1. How To Enter The Chinese Market
Shanghai Import Food Enterprise Association (SIFEA)
Mr. Guan Rong

2. Our Association - SIFEA
Provide information to members
Government liaison and coordination
Trade promotion
Conduct activities
Participate in trade exhibitions
SIFEA was established in January It was led by the Foreign Economic Relation & Trade Commission of Shanghai Municipality, and it is directly affiliated to the Shanghai Entry-Exit Inspection and Quarantine Bureau of The People’s Republic Of China (also called SHCIQ). Currently we have about 70 member companies that are food importers, agents, wholesalers, retailers active in Shanghai. Their sevices cover many provinces and cities of China.
The mandate of SIFEA:
Provide members with lastest regulations, laws, standards and policies on food importing from overseas.
Government liaison and coordination between overseas food exporters and SIFEA member companies.
Assist foreign organizatiions to promote their food products to the Shanghai market.
Conduct various activities (conference, forum and trade exhibition, etc.) and help members for Chinese label design.
Organize member companies to participate in domestic and international trade exhibitions (ie. FHC, SIAL, Sweet China, etc.)

3. Outline 2. Major Products and Exporting Countries
1. The Imported Food Market in Shanghai
2. Major Products and Exporting Countries
3. China’s Current Import Requirements
4. Impact of the Global Economic Situation?
5. Suggestions to Your China Strategy
This is the outline of my presentation today, with 5 topics.

4. Imported Food in Shanghai
This is a chart to show the data of imported food from 2006 to 2008 in Shanghai. The green color represents weight of metric tons; the blue color represents US dollar value. In 2008, more than 1 million metric tons of food products entered the Shanghai port, and the value reached 3.62 billion USD, increased 35% & 48% respectively than 2007.

5. Breakdown of Products (2008) (USD Million)
This chart breaks down the products by name, US$ value and percentage to the total imported food products in I have divided the products into 8 parts. They are Grain, edible oil, candy, food additives, wine and beverage, dairy, vegetable and fruit and others. You can see that imported wine and beverage reached 760 million USD, 23% of the total $ value of 2008.

6. Products and Exporting Countries (2008)
Food category
Major Foods Export Countries to Shanghai
Food additives
USA, Japan
Wine
France, Australian , Italy, Spain, Chile, USA
Liquor
France, England, USA
Dairy products
Australian, New Zealand, USA, France, Italy, Japan,
Olive oil
Italy, Spain, Greece
Chocolate
France, Belgium, Switzerland, Japan, USA, Germany
Biscuit and Cookies
USA, Japan, Denmark, England, Germany, Italy
Beverage and Mineral water
France, Italy, England, USA, Canada
Meat and meat products
USA, Canada, Denmark, France, Ireland, Australian, New Zealand,
Confectionery
Japan, Switzerland, England, Germany
This table shows 10 typical imported products and exporting countries in 2008.
- Food additives from USA and Japan
Wine and liquor from France, Australia and Italy
Confectionery products from Japan and EU
Canada exported pork and some bottled natural glacier water to Shanghai
There are many foreign food brands available in the China market. They are sold in major supermarkets, such as Carrefour, Metro, Wal-Mart, Lotus, City-shop etc, food stores, restaurants and 5 star hotels.

7. －Singapore US$ 339 Million (#3) … … －Canada US$ 17.7 Million (#20)
2008 Major Exporting Countries to Shanghai
－USA US$ 518 Million (#1)
－Japan US$ 392 Million (#2)
－Singapore US$ 339 Million (#3)
… …
－Canada US$ 17.7 Million (#20)
According to the statistics, USA exported 518 million USD foods to Shanghai, at the top position in Japan was #2 with 392 million USD, and Singapore was #3. Canada was #20 on the list. Canada exported 17.7 million USD foods to Shanghai in 2008.

