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Here’s why China is going to boom

china
Could China become the biggest buyer of U.S. beef in the next 5 years?

There are a lot of news stories about China in the past year that have been largely negative: trade wars, TikTok bans — and, of course, China as the originator of the COVID-19 virus.

But quietly, China has been buying more U.S. beef this year, and more Chinese companies than ever are inquiring about U.S. beef. 

I predict that China will become the largest buyer of U.S. beef in the next 60 months, and for years to come, it will be our largest export customer.

Three years ago, and again last year, I was in China meeting with prospects and customers. I learned that China can never produce grain-fed beef like we can here in the U.S.  Chicken, yes. Pork, yes. But not grain-fed beef.

China does produce some domestic beef, but not of the same quality as U.S. beef; and so China depends on imports to meet the ever-growing demand for premium beef protein.

There are other reasons why China will become the largest customer of U.S. beef in the next 60 months:

* China’s economic recovery is faster than expected and is robust. Its economy is doing very well now.

* China’s growing middle class will continue to demand and consume more beef.

* Australia, which has supplied a lot of beef to China, is struggling with drought and production issues. Cattle slaughter numbers are down 30% year-to-date in recent weeks.

* China will continue to drive growth in world meat trade. This year, China accounts for 36% of all world meat trade and the quantity is up 26% from last year.

* Marketing at food shows in China is now completely normal. The largest food show in the world, SIAL  China (the acronym stands for “food and drink fair” in French), took place in September, with an estimated 2,200 exhibits and 60,000 attendees.

* So far, not all our major packers are selling to China. I predict that after they see the continued success of exports to China, those holding out with a wait-and-see approach will get off the bench.

According to a U.S. Meat Export Federation (USMEF) report published this summer, “Since its March implementation, the U.S.-China Phase 1 Economic and Trade Agreement has sparked growth in China’s demand for U.S. beef. July exports were record-large at 2,350 metric tons, up 160% from a year ago, valued at $14.9 million (up 92%).

“Through July, exports were 95% above last year’s pace in volume (9,262 metric tons) and 82% higher in value ($68.9 million).”

In 2019, the largest buyers of U.S. beef in the world, ranked by quantity bought, according to USDA, were Japan, South Korea, Canada, Mexico, Hong Kong, Taiwan and China. Mainland China came in seventh. By 2022, I believe we will see China far surpass Japan as the No. 1 destination for U.S. beef. 

Challenges remain

This great opportunity will also present some challenges. Chinese buyers are looking for certain cuts processed in specific ways that meet the needs of the unique Chinese market. For example, China doesn’t consume a lot of ground beef like we do in the U.S., so we won’t be selling tons of hamburger there.

Also, Chinese home kitchens are quite different from ours. They don’t have large ovens below the counter or barbecues on the deck outside. Chinese consumers won’t be buying roasts or steaks for home cooking.

Because their beef consumption habits are quite different, I’ve found that Chinese buyers are reluctant to pay the high prices for middle meats but are looking for less expensive end cuts. 

In mainland China, all beef imported must have labels on each package in Chinese and English. Not just a box label like here: Each package inside the box must also be labeled. I visited a huge indoor meat wholesale market in Beijing and witnessed firsthand why this is so.

Meat is sold by the piece, as frozen  — even to food service operators and wholesalers. Meat quality is also differentiated by what USDA plant it comes from, and savvy buyers look for USDA plant numbers that they know and come to depend on for consistent high-quality meat. 

On my trips to China, I’ve eaten U.S. beef served in restaurants and at hotels. As you’d expect, the beef was served as thin slices in hot pots or stir-fry dishes. At a barbecue restaurant in Beijing, I had beef tendons and offal cuts served on kabobs.

It’s rare for a Chinese consumer to enjoy steak at a steakhouse-style restaurant, although these offerings are increasing for the upper middle class and higher classes.

High-quality beef shines

I’ve experienced trade shows and seminars put on for chefs in China by the USMEF. Using well-trained Chinese staffers, the USMEF is working hard to introduce new ways for Chinese food service operators to use U.S. beef.

Tasting is believing, and it’s been fun to witness Chinese chefs and consumers taste highly marbled, U.S.-produced, grain-fed beef for the first time.

Last year in Hong Kong, at one of Asia’s largest food shows, I worked a booth near the USMEF pavilion. It was exciting to see the energy and enthusiasm of participants to watch the cooking demonstrations and then taste the various brands and types of U.S.-produced beef. 

Of course, I could be wrong about the future of beef sales to China. Duty exemptions could rebound next year, political tensions could disrupt trade, and China may prove to be an unsteady buyer if politics gets mixed in with beef trade. But I believe the strong desire for our grain-fed beef will prevail.

I truly hope you get a chance to go to China one day and experience U.S. beef served Chinese-style. If you do get to China, make sure you leave a couple of days in your travel schedule to Beijing and see parts of the Great Wall and the Forbidden City. 

They say in sales we should know our customers well: their needs, wants and challenges. China is soon likely to be our largest customer, so let’s do our best to know how to accommodate its growing interest and consumption of U.S. beef.

Bloom owns U.S. Protein, an international distributor of premium meats. Contact him at greg@usprotein.com.

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