What's the beef on China's beef market?

BEEF per capita consumption in China is merely 4.1kg compared to 50kg per capita in most developed countries and lower even than the global average annual consumption 10kg per person. Yet by 2010, China had become the world's third biggest beef producer and consumer, and a net beef importer. Beef production is likely to reach 700 million tons in 2015 with compound annual growth rate of 1.4% during "12th Five-Year" period. Frost & Sullivan predicts that beef consumption will continue to grow during this period.

Beef consumption mainly takes place out of home. In 2010, the outdoor consumption, household consumption and industrial consumption accounted for 60, 32 and 8 per cent of the total beef consumption (6.53 million tons), respectively.

Consumption has risen even as the price of beef price has kept increasing since 2006. As of December 2011, the national average price of beef reached RMB 39.78 per kg – more than double the average price in January 2006.

Market Drivers

Improved living standards Traditionally, the Chinese eat pork and chicken to satisfy their desire for meat. This is largely due to the much higher price of beef, which is beyond the average consumer's affordable level. With the improvement of living standards, however, Chinese people have begun to include more meat in their diet and to eat more beef.
Changing dietary structure Dietary patterns are changing to include foods that are considered healthier and provide more nutrients. Since beef is a good source of protein and less fatty that pork or chicken, it expected to replace the market shares in pork, chicken and other types of meat.
Promotion of the beef industry Supportive policies from Chinese government are expected to ensure adequate supply of cattle from the upstream area and to improve the quality and safety of beef products. These development efforts are expected to further improve the beef industry and spur beef consumption in the next five years.

Market Restraints

Low-quality beef and inappropriate product structure Compared with developed countries, China's beef industry lags far behind in the aspects of product range, production performance and feeding model. Chinese cattle breeding suffer lack scale management and in recent years, have been on a decline, leading to surplus capacity in slaughterhouses and processors. All this has lead to long, inefficient periods of fattening, easy breakouts of disease and, owing to breeding practices, residual hormones in the beef. These low-quality beef do not meet the export standards in many developed countries. China's beef industry is still dominated by primary processing, which has a limited product portfolio and cannot meet or satisfy market standards.
Inadequate facilities Despite inadequate, substandard facilities, private slaughterhouses have taken over large proportion in the primary processing. Even some large-scale meat processing companies in China are without the complete cold chain and can hardly meet international health standards. At present, the factory system accounts for only 1% of China beef production, which is the lowest ratio amongst meat-producing countries. Such low level of modernisation is a large barrier to the development of beef market in China.
Classifying, testing and monitoring systems lag behind China has not established beef qualiCAMPO