8. Major Rejections and Reasons
USD7+ million of imported food products (0.2% of total import) are found unqualified in Shanghai port in 2008 – main reasons:
1. Snack food - pigment, additives and total bacteria count exceeding
2. Dairy product - Enterobacter Sakazakii and the other bacteria detected
3. Wine and liquor - preservatives and methanol exceeding
4. Chinese Label - not correctly indicating the additives in the ingredient, additives do not conform to Chinese National Standard GB
5. Other reasons: Exceeding the period of quality assurance. Can not provide required certificate of imported foods. No date of production on the package, etc.
Every year we can see some imported foods rejected at the Shanghai port due to various reasons. In 2008 more than 7million USD of imported food products did not meet the Chinese national standards.
Snack food are mainly unqualified cause by pigment, additives and total bacteria count exceeding.
Dairy product are mainly unqualified cause by Enterobacter Sakazakii and the other bacteria detected.
Wine and liquor are mainly unqualified cause by preservatives and methanol exceeding.
Chinese Label are mainly unqualified cause by not correctly indicating the additives in the ingredient, additives using is not conform to Chinese National Standard GB
Other reasons: Exceeding the period of quality assurance. Can not provide the required certificate of imported foods. No date of production on the package, etc..

9. The following 6 pictures will show you the foreign and Chinese brands and their market shares in the Shanghai.
This chart shows liquors, and you can see that England and France are standing the forefront.

10. This chart shows Japan and USA beer brands are standing the forefront
This chart shows Japan and USA beer brands are standing the forefront. Their sales volume exceeds half of the total sales, followed by the Chinese beer of Tsingdao brand.

11. Milk powder – the #1 + #2 occupy more than half of the Shanghai market.

12. This chart is showing you the market shares of infant milk powder
This chart is showing you the market shares of infant milk powder. Most of them are foreign brands.

13. This chart shows the market shares of cheese
This chart shows the market shares of cheese. Although the Chinese brand “Bright” is standing on the top, the company imports cheese material from foreign countries and do packaging in Shanghai. In fact, there is hardly any Chinese-made cheese product in the local market.

14. This chart is showing the market shares of chocolate in Shanghai
This chart is showing the market shares of chocolate in Shanghai. Again, most of them are foreign brands.

15. Food Products Entering China
Agent & Importer
Self-import
OEM (Private Label)
Local Manufacturing
Agent and Importer means that you identify an agent to represent your products in China, or sell your products to an importer in China.
Self import means that you set up your own company in China. The company can either import your own products or source products from other suppliers, or be an agent for other products.
OEM – similar to Private Label.
Local manufacturing - Manufactured in China or in Shanghai, such as the Dove chocolate, the Nestle milk powder, the Suntory and Budweiser Beer, and the Hormel meat.

16. The Administration System in China for Import Food Inspection and Quarantine
AQSIQ
General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China (AQSIQ) is a ministerial administrative organ directly under the State Council of the People's Republic of China in charge of national quality, metrology, entry-exit commodity inspection, entry-exit health quarantine, entry-exit animal and plant quarantine, import-export food safety, certification and accreditation, standardization, as well as administrative law-enforcement.
With purpose to perform the function of entry-exit inspection and quarantine, AQSIQ has set up in total 35 Entry-Exit Inspection and Quarantine Bureaus (CIQ) in China's 31 provinces, near 300 branches and more than 200 local offices across the country, with employees totaled over 30,000 in goods distributing center at sea ports, land ports and airports. AQSIQ provides direct leadership to all the CIQ.

17. Food Safety Management
The recent Chinese National People’s Congress has approved the Chinese Food Safety Law which is to become effective June 1, 2009.
AQSIQ is responsible for inspecting, supervising and administering the safety, hygiene and quality of the imported and exported foods and cosmetics.
1. It is AQSIQ that should inspect, quarantine, supervise and manage the imported foods, food additive, food container, packaging material, instrument and equipment for food production.
2. Pre-warning System for Entry-exit Food Inspection and Quarantine Risk and Quick Response System have been established by AQSIQ with the view to take preventive safeguarding and treating measures against the possible risk or potential harm caused by imported and exported food.

18. China’s Current Import Requirements
This table is very important for international companies that export food to China. The form tells us the procedures and requirements. For example, if exporting fruit and vegetable to China (in the third line of the table as you can see), it requires bilateral government agreement, AQSIQ registration, AQSIQ quarantine permission, export plant quarantine certificate and Chinese label. Another example is pre-packaged snack food (in the last line of the table). It only requires Chinese label. Therefore it is easier to exporting snack food to China than exporting fruit and vegetable. You can find requirements for your own products in this table to. I use my own experience and professional knowledge to have made this table, and I hope the table can provide you a clearer understanding on China’s import requirements that look complicated to many international exporters.

