Market and Trade Data
Beijing, Shanghai, and Guangzhou:
Profiling Three of China’s Largest HRI Markets
By Yang, Mei
also . . .
FAS Report CH6402
“China’s Food Service Sector Continues Sustained Growth”
Beijing, Shanghai, and Guangzhou were the first cities
in China to benefit from economic reform and foreign
investment, and today boast substantial elite urban
According to restaurateurs, executive chefs, and food
purchasing managers, distribution has made great strides
in these three cities, the major HRI markets in China.
National road, port, and cold chain infrastructure has
improved, cutting transportation and delivery times.
Companies have developed expertise in imported foods,
becoming larger and more focused, while many small
fly-by-nighters have dropped out of the picture.
U.S. suppliers hoping to succeed in this vast
country should tailor their HRI products to
specific geographic markets.
2008 Olympic Summer Games should open the China market
even further. Beijing is the focus, but the impact will
be felt well beyond the capital in many other parts of
China, especially other Olympic venues and cities around
like Tianjin, Qingdao, Qinhuangdao, Shanghai, and
Shenyang. Dozens of new hotels are being built to
accommodate the expected flood of visitors; cooking
instructors around the world are training local chefs to
cook for athletes, staff, tourists, and other visitors.
With the Olympic Games looming, the travel, food, and
cruise service operators of the world are lining up to
get into the China market.
The Olympic Village will offer 24-hour catering
service, serving a projected 22,000 people 50,000
meals per day.
Olympic Organizing Committee chose Western foods for as
much as 70 percent of Olympic Village menu offerings and
Chinese foods for the remainder. Caterers and catering
service operators can apply to be suppliers to the 2008
Olympics through an open-global tendering system.
Promotions linked to the games will occur nationwide,
allowing many Chinese to sample foreign foods for the
first time as part of their Olympic experience.
revenues for 2008 are expected to reach $2.2 billion.
Beijing and Vicinity
GDP (gross domestic product): $53 billion in
Per capita disposable income: $2,000
Population: 15 million
Beijing and its environs are home to numerous political,
diplomatic, cultural, educational, and business elites.
The area is also a major tourist destination that played
host to 120 million Chinese and 4 million overseas
tourists in 2004. In 2008, 125 million tourists are
projected to visit, 5 million of them from foreign
These factors have made Beijing a major HRI market; in
fact, Beijing’s HRI sector is its largest and fastest
growing consumer business. In 2004, the capital had over
40,000 food service outlets, employing nearly 400,000
people. Branding and chain operations appear to be two
high growth areas. Beyond Beijing, with continuing
economic expansion, rising incomes, and growing tourism,
Qingdao, Dalian, and Harbin have quickly emerged as
major restaurant destinations in North China.
Catering: As noted above, the 2008 Summer
Olympics are producing a huge catering opportunity for
businesses in and around Beijing. The Olympic Games HRI
revenue pie is expected to exceed $2.2 billion. In
addition to the venues and the Olympic Village, the
entire city should experience high demand. The Olympic
Committee estimates that over 270,000 players,
officials, staff, and media — and 7 million spectators —
will attend. The Olympic Village will offer 24-hour
catering service, serving a projected 22,000 people
50,000 meals per day.
Restaurants: Beijing has a rich and varied
food culture and history that is reflected in its
restaurants. As a geographic and economic crossroads,
all regional and ethnic cuisines meet in Beijing, with
international flavors adding other dimensions to the
gastronomic landscape. Time-honored brands like Quan
Jude Roasted Duck and Dong Laishun Mutton Hotpot
represent the essence of Chinese cuisine. Modern
renditions of formerly imperial snacks attract Chinese
and foreigners alike. Maxim’s, FLO Brasseries, KFC,
Pizza Hut, and McDonald’s, along with Yoshinoya and
Mawaru Sushi, are familiar. Wealthy and trend-conscious
Chinese, expatriate residents, and visitors have an
enormous list of food and beverage options.
While elite niche markets have become a hallmark of
Beijing’s restaurant trade, middle-class, white-collar
consumers and the huge tourist influx sustain the middle
market. Expenditures per restaurant meal average $8 per
person. However, dining patterns are changing, with
people under 40 eating out to save time and the work of
home meal preparation. Demand has shifted from simply
quelling hunger to enjoying delicious, healthy dishes as
Hotels: Beijing’s high-end hotels serve as
excellent venues to introduce and test-market new
cuisines and foods. The run-up to the Olympics has
prompted a frenzy in refurbishing old and constructing
new hotels in Beijing. Expanded tourism will likely
provide steady growth in Beijing’s hotel segment, now
characterized by occupancy rates well above 85 percent.
