Documente Academic
Documente Profesional
Documente Cultură
Dr. FuYuning
May 2010
Executive summary
Rising middle class in China will demand more and safer food
2
Urbanization in China has significantly increased
disposable income levels of the middle class
127.2
0.5 7.6
Source: National Bureau of Statistics of China; China statistics abstract; Chinese Academy of Social Science; The Great Electronic Wars 9/06
3
As food safety becomes a greater concern, the urban
population tends to buy more from supermarkets
Others 4.7%
(1) Weighted average of all the health concerns held by food and beverage buyers
(2) Including all the consumers that are concerned about safety and are willing to pay a premium
Source: Insights China; Annual survey report on China consumers; Statistics of Food Safety Survey that is Zhejiang Provincial Government conducted
online in March –May 2009
4
As food safety becomes a greater concern, the urban
population tends to buy more from supermarkets
Internet survey result of “Where do you believe you can buy safer food (single choice)”
– Supermarket is a primary choice for urban people who wish to buy safe food
– Concerns about food safety focus on hygienic processing environment, fake products used
as genuine articles, inferior products used as qualified articles, additives being illegally
added, residue of pesticide/veterinary drugs, false or exaggerated marketing, or
expired/spoiled foods
5
In the rural areas, consumers have developed a weak
sense for food safety
Food
Food type
type in
in rural
rural areas
areas Food
Food sourcing
sourcing channel
channel in
in rural
rural areas
areas
Rising middle class in China will demand more and safer food
7
The Chinese government has issued new standards and
regulations on food safety
These new food safety standards and enforcement of these standards will
drive out non-compliant players in the supply chain
8
Food Safety will now fall under China’s Ministry of Health
9
China still lags behind developed western countries
10
However, when problems arise, all players in the supply
chain are liable for prosecution
Yogurt
Salmon
This places pressure on all players in the food industry to pursue operational
excellence in food production, transportation, storage and sales
11
Executive summary
Rising middle class in China will demand more and safer food
12
75% of the market will be in 2nd and 3rd tier cities
Harbin
Changchun
Urumqi Shenyang
Beijing
Dalian
Baotou
Taiyuan Tianjin
Qingdao
Xining Jinan
Lanzhou
Xian Zhengzhou
Shanghai
Nanjing
Hangzhou
Wuhan
Chengdu
Lhasa Chongqing Nanchang
Changsha Fuzhou
Guiyang Xiamen
1st Tier Cities
Kunming
1st Tier Regions Nanning
Guangzhou /
nd rd
2 , 3 Tier Cities Shenzhen
Cold
Cold Chain
Chain Model
Model Feature
Feature Typical
Typical Player
Player
• Internally operate • The logistics business unit, which
Internal Operation • Guarantee food safety is subsidiary to Yum Group,
• Huge volumes of cold chain
logistics costs
• Difficult to monitor the delivery • Very common in China
Pick-up /Delivery quality of the outsourced
logistics;
• Or depth and breadth of market
coverage is severely restricted
• Much safer • Kangxin Logistics
3rd-Party Cold
Chain Logistics • Not common • ShuangHui Logistics,COFCO
• Sinotrans Yuhe Cold Chain
Logistics, Jinjiang Cold Logistics,
Shandong Rongqing Logistics
• Havi Logistics
More and more players have been considering outsourcing their cold chain
logistics, to focus instead on sharpening their core competence
14
Executive summary
Rising middle class in China will demand more and safer food
15
Problems can easily occur within each interface of food
distribution process
Plant or Linehaul or
Linehaul intermediate multi-stop Market
transporta- (regional) transporta- facing Local Retail
Source tion warehouse tion warehousing delivery operations
•• Maintain
Maintain quality
quality and
and safety
safety •• Temperature
Temperature abuseabuse isis the
the •• Significantly
Significantly more
more complex
complex
from farm to consumer
from farm to consumer single most important
single most important •• More
More expensive
expensive (facilities,
(facilities,
purchase
purchase or or consumption
consumption issue
issue in
in cold
cold chain
chain equipment)
equipment)
•• Ensure logistics
logistics in
in China
China today
today
Ensure temperature
temperature andand •• Multiple
Multiple participants
participants and
and
sanitation
sanitation integrity
integrity •• Temperature
Temperature abuseabuse hand-offs
hand-offs
throughout
throughout logistics
logistics typically
typically happens
happens at at the
the
process
process interfaces,
interfaces, where
where “hand-
“hand- •• More
More attention
attention and
and
offs”
offs” occur
occur discipline
discipline required
required
•• Provide
Provide certifiable
certifiable product
product
at
at retail
retail •• The
The integration
integration challenge
challenge •• Requires
Requires seamless
seamless
is
is substantial:
substantial: multiple
multiple integration
integration throughout
throughout the
the
•• Increase
Increase customer
customer process
process
satisfaction
satisfaction participants,
participants, functions and
functions and
hand-offs
hand-offs
Therefore retailers must influence the entire food supply chain as much
as possible
17
Capabilities of logistics vendors must be analyzed before a
vendor can be selected
•• Local
Local experience
experience
Weak Abilities In
International
Logistics
•• Logistics
Logistics as
as core
core businesses
businesses
Weak Strong
Local Experiences Local Experiences
Multi-national food producers entering into China should seek nationwide and
all-along-cold-chain strategic cooperation with logistics vendors that are
leaders in the industry
(1) Industry standards are defined by reference to best players in the industry, since their practices have undergone market test and thereby developed
practicability
18
CMAC is ready to be your strategic partner to set up an
efficient distribution network in China
AmeriCold, with 49% stake in CMAC, will inject its International logistics
capabilities
• Has 30 million sqm cold storage
• Able to service many large food producers and wholesalers
Li Hongzhang,
Founder of China Founded in 1872 ,China Merchants was the first CM’s branches in
Merchants national enterprise in China’s modern history and history
the legacy of the “Westernization Movement”
2009
22
CMG introduction — Core business sectors
Transportation Transportation
Infrastructure 34% Infrastructure 34%
44% Finance
50% Finance
22% 16%
Property
Property
23
CMG introduction — Financial strength
+29%
40 368 1.6
1.4
30 1.2
+17% +29% 255
0.9
18
147 0.6
0.5
6 8 0.3
4
8 16 18
1994 1998 2002 2006 2008 2009 1994 1998 2002 2006 2008 2009 2003 2004 2005 2006 2007 2008 2009
CMAC is a joint venture, held 51% by China Merchants and 49% by AmeriCold, involved in
developing cold chain logistics industry in China
CMAC owns cold storage space 24,500㎡ near West Port, one of the two designated
refrigerated food inspection storage warehouses endorsed by the General Administration of
Quality Supervision, Inspection and Quarantine of the People’s Republic of China in
Shenzhen
Furthermore, CMAC has constructed a 12000 ㎡ cold storage warehouse at Qianhaiwan
Free Trade Zone. And by leveraging the favorable policies that are entitled by a free trade
zone, CMAC also provides innovative services for import and export traders
CMAC
Qianhaiwan
Free Trade Zone
MWT
CMAC
CCT
SCT
25
CMG Cold Chain — Development planning
26