Food Consumption and
Marketing in China
A perspective on China’s rapidly
changing food economy
The Traditional Chinese View of Food

A meal is composed of two major components:
grain (rice—fan) and vegetables (dishes—cai)
 Grain is the most important ingredient, but a meal
without dishes is boring and tasteless, so both
should be consumed in moderation.
 Freshness of vegetables, fruits, and meat is a very
important factor for Chinese consumers.
 There is a strong connection between foods and
health, and waste and over-eating are discouraged.
Historical Factors

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Food supplies have not always been abundant
Inter-regional transportation was costly and
difficult
Cold chain systems and household
refrigeration were often lacking
Diets were influenced by regional availability of
foods.
Urban and rural diets show significant
differences in consumption of grain and
livestock products.
Implications for Food Marketing
Consumers shop daily for fresh
ingredients and buy in small quantities
 Supply chains are short, and consumers
may buy directly from producers
 Quality and food safety attributes of food
are determined by experience and
reputation
 Mass media marketing is not important

Key Historical Facts
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In the Qing dynasty and during the first 40 years of
communist rule, farmers were “taxed” heavily to
provide food for urban residents.
Over several decades, the gap between rural and
urban incomes and food availability widened.
Collectivization of farms in the 1950s reduced
incentives for productivity growth in agriculture, and
food scarcity increased with population growth
Rural diets in the 1970s were largely vegetarian.
More than 300 million people in China did not receive
adequate nutrition on a regular basis.
Recent Trends in Chinese Food
Consumption

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Rapidly growing consumption of livestock products
Increased consumption of fruits and higher-quality
vegetables
Rising consumption of processed food products and
food prepared away from home.
Declining consumption of rice, potatoes, and other
staple grain and starchy foods
Rising concern for food quality and food safety.
Rise of supermarkets as a major force in food retail
Rural Per Capita Food Consumption
Kg/Person
300
250
200
150
100
50
0
1978
1981
Grain
1984
1987
1990
Vegetables
1993
1996
1999
2002
Rice & Wheat
Rural Per Capita Food Consumption
Kg/Person
25
20
15
10
5
0
1985
1988
Veg. Oil
1991
Red Meat
1994
1997
2000
2003
Poultry
Eggs
Aquatic
Fruit
Urban Per Capita Food
Consumption
Kg/Person
160
140
120
100
80
60
40
20
0
1985
1988
Grain
1991
1994
Vegetables
1997
2000
Fruits
2003
Urban Per Capita Food
Consumption
Kg/Person
25
20
15
10
5
0
1985
1988
Veg. Oil
1991
Pork
1994
1997
Beef/Mutton
Poultry
2000
Eggs
2003
Aquatic
Per Capita Milk Consumption
Kg/Person
25
20
15
10
5
0
1990
1993
Rural
1996
1999
2002
Urban
Factors Driving Dietary Change
Agricultural and commercial marketing
policy changes
 Income growth
 Foreign direct investment and the
growing role for multi-national firms
 Urbanization
 Rapid modernization of food processing,
transportation, and retailing systems

Reform and Opening
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With the adoption of the household responsibility
system (HRS) in 1981, China’s agricultural production
boomed, and the availability of agricultural produce
and food greatly increased.
The early 1980s and mid- to late 1990s were likely
periods of structural change in food consumption in
urban China as a result of the introduction of the dualtrack marketing system and the elimination of food
rationing.
The opening of China’s food processing and retailing
sector to foreign direct investment (FDI) has facilitated
the rapid modernization of China’s food processing
and distribution systems and created an environment
that fosters food product innovation
Dietary Transformation
During income-induced dietary diversification,
economic prosperity enables consumers to afford a
more varied and balanced diet and to demand
nutritionally superior products.
A critical implication of globalization is the
severing of the link between diets and the local
availability of resources and local habits.
─Prabhu Pingali, 2004.
Engel’s Law at Work:
Rural Households
Yuan/Person
2500
Share
0.8
0.7
2000
0.6
0.5
1500
0.4
1000
0.3
0.2
500
0.1
0
0
1978 1981 1984 1987 1990 1993 1996 1999 2002
Total Expenditures
Food Expenditures
Food Exp. Share
Engel’s Law at Work:
Urban Households
Yuan/Person
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Share
0.6
0.5
0.4
0.3
0.2
0.1
0
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
Total Expenditures
Food Expenditures
Food Exp. Share
Foreign Direct Investment
Million USD
Percent
20
60000
50000
15
40000
10
30000
20000
5
10000
0
Source: IMF
FDI
FDI/GDCF
20
04
20
02
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
0
Growth of Supermarkets
Percent
25
Number
80000
70000
20
60000
50000
15
40000
10
30000
20000
5
10000
0
0
1994
1996
1998
Stores
2000
Retail Share
2002
Supermarket Sales in Major Cities
40
35
30
25
20
15
10
5
0
Shanghai
Beijing
Retail Sales (bil $)
Tianjin
Chongqing
Supermkt Sales (bil $)
Qingdao
Share
Factors Hindering Supermarket
Growth

Consumer demand for freshness

Wet markets still dominate markets for fruit
and vegetables and meat
Distribution networks are still underdeveloped
 Consumer shopping patterns still favor
more frequent trips with smaller
purchase quantities

Questions?
Annual Production Growth
Percent
30
25
20
15
10
5
0
Pork
Source: CNBS/USDA
Beef
1984-1994
Mutton
Poultry
1994-2004
Eggs
1999-2004
Milk
Rural and Urban Grain Consumption
300.00
kg per capita
250.00
200.00
150.00
100.00
50.00
0.00
1985
1990
1995
rural
2000
urban
2003
2004
Taste Changes
Kg/Person
12
10
8
6
4
2
0
-2
-4
1981
1984
Grain
Veg
1987
Pork
Fruit
1990
Beef
Milk
1993
1996
Poultry
1999
Eggs
2002
Fish