Room availability must grow by 45,000 units for the 2008
Summer Olympics; Beijing will need a total of 100 four-
and five-star hotels needed to meet this ambitious
Shanghai and Vicinity
GDP: $93 billion in 2004
Per capita disposable income: $2,085
Population: 20 million
Shanghai is one of China’s leading commercial centers
and its largest port. The city stands at the center of a
massive web of development. Its economy is becoming
increasingly focused on finance and services, as rising
prices drive manufacturing further afield, while
international companies (in finance, banking, trade,
etc.) continue to pour in. Shanghai is an aggressively
cosmopolitan city, with cutting-edge knowledge of
foreign brands and fashions. So, while Shanghai has its
own distinct food culture, its people are also open to
new tastes, making the city an excellent market for
As in the rest of China, food plays a central role in
all aspects of Shanghai life. Business, networking,
celebrations, and friendly get-togethers are invariably
conducted over meals. Food items are often given as
gifts and constitute an important niche market. Shanghai
is also an affluent city, and local residents are more
than willing to pay for quality products, provided they
can be persuaded the items are truly special. For
example, a top local delicacy, the Yangcheng Lake hairy
crab, can sell for as much as $200 per kg (1 kilogram =
Catering: Traditionally, the Shanghai
catering industry has been a poor venue for imports due
to its focus on box lunches produced for less than $1
apiece. But this is starting to change, as concerns
about food safety have led many Shanghainese to distrust
established box lunch manufacturers. To appeal to these
consumers, several high-end restaurants, and retailers
such as Lawson’s, have begun offering box lunches.
Significantly more expensive than traditional box
lunches, their appeal lies in high quality and
convenience. This trend has created a potential
opportunity for U.S. products, and several companies
have contacted Lawson’s about including their products
in box lunches.
Offsite catering has also become a booming business for
hotels and restaurants. All of Shanghai’s five-star
hotels report their offsite catering has mushroomed:
some report higher revenues from this than from their
onsite restaurants. Element Fresh, one of the city’s
first restaurants to offer large amounts of fresh raw
vegetables, organic items, and functional foods, has
also found big business in offsite catering.
Restaurants: Shanghai is home to one of
China’s most vibrant and innovative restaurant scenes.
Shanghai now hosts a cohort of world-class restaurants,
including Jean-Georges, Sens et Bund, and Laris,
catering to its growing business elite. Pizza
restaurants are becoming increasingly popular.
A key trend is the rapid emergence of high-end
Chinese-style restaurant chains, such as Shanghai Uncle,
Xiaonanguo, and Lulu’s. Chinese prefer to entertain
guests in restaurants.
Business dinners in particular place a premium on
impressive displays of generosity, and therefore hosts
prefer to patronize restaurants that offer reliable
quality: foreign cuisines are interesting, but may be
unfamiliar and unsuitable for some occasions. Such
restaurants specialize in a reliably excellent dining
experience with high-end ingredients and consistent
preparation. They innovate in recipes, but only within
certain limits. However, their demand for consistent
quality, willingness to pay higher prices, and very high
volume (Xiaonanguo has 20 large restaurants) make these
restaurants an excellent venue for imported ingredients.
They all serve imported wines, and most import a number
of other ingredients. Shanghai Uncle has an exclusive
arrangement with Gallo Wines, and Lulu’s featured fresh
Washington cherries in a 2005 promotion.
Shanghai also has a large number of Western restaurants
serving expatriates and locals who have either lived
abroad or are just interested in trying something new.
Western restaurants are important both as customers for
high-end products and a means of introducing new
products. Specialty and ethnic restaurants are becoming
increasingly common, creating niche markets for very
high-end items. Organic foods are also becoming popular.
Demand for knowledge about preparation and handling of
Western foods is high, and Shanghai has a chronic
shortage of well-trained Western chefs. One estimate
puts the number of fully qualified chief chefs at 100,
most of them in star-rated hotels. This unfilled demand
constitutes an excellent opportunity for exporters and
distributors willing to commit the time and effort to
introduce and explain their products.
conjunction with the local chef associations, ATO
Shanghai (the FAS Agricultural Trade Office in Shanghai)
holds chef seminars throughout East China that are
invariably packed. These events provide USDA cooperator
groups (such as the Alaska Seafood Marketing Institute,
the U.S. Meat Export Federation, the USA Poultry and Egg
Export Council, Sunkist Growers, and the California
Table Grape Commission) not only the chance to introduce
their products, but also to explain proper preparation
techniques and potential innovative uses. ATO Shanghai
has taken these activities far beyond Shanghai to
Chengdu, Chongqing, Hangzhou, and Nanjing, and received
an outstanding response from the local restaurant
Hotels: Revenues for Shanghai’s hotel
industry topped $1.7 billion in 2004. The hotel segment,
although extremely well developed, is expanding rapidly
from overwhelming demand. Five- and four-star hotels are
routinely fully booked, and in peak seasons may have no
vacancies. At the end of 2004, Shanghai had 359
star-rated hotels, 61 of them four- or five-star
establishments. Marriott has targeted the Yangtze River
Delta for development. Holiday Inn plans to build hotels
in every city in China with an airport in the next few
years, including seven in Shanghai.
The hotel industry is an ideal entry point for
new-to-market and high-end imported ingredients. Top
hotel restaurants have the most qualified chefs for
foreign cuisine. These chefs tend to be more familiar
with imports and menu promotions, and their high profile
in the trade means other operators follow their lead.
