China's meat industry has expanded to become the world's largest, accounting for 20 percent of global sales. Chinese meat consumers across the country are now starting to experiment with new trends, such as premium and organic products, presenting high growth opportunities for foreign investors interested in entering the market.
China's meat industry is a dynamic and rapidly growing sector that presents significant opportunities for foreign investors and businesses. Revenue in the meat segment is expected to reach US$87.75 billion in 2023, and China's meat market is projected to grow annually by 19.99 percent between 2023 and 2027.
Unsurprisingly then, the meat industry is a critical component of China's economy, contributing to employment, economic growth, and food security. The industry supports millions of jobs in areas such as farming, processing, and distribution, and is a key source of income for rural communities.
This article provides foreign investors and businesses with insights into China's meat industry, including its historical background, types of meat consumed, major players, and production and consumption trends. We highlight the opportunities and challenges facing the industry, as well as the potential impact of foreign investment on China's economy and society.
China's meat industry at a glance
China has now taken the top spot as the world's largest meat producer, consumer, and importer. The country's meat consumption in 2021 accounted for around 28 percent of the global meat supply, and this figure represented more than 73 percent of the Asia-Pacific meat market value. In the same year, China's total meat imports exceeded US$30 billion, with Brazil being the top supplier.
In China, the meat market is the second-largest segment in the country's retail food market, trailing only behind the fresh vegetable sector. Despite the rise of new retail, the meat market has been slower to adapt. Most meat products sold in retail settings are still found in traditional wet markets, which are typically situated in open-air marketplaces or on the streets. These markets allow customers to purchase live poultry or freshly butchered meat directly from local farmers. However, these markets are gradually being phased out of cities and incorporated into supermarkets and hypermarkets.
China's meat industry produces and consumes a wide variety of meats, including pork, beef, poultry, and other meats such as lamb, goat, and fish. Historically, pork and poultry have been the most popular meats in China, due in part to their affordability and widespread availability.
In recent decades, however, there has been a significant shift towards pork as the most consumed meat in China, reflecting changing dietary habits and increased demand. This shift is attributed to rising incomes, urbanization, and the growing popularity of fast food and processed meat products.
Production and consumption
China's meat industry has experienced significant growth over the past few decades, driven by rising incomes, urbanization, and changing dietary habits.
In 2022, the country produced around 92.27 million tons of meat in total, a 3.8 percent increase compared to the previous year. Pork production, in particular, has grown rapidly, increasing from around 40 million tons in 1990 to over 55.41 million tons in 2022. In comparison, beef and poultry production have also increased steadily over the past few decades, but at a slower rate.
Meanwhile, China is also the world's largest meat consumer, with an estimated per capita consumption of over 53 million tons of pork and 10 million tons of beef and veal in 2022.
In 2022, pork accounted for around 60 percent of China's total meat consumption. Poultry was the second most consumed meat, accounting for around 20 percent of total consumption, followed by beef at around 10 percent.
Notwithstanding continued growth prospects, the meat industry routinely confronts challenges, such as disease outbreaks, environmental concerns, and food safety issues. In recent years, the industry has been hit hard by outbreaks of African swine fever, which have led to significant declines in pork production and increased demand for other meats. In addition, the industry faces increasing pressure to address environmental concerns related to intensive farming practices, as well as food safety issues related to the use of antibiotics and other additives.
Major players in China's meat industry
China's meat industry is highly fragmented, with a large number of small and medium-sized (SME) players operating alongside a few dominant companies. Reportedly, in 2021, there were over 500,000 businesses engaged in meat production, processing, and distribution in China, with a combined revenue of over RMB 3.8 trillion (US$590 billion). The industry is highly competitive, with low barriers to entry, but operations can be challenging due to disease outbreaks, escalating production costs, and regulatory scrutiny.
Domestic sector
Among the large Chinese companies operating in the industry, the top three pork producers in China are WH Group, Muyuan Foods, and New Hope Group, which collectively account for around 40 percent of total pork production in the country. WH Group, formerly known as Shuanghui Group, is the world's largest pork producer and processor, with operations in China, the United States, and Europe. The company's revenue in 2021 was approximately US$27.3 billion. Muyuan Foods, founded in 1992, is the second-largest pig breeder in China, with a market capitalization of over RMB 800 billion (US$125 billion) as of February 2023. New Hope Group, established in 1982, is one of the largest agribusiness companies in China, with diversified operations in feed, livestock, and food processing.
In addition to these large companies, there are numerous small and medium-sized producers and processors operating across the country, particularly in rural areas. Many of these companies are family-owned and have been in operation for generations. These companies face challenges, such as limited access to capital, lack of technical expertise, and difficulty in complying with increasingly stringent food safety and environmental regulations.
