Saturday, November 20, 2010

Whats happening in China

Interesting perspective from one of our board members.

Thanks Trevor for the article. Aivars Lode

Volume 2 - 2010
I hope you enjoy our 2nd volume of the Focus International Newsletter for your information. As 2010
draws to a close the jury is still out on whether the global economy is over the worst of things but at least
the Flavor & Fragrance industry is reporting healthy gains compared to prior year which is an encouraging
sign. Many of these companies are achieving this growth from China and the other BRIC countries and are
investing heavily in these markets to establish a market position. On the other hand Food Ingredient
commodity prices are seeing a lot of upward pressure particularly sugar and Cocoa which is creating
problems and opportunities in the industry.
The China market continues its extraordinary growth ‐ Freedonia predict that the Asian F&F market will be
the number 2 regional market by 2014 behind only North America led by the 2nd largest market being
China. I personally think the growth numbers they are using are conservative but lack of information will
always mean that it is more of a guess but one thing is certain. What happens in China will have a big
bearing on the future of not only the F&F Industry but nearly every industry and the rise of local players as
effective global competitors is almost inevitable. The article on the size of the Chinese beer industry
emphasises this as does the investments from the F&F industry such as Sensient and Cargill as well as the
ramp up of Investment by Pepsi and Coca Cola.
Food safety and quality issues continue to be addressed by the Chinese Government and they are working
closely with other organisations such as the FDA. The Chinese Government have started to encourage
Chinese companies to start moving abroad and gain more of the value chain and are reducing approval
requirements for SME’s to make the move abroad.
While the market in China is big now, the future offers even more promise as the impact of urbanization
will continue to drive growth for years to come. 2nd and 3rd tier cities as well as whole new cities will
emerge as key centers of population and consumption. China is where the USA was in % of urban
population in the early 1990’s so we are witnessing a population movement unprecedented in human
history and unlikely to be repeated. The F&F industry in China is extremely fragmented and estimates put
the number of F&F companies anywhere between 800 to 1000 and this offers many interesting
opportunities for foreign companies to enter the market without having to start from scratch. Focus
International is a specialist in developing unique solutions for its clients looking to enter China or other
International markets and would be very happy to talk with you to discuss your needs and strategic
I hope you all have a great Thanksgiving.
Best regards
Trevor Rahill / President

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