Chinese people are getting ready for the dog’s year, French President Macron offered a horse to his Chinese counterpart, yet another Chinese sign is drawing the attention of French exporters to China: the beef. During his official visit, Emmanuel Macron announced the total lift of the Chinese embargo on bovine meat “within six months”. The Beijinger wrote that this decision was welcomed by the F&B industry in China as well as all the meat lovers.

Origin (and end?) of the embargo

In 2001 while Europe was facing the crazy cow outbreak, China decided to shut its market to all European beef importers, then American, as a protection measure. In March 2017, the Chinese market slightly opened itself to French beefs: only deboned meats coming from beefs under 30 years old could be imported in China. Eventually, Emmanuel Macron announced a total lift of the embargo during his visit to China in early 2018, in a speech punctuated with some sentences in Cantonese, much appreciated from the Chinese audience.

An expanding market

This decision comes at the right moment. Many studies emphasize the current evolution in the habits of the 1.4 billion Chinese consumers, especially regarding the consumption of meat. As a result, the market is booming (it was multiplied by 10 between 2010 and 2015) while the French beef market is decreasing by 5% per year. Pork meat still makes the bulk of Chinese meat consumption, accounting for 60% of it. Yet, beef consumption is increasingly growing mainly because of the growth of the middle-class: in 2016, a Chinese would eat on average 4 kilos of beef when it was only 3 kilos in 2005, according to OECD figures. For comparison only, French consumption of beef is four times higher than the Chinese one.

The meat market is all the more attractive for exports that prices have been quadrupled in 15 years (3.5 euros per kilo today). Chinese growing middle class is now looking for quality. Thus, according to a note from the Dutch bank Rabobank, they tend to prefer to import meats despites the price.

Opening of the Chinese food sector to importations

If the Chinese food market used to be difficult to access, this situation changed since the 13^th Five-Year Plan (2016–2020). Indeed, the Chinese government officially opened China to the international food markets to ensure its food security. Today, China is a net importer of food with a deficit of 34 billion euros in 2015, according to Chinese custody. Every year 1.7 million tons of meat are imported to China, accounting for 20% of total food imports, as a result of the Chinese thirst for imported products in this domain. Food is also the third-largest sector for French exports to China, although meat only accounts for 9% of all exports. As China is about to become the largest importer of beef worldwide, before the United States, meat’s share in French exports to China is expected to increase in the future Franco-Chinese trade balance.

A high level of foreign and local competition

This decision is following the lift of the embargo on American beef last June. In Europe, France is the third country benefiting from it, after Ireland and the Netherlands. The lift regarding French beef was actually decided on March the 3^rd. 2017 but it was in a stalemate because of Chinese health requirements.

For the 150,000 French farmers raising beef (a sector worth 6.6 billion euros), the lift is a real opportunity, yet not a given one. Indeed, about 90% of the Chinese beef market is owned today by Australian, Brazilian and Uruguayan importers, and Chinese beef cattle is about 10% of the world cattle, five times more important than the French one.

Yet, unique French assets

French exporters are expecting about 50,000 tons of beef to be exported at first, which would amount to one fifth of all nowadays French beef exports. The market targeted in China is the high quality and high standing food market, but there is also an opportunity in the sale of unwanted meat pieces in France, such as beef tails, a piece mostly appreciated in China. In the 6 months needed for the lift to be effective, France has the opportunity to promote its French beef for its quality (sanitary traceability), for its specific cattle breed, or as a part of the French art de vivre.

Will poultry be next on the list? Discussions are still undergoing for a lift of the embargo that was imposed by China in 2015 following a bird flu outbreak.

To sum up

The beef market in China has been multiplied by 10 between 2010 and 2015, and still increasing. Both consumption and prices are on the rise in China, due to a growing middle-class. On this market, Chinese people particularly prize imported beef. Within 6 months from January 2018 on, it will be possible to export French beef in China.

By Manon Bellon

New sales record for Chinese giant Alibaba

Alibaba hit a new sales record on November 11th, 2017 or Singles’ day. The Chinese e-commerce giant reported that sales during what has become over the last decade the world’s biggest shopping day amounted to $25.3 billion, a 40 percent jump compared to the same period last year. Additionally, the retailer set a record $18 billion in just 13 hours on Saturday, eclipsing last year’s record of $17.8 billion in 24 hours. Sales from the Chinese e-commerce’s one-day holiday are nearly double those from Black Friday and Cyber Monday in the U.S. combined.

Just like U.S. versions of shopping holidays, Alibaba offered discounts on 15 million products from 140,000 brands. To celebrate the kickoff of this event, Alibaba founder Jack Ma held a gala at the Shanghai Mercedes Arena, with celebrities like Pharell Williams, Nicole Kidman, and Jessie J in attendance. On stage, a countdown was running on a huge screen, where a billion dollars in revenue from Tmall (B2C) and Taobao (C2C), Alibaba’s platforms, was reached within two minutes. The show was aired on both Alibaba’s video service and on three Chinese TV networks, and was covered by hundreds of Chinese and foreign journalists.

A waning interest

Singles’ Day was created at China’s Nanjing University in 1993 by four friends as a version of Valentine’s Day for people without romantic partners. The college students came up with the idea of celebrating singles on November 11th (11.11) because all four digits for this day are the lonesome “1”. At first, only men partook in the festivities, whereas now both sexes do. The first Singles’ Day sale was organized in 2009 by launching a massive marketing push and offering special “Double 11” deals.

But if Singles Day’ may be the most important timing to achieve annual revenue goal for retail companies, interest seems to be already waning in the country after just eight Single Days. According to the Chinese marketing data technology firm Admaster, only 65 percent of interviewees said they would attend the festival in 2017, compared to 84 percent in 2015. These figures highlight changing consumption trends among middle-class shoppers. If Singles’ Day is renowned for the deep discounts offered by retailers, more and more Chinese are looking for better quality products and services. And for that, they are willing to pay.

JD.com is now taking advantage of this trend. This direct online sales company, Alibaba’s main competitor in the domestic market, has a major advantage: better logistics management. Alibaba’s platforms put sellers in direct contact with customers, while JD.com works more like an online supermarket. The company buys products, stores them in its own warehouses and delivers them through an army of delivery men, who also provide customer support. Its “Double 11” lasts 11days, from November 1 to 11, allowing for more flexible operations.

More international brands

Facing this competition, Alibaba wants to lure more international brands onto its platforms, combating Taobao’s bad reputation for offering counterfeit products. It seems to be paying off. According to Alibaba, out of 100,000 retailers who attended Singles’Day last year, 10,000 were foreigners. This year, out of 140,000 sellers, 60,000 came from abroad, 250 of which were French.

Alibaba is also trying to be more innovative. This year, the giant retailer used an online-to-offline strategy to streamline sales between its e-commerce platforms and the merchants with bricks-and-mortar stores selling on them. For example, Alibaba took the Pokemon Go augmented reality game idea and applied it to Tmall, but with cats (Catch the Tmall cats). Chinese consumers were then able to find discount coupons in different stores, such as the French cosmetics brand L’Occitane. L’Oréal set up an interactive mirror at its Shanghai store where shoppers could try on virtual makeup using augmented reality and then order products on a touch screen linked to an Alibaba platform.

But the blockbuster sales of Singles’ Day create an enormous amount of waste. According to Greenpeace, the manufacturing, packaging and shipping linked to the event produced 258,000 tons of carbon dioxide emissions last year. It would take about 2.6 billion trees to absorb it all. This year’s online shopping frenzy is about to leave an even larger carbon footprint, warned the environmental activist group.