Sun, May 27, 2012 page11

• China displays a hunger for food brands from UK

  • By Julia Kollewe / The Guardian, SHANGHAI
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  British favorites such as baked beans and cream of mushroom soup have proved an unlikely hit with Chinese shoppers at Marks & Spencer’s (M&S) flagship store in downtown Shanghai.

  However, it does not stop there — shoppers are also stocking up on frozen salmon or cod fillets, ready-made frozen curries, chocolate-chip cookies and porridge oats. Everything is shipped in from Britain. There is even a bakery selling rebaked bread-rolls and pastries that are brought in frozen from the UK.

  UK food and drinks manufacturers, along with supermarkets, are queuing up to tap into China’s burgeoning taste for western food. At a time when British brands such as Weetabix are being gobbled up by Chinese companies, a growing number of UK businesses hope to grab their own slice of the booming Chinese grocery market.

  They have the full support of the UK government. As part of British Prime Minister David Cameron’s “march of the makers,” the government in January announced a drive to boost British food and drink exports to countries like China.

  British Minister of State for the Environment, Food and Rural Affairs Jim Paice is now touring China. Food and drink is one of the biggest sub-sectors of Britain’s manufacturing industry, which makes up a tenth of the economy.

  “In so many cases the Chinese have taken over our manufacturing base, but with British food they can’t do that,” said Lance Forman of H. Forman & Son, the last smokery still operating in east London.

  Chinese eating habits have started to mimic those in the West — the growing middle class has started eating breakfast cereal rather than rice; chocolate, potato chips and biscuits as special treats; and using teabags rather than traditional tea leaves. This brings mixed blessings: Nutrition experts warn that obesity is already growing among the younger generation in big cities.

  China recently overtook the US to become the world’s biggest market for grocery shopping, a shift to more expensive foods and strong economic growth. It is predicted to grow twice as fast as the US to be worth about ￡950 billion (US$1.49 trillion) by 2015 — from ￡609 billion at the end of last year — according to industry researchers IGD.

  Tesco already has more than 100 stores in China, and rival supermarket Sainsbury’s is believed to be in talks with a potential partner about entering the Chinese market. Its team in Shanghai has conducted a thorough feasibility study.

  “We do not see international expansion as part of our short-term plans, but we are exploring other possibilities for growth in the medium to long term,” a spokesman said.

  Sainsbury’s is still smarting from its disastrous foray into Egypt in 1999. It pulled out in 2001 after running up losses of more than ￡100 million in just two years.

  M&S has four fashion-and-food stores in Shanghai after opening the first one, measuring 5,000m2 in 2008, as well as three others in the smaller cities of Ningbo, Changzhou and Wuhan.

  The company got off to a rocky start, but intends to focus on Shanghai, where a rapidly growing new strata of Chinese society — the urban rich — has developed a taste for western brands from Prada to Gucci, along with French wine, Spanish olive oil and British biscuits and beer. Shanghai is the world’s fastest-growing city economy, with a population of more than 20 million.

  Chinese food importer Gorden Wei, chairman of Shanghai Ted Enterprises and vice-president of the Shanghai Import Food Enterprises Association, says Chinese consumers are “quite conceptual.”

  That is to say, they associate wine with France (in particular Chateau Lafite Rothschild from the Bordeaux region), chocolate with Belgium and whisky with Scotland.

  However, he worries that Chinese shoppers are not sophisticated enough to remember more than a handful of Western brands.

  “We are doing a missionary job; we’re educating people about other brands,” Wei said.

  He also warned British exporters not to expect to sell in big volumes, saying that goods such as Campbells Shortbread are regarded as a “high-end product” in China.

  However, this does not worry Rayfield at M&S, who has seen “made in Britain” food and drink fly off the shelves in the six months he has been in Shanghai. About 17,000 packs of potato chips and nuts were sold in the last quarter, more than double the level a year ago, as well as 35,000 pieces of frozen fish, an increase of 26 percent.

  Much of the Western food available, such as biscuits and chocolate, is bought by consumers as gifts for others or treats for themselves.

  “We are at the top end of the market,” Rayfield said. “The Chinese customer sees us for that as well. They come in to top up, to buy a treat from us. We are not going to be an everyday supermarket.”

  That does not come as a big surprise after a quick look at the high price tag.

  Similarly, in the City Shop adjacent to the Ritz-Carlton hotel in Shanghai — part of a local supermarket chain — a box of Dorset Cereals muesli is priced at 104 yuan — about ￡10. A pack of PG Tips tea is 78 yuan. This shop caters mainly for expats, but a new, bigger City Shop has now opened in downtown Shanghai to lure in Chinese shoppers.

  Tesco has opened more than 100 hypermarkets along the Chinese east coast since its launch in 2004. It has also developed its own shopping malls, branded “Lifespace,” which are anchored by a Tesco store. At last count sales in the country had reached ￡1.3 billion.
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