CHINA: Market Profiles for Poultry Meat

China has emerged as a major player on the world poultry meat market, both on the import and export side of the trade equation. As in many developing countries, growing incomes in China as well as changing tastes and preferences will shape the outlook for poultry meat consumption which has grown at an exponential annual rate of 14 percent since the mid-1980's.

A massive population base as well as forecasts of economic growth that are the envy of the developed world are likely to sustain strong gains in poultry meat consumption. Poultry meat consumption in China is forecast at 12.9 million tons in 1998, accounting for 25 percent of total global demand. Meanwhile poultry meat consumption in China has grown from only 12 percent of total meat intake in 1990 to a forecast 20 percent in 1998. While a robust economy is expected to prompt continued strong demand for broiler meat, growth over the next decade is expected to slow from the strong pace since 1985.

China is recognized as one of the largest markets for poultry meat now and into the future. Second only to Russia as a major importer, China remains a net importer of poultry meat with 1998 imports estimated at 850,000 tons. Nearly two-thirds of total imports pass through Hong Kong, a phenomena continuing after reunification in July 1997. Consumer preferences in Hong Kong and China differ given the large gap in living standards. Consequently most of the more expensive imported chicken parts such as mid-joints, wings, and legs stay in Hong Kong. The less expensive parts, such as offal, gizzards, low-priced mid-joints and particularly feet and paws, are the best selling items in the Chinese market.

Economic Profile

Source: MRI/McGraw Hill 1/Purchasing Price Parity adjusts per capita GDP for different prices in different countries.

China is also dominating the stage as one of the world's fastest-growing poultry meat exporters. From 1992, the volume of China's poultry meat exports more than tripled, reaching an estimated 430,000 tons in 1998. Rapidly growing broiler meat production in China since the late 1980's supported by close proximity to other Asian markets has allowed China to successfully market poultry meat products overseas, especially to Japan.

A rapidly growing domestic industry is the U.S.'s major competitor in China. By 1994 China surpassed the European Union to become the second largest poultry producer in the world, and its industry continues to grow. The poultry industry has witnessed a restructuring over the past decade with foreign joint ventures working with state-run entities to support a transition of the industry into one of specialized contract growers of modern broiler meat type birds.

Domestic broiler output in China will continue to grow but at a slower pace than in the past decade. Factors supporting continued growth include labor availabilities, technical capabilities, large domestic market and strong Asian demand in nearby markets. Government policies are encouraging the expansion of the broiler industry, particularly in the Yellow River area of China, due to the increased efficiencies in converting feed to meat than other livestock. Potentially limiting factors to broiler expansion include limited feedstuff supplies, infrastructure, training and organization of personnel to control diseases and environmental concerns

Poultry Meat Profile

1/ Assumes 65 percent of U.S. product shipped to Hong Kong is transshipped to China

Despite growing poultry production in China, growth in demand is expected to surpass that of output, opening further the door to increased imports. The United States, as a reliable supplier of low-priced poultry meat products, stands to continue to benefit from the growing market in China and is expected to remain the dominant supplier. In 1997 U.S. exports to Hong Kong/China accounted for nearly 25 percent of total U.S. exports.

Despite the 40 percent increase in imports since 1990, trade continues to be hampered by high tariffs. All poultry meat imports by China, except gizzards, are subject to a 20 percent import duty plus an additional 17 percent value-added tax imposed to control the use of hard currency for foodstuffs imports. In addition, imports, up to present, have been restricted to use in hotels and restaurants. In early 1997, China announced a limited trial program of meat imports for retail sale. The period of trial sales which includes 5,000 tons of poultry meat will be one year from June 1, 1997.

Over the medium term, increased production efficiencies and a continuation of structural integration and concentration are expected to allow production in China to expand. However, consumption gains are expected to exceed those of production, allowing imports to satisfy an increasing share of the market as preferences and income shape demand for certain parts which are available cheaply in the world market. China, undoubtably, will continue to be a major force shaping the outlook for the world poultry market, both in its role as an importer and exporter.

Last modified: Tuesday, August 30, 2005