The bakery market in China is growing rapidly. What are the forecasts of the future development? How should we approach this market?
A Booming Market
According to Ubifrance, the Chinese have 92 opportunities to consume bread over a year against more than 400 in Western Europe. This consumption is still limited to residents of large cities and to Chinese who already have a good knowledge of Western culinary habits. But the amount of bakery products consumers is in full expansion, China could be the 2nd largest market for bakery products by 2018.
Bakery is a real fashion phenomenon. Between 2008 and 2013, bread and bakery products recorded a growth of over 30%. In 2013, the market for industrial bakery products in China came close to 25.4 billion US dollars. Chinese consumers are fond of cakes and sweet pastries, which represent 44% of sales. The food industry is one which develops most rapidly in China, opportunities for foreign investors, producers, and professionals in the field are growing.
How to Position your Company in this Market
The Chinese have a taste for new products. They have a great desire to develop their knowledge in bakery or Western products in general. They currently consume European products but adapted to the Chinese market, such as sweet bread, for example. But their taste for traditional Western products grows. Bakery specialists have a real card to play in offering traditional products or offering training to this population has a real desire to develop their knowledge.
In addition, a growing number of Western restaurants are opening in cities of second and third ranges. Bakery products are generally offered by these restaurants. They are generally not consumed at home by Chinese consumers. This exponential number of new restaurants is also increasing the demand for bakery products.
How to Develop your Company in the Chinese Market
If you want to expand your market, several options are available:
- The joint venture, which requires a Chinese partner.
- The representative office, which is easy to create and does not require minimum capital. However Chinese law strictly regulates the structure. It is impossible with this type of structure to sell products or services, or even generate profit. The structure therefore only exists to represent the foreign company in China.
- The WFOE, which is the most permissive structure. However, the procedure leading to its creation is heavy and the minimum capital can be very important, depending on the area of activity of the company.
- A fourth category should be included in this list even though it is not a strictly social form: Umbrella Companies such as INS. They take care of all the back office of your company and can recruit your employees so that you do not have to create a structure in China. They provide you with a solution that allows you to focus on your core business.
In order to approach the Chinese market, you will have to get information about rules and regulations. Health regulations are different than European ones, you have to know the rules in order to import your products.
The participation to fairs, such as Bakery China, is also a good way to prospect and to set up on the Chinese market. Your sales representative will meet potential commercial partners and know more about the competition and the evolution of the market.
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