U.S. beef exports to China and Hong Kong have soared this year as rising incomes, a torrid expansion of the foodservice industry, tight Chinese supplies, and favorable U.S. pricing have boosted demand. Through the first eight months of this year, USDA reports that U.S. beef muscle meat exports have jumped to 14,372 metric tons (mt), a 78 percent increase over the pace of a year ago.
The U.S. Meat Export Federation (USMEF) and the U.S. industry have identified and marketed to a burgeoning demand among targeted Chinese buyers of U.S. beef. As recently as two years ago, U.S. beef sales in China were limited to small-volume, niche purchases by top-tier hotels, and a wider but seasonal demand for U.S. short plate by “hot-pot” restaurants. Now, from Shenyang in Northeast China, to Xian in the west, stretching to the Pearl River Delta border towns, U.S. beef is appearing in a wide range of foodservice establishments, and is being identified and featured as U.S. in origin. The range of U.S. beef cuts is also widening, along with the ways of preparing them.
“I had never thought that short plate could be used as a center-of-the-plate steak item,” commented USMEF Vice President Asia Pacific Joel Haggard, referring to a restaurant on the Pearl River that offers customers a U.S. short plate steak meal for under $4.
Although short plate is still the largest U.S. beef item sold to China, there is increasing demand for middle meats, bone-in and boneless short ribs, chuck short ribs, rib fingers, top blade muscle and other relatively inexpensive underutilized beef cuts. According to Steve Mo, USMEF South China consultant: “The big increase in locally-managed western restaurants in South China is driving demand for a range of U.S. beef items. And spending power is strong, especially for establishments offering value for money.”
Mo cites the case of Guangzhou’s Macau Street Restaurant, a locally owned outlet that fills its 700 seats five times each day. “Although Macau-style Chinese food is the restaurant’s mainstay, the sheer volume of business allows the outlet to sell 60-70 U.S. beef menu items per day, without featuring any as a special.”
Sales of U.S. beef have been helped by other factors. Since China’s accession to the World Trade Organization (WTO), competitors have had to obtain plant-by-plant approval in order to ship product to China for distribution into general market channels. Under the bilateral Agricultural Cooperation Agreement that preceded China’s WTO entry, China agreed to recognize all federally inspected meat and poultry plants, and thus allow U.S. imports without the cumbersome necessity of individual plant approvals. This has given the United States an edge over competitors, although almost all competing suppliers are expected to obtain approvals for their largest exporting plants in the near future. According to Chinese import statistics, the U.S. captured a 75 percent share of China’s imported beef market in the first eight months of 2002.
Nevertheless, challenges remain. China has stepped up its inspection regime for imported meat and poultry. The issuance of import licenses for beef has been re-centralized, forcing importers to obtain approval from China’s central veterinary inspectors in Beijing. Prior to 2002, provincial or local officials could approve beef import requests. Re-centralization has slowed the issuance of import permits, although beef shipments have encountered fewer problems than poultry and pork. The difficulties encountered by imports still mean most imported beef comes in via “gray” channels in southern China. Product inspections at ports have increased and China maintains a zero tolerance policy on pathogens, such as Salmonella and Listeria on raw product. China is set to enforce new labeling laws on wholesale (i.e. boxed and bulk) imported meat and poultry within the next few months.
Another constraint is purchasing power. Although China’s overall economic growth is still very strong, the average purchasing power of Chinese consumers is still low. Average per capita income in 2001 was just $4,300, a fraction of those in neighboring South Korea ($18,000) or Japan ($27,200) The purchasing power constraint is felt most acutely in emerging Chinese markets, such as so-called secondary cities like Shenyang in the Northeast and Xian in the west. According to USMEF Shanghai Assistant Marketing Manager Diana Zhu, “In both these cities, red meat consumption is high. Consumers like beef, but purchasing power limitations make even inexpensive imported items like U.S. short plate just out of reach for most citizens.”
Another major constraint is the simple lack of knowledge of Chinese consumers about U.S. beef attributes. “There is some consumer recognition now of Meiguo Feiniu (U.S. fatty beef or short plate) in the market, but overall, Chinese awareness of beef attributes is low,” according to Haggard.
The USMEF China marketing program is still focused on trade and educational activities serve as a foundation for long-term market expansion and building U.S. brand loyalty among China’s retailers and restaurants. This year, USMEF has continued its education programs aimed at China’s chefs and retailers. With the help of USDA Emerging Market Program (EMP) funding, USMEF trained over 100 meat importers and distributors at its Shanghai Retail Training Center on the basics of U.S. meat production, grading and inspection, specifications, food safety, and industry information sources. Several companies have started importing and/or distributing U.S. beef after attending the courses.
USMEF has continued to supplement education and training with promotion incentives for new U.S. beef users. In September, USMEF organized a chef competition in Guangzhou challenging chefs from around the region to prepare a winning dish using U.S. top blade muscle or boneless chuck short ribs. More than 86 chefs competed for 50 competition spots, while 460 people attended the Texas-themed awards barbecue party. Two restaurants that never used U.S. beef immediately ordered both featured cuts.
USMEF plans to continue its foundation building throughout the coming fiscal year, and plans to tap new regional markets. “Beijing beckons, since it’s hosting the Olympics in 2008,” said Haggard. Chilled U.S. beef has also been imported on a regular basis for the first time this year, and USMEF continues to monitor opportunities for selling chilled beef to consumers at retail.
“We need to maintain our aggressive stance in China. This year’s export performance is a testimonial to how effective marketing programs can make a difference. The rate of return is high and the potential is just beginning to be tapped,” concluded Haggard.
The U.S. Meat Export Federation is the trade association responsible for developing international markets for the U.S. red meat industry and is funded by USDA, exporting companies, and the beef, pork, corn, sorghum and soybean checkoff programs.