meant that making fake organic food is now much more difficult.

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Picture: 2.722 million hectares of agricultural land were managed organically to China’s national organic standard.

In September 2014 CNCA released the Report on China’s Organic Industry Development. According to the Report, organic food sales reached 10.5 billion yuan in 2007 in China and were estimated to be around 20-30 billion yuan (about 3-5 billion US$) in 2013. 2.722 million hectares of agricultural land were managed organically to China’s national organic standard (GB/T 19630-2011) by the end of 2013, among which, 1.435 million hectares (53% of organic farmland) were organic wild collection areas. There were 6,051 organic producers in mainland China with 9,957 organic certificates issued by the end of 2013, while there were less than 200 organic certificates issued in 2005, when the first organic store (Ostore) was opened in Shanghai symbolising the beginning of domestic organic market. Among the 9,957 organic certificates, 6775 were awarded to plant products such as grains, beans, seeds, vegetables and fruits, accounting for 68% of the total, while animal husbandry and aquaculture comprised only 5.3% and 3.4% respectively with lightly processed food making up the rest.

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Picture: the organic supermarket called Lohao is offering also foreign brands.

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More than 50 foreign companies are present in China

There has been not much change in China’s organic export, as shown every year duringBioFach Nuremburg with most Chinese exhibitors marketing organic primary ingredients, mainly beans and grains. For what concerns imports, since there are no equivalent organic standard agreements between China and other countries, all foreign organic products have to be certified organic by Chinese control bodies if they are going to be sold as organic in the Chinese market. According to the Report, by the end of February 2014, there were 100 organic certificates awarded to imported organic products excluding foreign OEM products and those imported as ingredients. 54 foreign companies have already had their organic products in or are about to enter the Chinese market, among them, 34 were from Europe, mainly Italy, Spain and Denmark. The majority of imported organic products were dairy, baby food, wine and extra virgin olive oil.

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Picture: the number of trade visitors at BioFach China in Shanghai has increased every year.

From figures released over the years by BioFach China -the only trade fair in China exclusively focusing on certified organic products (), one can also have a glimpse of the picture of the current state of the organic market in China. The numbers of exhibitors in the years from 2011 to 2014 were respectively 342, 189, 261 and 345, and trade visitors during the same periods were 14,613, 15,963, 16,235, and 16,755. More than 360 exhibitors and 17,000 trade visitors are expected on 28-30 May this year. Though exhibitors went down dramatically from 2011 to 2012, due to the implementation of the new organic regulations, the number of trade visitors has increased every year. The rebound of exhibitors in the last couple of years is an indication of a recovery and growth of the organic market in China, after adjusting to the new rules.

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Picture: local farmers´markets are becoming popular.

What are the new developments in the Chinese organic market?

Before 2012, organic sales were mainly achieved through conventional hypermarkets, and the rest came from organic or natural food chain stores and ‘the gift market’. The latter involved selling organic food, packed in form of gifts, which big companies and government institutions gave to their own employees or clients. However, the end users could not really be considered organic consumers and this could not nurture loyal and mature organic consumer support. Due to anti-corruption measures from the central government, businesses selling organic food as gifts have been greatly affected, heavily downsized if not out of the market. During the adjusting painful period in 2012, there was less organic food on the shelves in all supermarkets previously selling such products. Because of the new strict organic rules, some producers gave up organic production, and most imported organic food could not be sold as organic any more since they were not certified to the Chinese organic standard. Since organic food processing has always been weak in China, this resulted in a lower availability of a variety of processed organic food. This has indeed frustrated the Chinese organic market both before and after 2012.

Beijing and Shanghai are the main organic markets

Beijing and Shanghai are still the main organic markets in China, though other big cities are catching up.
Lohao City was set up in 2006 and opened several organic & natural food chain stores in Beijing. It tried markets outside Beijing at the beginning, but soon gave up. After many years of different attempts in the organic market, it has shifted its focus in recent years: building its own brand Lohao’s since 2009 by packaging grains, seeds and dried mushrooms etc. both organic and natural, and entering e-commerce with its own brand since 2013.
As China’s retail market is experiencing rapid evolution, so is the organic market. Relatively new premium supermarkets have been undergoing rapid development in recent years with many selling more organic products, such as Ole’s in Shanghai. The online retailing has been flourishing in all big cities in China, which is particularly convenient to people living in megacities like Beijing and Shanghai where traffic congestion is daily routine.

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Picture: e-commerce is growing in the food sector: Shun Feng is a first choice platform for consumers to buy high quality and safe food.

Shun Feng Express was established in 1993 and it is a logistic business. Since 2012, it set up Shun Feng Best to sell over 10,000 food products using its own reputed logistics to customers across the country. 70% of these products are imported and there is a selection of organic food produced in China and some imported. Its aim is to make SF Best a first choice platform for consumers to buy high quality and safe food. In the same year another e-tailer, Benlai Life , started its business aiming to help improve the food safety situation in China and become China’s quality food provider. In addition to relatively healthy conventional products, it has a full selection of organic food. It delivers to many places in North, South and East China. Similar, but local (provincial), operations can also be found in other parts of China.

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Picture: Tootoo Organic farm – from the farm to the tables.

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Picture: Since May 2010 there is an organic farmers´market in Beijing.
Also Shanghai has one (on the picture)

Tootoo Organic Farm is the biggest organic food online store

At the moment, the most important player in organic ecommerce in China is Tootoo Organic Farm. Set up in 2008, it is owned by Beijing Ninetown Ecological Agriculture Co., Ltd., part of NASDAQ listed Ninetown Group. Tootoo has claimed to be the biggest organic food online store in China and delivers to more than 30 cities. It has 70- hectare farmland outside Beijing, but not everything is certified organic and it does not produce everything it sells, so many products both organic and conventional are outsourced from other farms and markets. On its e-shelves there are lots of imported products too. In addition to food, ecological personal care, textile, and cleaning products are also on the offer.

The awareness is growing steadily

The awareness of organic food and healthy lifestyle has been growing in China since 2010 and farmers’ markets have played a big role. The first (organic) farmers’ market started in Beijing in May 2010, it has evolved into a weekly market in different locations. Besides there are several more farmers’ markets in Beijing and some in other big cities too. These farmers ’markets have brought producers and consumers together opening the first window for city dwellers to get to know the people who are behind the food and how food is being produced. That has becoming a driving force in the grass root food movement in China, which in turn helps the growth of China’s organic market as more and more people become aware of the environmental impact of conventional farming and demand clean and good food.

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When people start to buy organic vegetables and fruits regularly, they will look for other organic food. As more and more Chinese organic consumers demand full range of organic food, there is need for certain organic imports-products that China does not or cannot produce yet. But in the long run, China needs to learn how to process food organically and locally in line with organic principles. For this aim, the European organic operators probably can provide significant contributions.

The Author: Yinghui Zhang-Carraro was born and grew up in China. With her Italian husband and her two sons she is living in UK now. Yinghui is dedicated to the organic sector and in an active role to promote orgnanic food in her mother country and anywhere in the world. For example she founded the organic farmers´market in Beijing and is supporting many developments in the sector. For organic-market.info she wrote this detailed, informative article.