19. Chinese Label Regulation
Chinese labels must include: Food Name, Ingredients, Net Weight, Country of Origin, Date of Production (Year/Month/Day), Expiration date (Year/Month/Day), Store Condition, Distributor Name and Address.
Chinese label must be covered over the foreign language package in the designated position of the package surface, or printed on the package surface directly, this method can help the goods to pass the inspection procedure rapidly. Imported food products can not be permitted into the Chinese retail market without Chinese labels.
The local CIQ is in charge of the Chinese label inspection and keeps records according to the Chinese National Standards.

20. Impact of Global Economic Situation to Shanghai Food Industry (Survey to 90 companies)
While local hotel business and high-end restaurants are hit badly by the current global financial situation, In 2009 earlier, one of the Shanghai professional food magazine - "Business Opportunities" conducted an industrial survey to 90 enterprises somewhat on behalf of the Shanghai government.  Each company had an annual sales volume of at least RMB5 million (about US$1 million) in They are Chinese companies, joint ventures and WOFEs (wholly owned foreign enterprise).  Majority of them are in manufacture and trade business also including import, distribution, food service and retail, etc. The outcome of the survey was quite encouraging: 
Sales volume and commercial profit in 2008
- 76% of the 90 surveyed companies claimed their sales increased.  42% of them increased less than 10%; 5% of them increased 10-20%; and 53% of them increased 20-50%.
- 20% of the 90 surveyed companies wrote that their sales decreased.
- 61% of the 90 surveyed companies reported that their commercial profit increased.  31% of them increased less than 10%; 12% of them increased 10-20%; and 57% of them increased 20-50%.
- 30% of the 90 surveyed companies said that their profit decreased. 

21. 2009 Shanghai Food Industry Forecast (90 companies)
Forecast for 2009
- 89% of the same 90 surveyed companies believed that their "sales will increase", 11% expected "same as in 2008", but none said "will decrease" in 2009.
- Among those "sales will increase", 19% wrote their increase would be less than 10%; 52% agreed with 10-20%; 19% said 20-50%; and another 10% of them even expected a sales increase higher than 50%.
- 71% of the 90 surveyed companies forecasted that their commercial profit will increase in 2009; 26% expected "same as in 2008", and 3% said "commercial profit will decrease".
Among those "profit will increase", 17% wrote less than 10%, 58% wrote 10-20%, 17% wrote 20-50%, and 8% wrote "higher than 50%".
My conclusion is that the global economic situation will reduced the growth in 2009, but is not a too big impact to Shanghai’s food industry and food market.

22. Peak Selling Period – the Chinese New Year
To illustrate the current food market in Shanghai, let’s see the two pictures taken during the 2009 Chinese new year. This is a very famous food store - Shanghai First Food Store You can see many people are purchasing foods in his store. In the 7-day of Chinese new year holiday, 4,000 retail outlets of 389 commercial enterprises in Shanghai achieved a significant sales of total 630 million USD, 8.4% increase than the 2008 Chinese New Year period.

23. Suggestions to Your China Strategy
1. Right products for right customers
2. Be innovative and flexible
3. Co-operation with your Chinese partner
4. Your local presence will make a difference
5. Thinking Long term
Before I end my presentation today, ladies and gentlemen, I would like to share with you a few suggestions, with a sincere hope that your products will be able to enter the Chinese market more smoothly and successfully.
1. Right Products for Right Customers means that you choose the right products to meet the demands of Chinese customers – your homework is required.
2. Be Innovative and flexible means your products must be new and competitive in China, and your business approach is consistent with the business practice in China.
3. Respect and close co-operation with your Chinese partner is always wise and beneficial to the success of your business in China.
4. Having an office or factory in China can greatly help you communicate with customers and do marketing support, after-sale service and new market development.
5.Think Long Term - The Chinese market is going to further open. It has enormous opportunities and also severe competitions. You cannot just “sell and run”.

24. Questions？ Thank you Mr
Questions？ Thank you Mr. Guan Rong Tel/Fax:
Thank you very much. I welcome your comments and questions.