Foreign stakeholders
Foreign players in the Chinese meat industry include multinational corporations, such as Tyson Foods, Cargill, and JBS. These companies have established joint ventures or acquired local firms to enter the Chinese market.
For example, Tyson Foods has a joint venture with Shandong Xinchang Group, one of the largest poultry producers in China, and in 2018 acquired Keystone Foods, a leading supplier of chicken, beef, and fish products in the Asia-Pacific region. Cargill has a joint venture with New Hope Group, while JBS has acquired several local meat processing firms, including a controlling stake in Huizhou Fudi Food Co. and Moy Park, a UK-based poultry producer with operations in China.
These foreign players bring advanced technology, management expertise, and access to global markets to the Chinese meat industry. However, they may encounter regulatory hurdles, cultural differences, and rising competition from domestic players.
Regulatory environment
The regulation of China's meat industry is overseen by several government agencies, including the Ministry of Agriculture and Rural Affairs (MARA), the State Administration for Market Regulation (SAMR), and the General Administration of Customs (GAC). MARA is responsible for setting production and quality standards for meat products, while SAMR oversees food safety and quality standards for meat products sold in domestic markets. GAC is responsible for regulating the import and export of meat products.
China has a comprehensive set of laws and regulations governing the meat industry, including the Food Safety Law and the Meat Quality and Safety Control Regulation. These regulations cover all aspects of the industry, including production, processing, distribution, and sales.
In fact, China has implemented several changes to its regulations in the meat industry. In 2019, the SAMR introduced a new set of guidelines for the labeling of meat products, which require manufacturers to provide more detailed information about the origin and production of their products. This increased transparency in the industry and provided consumers with more information about the meat products they purchase.
Another significant change was the implementation of the Animal Epidemic Prevention Law in May 2019, which strengthened regulations for the prevention and control of animal diseases. This has had a significant impact on the pork industry, which was hit hard by the African swine fever outbreak in 2018. The government's response to the outbreak included culling millions of pigs and implementing stricter biosecurity measures, which have resulted in a shift towards larger, more technologically advanced pig farms.
In addition, since 2020, the government introduced a series of new regulations affecting China's meat products, as illustrated in the table below.
New regulations affecting China's meat products, 2020-2022
Emerging trends and opportunities in China's meat industry
The meat industry in China is constantly evolving, with emerging trends and opportunities creating new avenues for growth and profitability. One of the most significant trends in recent years has been the explosive growth of e-commerce in China, which has transformed the way meat products are marketed and sold.
The rise of e-commerce
The rise of e-commerce in the Chinese meat industry has been a major trend in recent years. According to a report by Euromonitor International, the online sales of fresh food, including meat products, in China reached RMB 0.73 trillion (US$106 billion USD) in 2021. The COVID-19 pandemic has been a propeller of this trend, with many consumers turning to online shopping to avoid physical stores and reduce the risk of infection.
E-commerce platforms, such as Alibaba's Tmall and JD.com, have become major players in the meat industry, offering a wide range of products from both domestic and foreign suppliers.
For example, Tyson Foods, the largest meat processor in the United States, has partnered with Alibaba's Tmall to sell its products online in China, and New Zealand's Silver Fern Farms has launched an e-commerce platform to sell premium beef and lamb products in China.
A taste for premium and organic
Indeed, another trend that presents opportunities for foreign investors in the Chinese meat industry is the rising demand for premium meat products. As incomes continue to rise and dietary habits evolve, consumers are increasingly seeking higher-quality, healthier, and more sustainable meat products. This trend has led to the emergence of specialty stores, online platforms, and even luxury meat brands such as Shangri-La Farms and Black Angus.
In addition to the demand for premium meat products, there is also growing interest in meat products that are perceived to be healthier, such as grass-fed beef and organic meat. This trend is driven by concerns over food safety, environmental sustainability, and animal welfare.
Key takeaways for investing in China's meat industry
To succeed in China's meat industry, foreign investors and businesses must be prepared to navigate a complex and constantly evolving landscape.
Investing in innovation and technology is a way to stay ahead of the competition, which can improve the efficiency, quality, and sustainability of industrial operations. For example, some companies have begun using blockchain technology to improve supply chain transparency and food safety, while others are exploring new production methods, such as lab-grown meat.
In addition, as concerns about the environmental impact of the meat industry grow, investors should be prepared to embrace sustainable practices and technologies. This includes reducing waste, minimizing energy consumption, and adopting more environmentally friendly production methods.
In addition, investors should be prepared to develop products and marketing strategies that resonate with local consumers and reflect the unique cultural and culinary traditions of each region.
Finally, as the meat industry continues to evolve globally, businesses may turn to alternative opportunities to breach the Chinese demand.
Source: China Briefing
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