China’s Frozen Exports

Are Still Small, But…

There’s big potential once food standards, freight costs and logistics hurdles are cleared.

Ethnic Chinese living overseas and major retailers like Wal-Mart are driving demand for frozen and refrigerated food from China. Wal-Mart, for example, has a purchasing office in the southern Chinese city of Shenzhen that looks for Chinese suppliers of frozen foods.

Exports are hindered by transportation costs, which erase some of China’s low price advantages. Of the 3.6 million tons of refrigerated vegetables China exported last year, almost all went to Japan and South Korea, said Tiexin Fu, vp of Beijing’s Xinhua Guoxin Trade Co., Ltd. “But the amount exported to America is increasing rapidly every year,” he said.

While some Chinese frozen foods are already finding their way to U.S. supermarket shelves, these are not bulk orders, said Zhenji Sun, manager of the import-export department at Wuxi Frozen Foods, located near Shanghai in China.

Because of issues such as transportation costs, prime U.S. markets for frozen and refrigerated foods from China are specialty shops targeting people nostalgic for the taste of home – and willing to pay a premium.

“Most Chinese frozen foods are imported for ethnic Chinese customers in the United States,” said a spokesman for the Shanghai Frozen Food Institute.

Meanwhile, there are still government restrictions on the export of meat to Western countries, left over from the days when China had problems feeding its own citizens. China exported about 74 million tons of meat-related products last year, said Zhonghua He, spokesman for the China Meat Association. Most of it went to the Middle East and Russia, he said.

Logistics Woes

Since there is no official government organization handling all frozen foods, it’s impossible to get accurate export statistics across all the food categories, said He.

In addition, China’s internal frozen and refrigerated foods market is still not fully developed, which results in problems with distribution and quality control. For example, there is a shortage of refrigerated trucks.

“Many companies will use normal trucks rather then special refrigerated trucks to reduce transportation costs, but it will of course result in low quality,” said Jian Xia, general manager of the Shanghai Jiao Rong Logistics Co., which supplies some frozen foods to Wal-Mart.

“Now it is rare for a U.S. supermarket to import frozen or refrigerated foods from China,” he said. “The problems are with the food standards, freight costs and freshness dates.”

Sea shipping is cheaper, but food may no longer be edible when it arrives, he said. Air transport costs will make the price uncompetitive.

But as the local market matures, the logistics infrastructure in China will improve and quality will go up, and transport costs will go down.

China’s frozen food market will reach $7.5 billion this year, according to Shanghai-based research firm Access Asia. By comparison, in 2000, the market was worth $4.8 billion.

—Maria Trombly is China Bureau Chief for SourceMedia, and a freelance writer. Linda Kiang contributed to this report.

Reported in 2006
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