Beyond Shanghai are dozens of boomtowns like Suzhou and
Hangzhou with growing expatriate communities. Hotel
restaurants there often serve as centers of community
life, giving them great influence over the trade in
their respective cities. Introducing new products into
distant cities requires close coordination with local
distributors, which is generally much more forthcoming
with the support of one of the city’s top hotels.
Guangzhou and Vicinity
GDP: $200 billion in 2004
Per capita disposable income: $1,700
Population: 20 million
Guangdong Province is often called the economic engine
of China. The HRI sector in Guangdong and the Pearl
River delta is developing relatively fast. In 2004,
Guangdong’s HRI industry revenues reached $12.47
billion, a 13.7-percent increase over the previous year.
In Guangzhou, the capital of Guangdong, per capita
expenditures for dining out average $515 per year — the
highest of any city in China. The Cantonese are famous
for eating and very open-minded toward new products.
Different styles of food find their own markets, and the
Cantonese are willing to try almost everything, although
they still prefer traditional Cantonese dishes. Food
imports enjoy a good reputation among consumers
throughout South China. The provinces surrounding
Guangdong are also developing rapidly, with many
emerging cities like Xiamen, Changsha, Fuzhou, Nanning,
Guiyang, Sanya, and Guilin.
Catering: The catering industry in South
China mainly focuses on box lunches retailing for $1 -
$2 per unit. The low price makes it hard for imports to
compete with local products. However, some local
catering chains are expanding and targeting the higher
end of the market. One of the selling points used by
these chains is reliable quality, which suits consumers’
desire for food safety. This desire provides good
opportunities for U.S. products. Consumers’ higher
spending for those meals, usually $3 - $4 per box,
allows the catering company to consider using imports
like poultry, cheese, and potato products.
The expatriate community also fuels demand for
high-quality and Western-style catering service. To
accommodate the rising number of expatriates working in
the region, more international schools have been set up
for their children. Parents expect these schools to
provide safe, high-quality meals that include a variety
of Western-style dishes. This development has helped
give imports a wedge in the market.
Offsite catering is getting popular in South China. Most
five-star hotels and high-end restaurants now offer
offsite catering service and reported increased sales in
2005. Guangzhou Restaurant, a famous chain serving
Cantonese cuisine, is providing both offsite catering
and prepared dishes for take away. The holiday season
also creates large demand for such service. Due to
higher budgets generally available for offsite catering,
the dishes may include some expensive ingredients, like
lobster, prawns, and scallops. Such dishes provide
another outlet for imports.
Restaurants: Dining out has long been a
priority for the Cantonese. Famous for its food,
Guangzhou is regarded as a center of delicious cuisines.
Restaurants have to be creative and offer innovative
dishes to stay competitive.
Chefs are integrating new food ingredients and different
preparation styles from other regions, or even
countries, into traditional Chinese cooking, creating
many fusion foods. And with heightened their awareness
of food safety, consumers are more than willing to pay a
premium for dishes that contain green, organic, and
nutritional ingredients. These two trends have spurred
demand for some U.S. products, such as Wisconsin ginseng
and California almonds, perceived as having health
benefits or that can be used in fusion dishes, such as
Wine consumption, especially red, has gone up in the
last five years. U.S. wines are slowly gaining a
foothold in this rapidly developing market. Wine dinners
occur on a regular basis at leading restaurants in South
China, and consumers are increasingly interested in
learning how to select and pair wines with various
Western-style restaurants are developing quickly in
South China, serving the growing expatriate population
and Chinese consumers. Most counties in Guangdong have
Western restaurants and coffee shops. Leading chains
like the Greenery Café and Green Island serve a
combination of Chinese, Southeast Asian, and Western
foods, and their operators adjust recipes to suit local
McDonald’s, KFC, Starbucks, Taco Bell, Pizza Hut, Papa
John’s, Pizza Hut, Subway, and Dairy Queen have been
extremely successful; the sales revenues of McDonald’s
and KFC in Guangdong are their highest in all of China.
To meet the demand of late night working customers
working late shifts, dozens of McDonald’s outlets in
Guangzhou operate around the clock. Western fast-food
chains also use many imported ingredients. McDonald’s
and KFC source 50 percent of their French fries from the
United States, also use U.S. corn on the cob and
Domestic fast-food chains, which usually emphasize
Chinese dishes, are striving to increase market share,
too. J-Kungfu is the first such chain to have more than
100 outlets. However, Chinese fast-food chains are
limited in their use of imports by their lower per-meal
cost (usually around $2).
Serving Food Service: Educating the HRI
sector to handle and use imported food ingredients will
continue to be a key task in penetrating this market.
Teaching them about the unique characteristics of U.S.
ingredients will help Chinese chefs understand their
uses and how to incorporate them into their menus.
China’s rapid HRI growth has led to growing pains from
the shortage of experienced, trained personnel, and
training of chefs is one way to solve the problem.
ATO Guangzhou regularly organizes chef seminars and
competitions in major South China cities, often with
support from U.S. producer and trade associations. South
China chefs are very curious about U.S. ingredients and
Western cooking methods, and are eager to enhance their
cooking skills and so differentiate their restaurants
from their competitors.
These activities are well attended not only by chefs,
but by others in the food service industry, and help the
entire HRI sector better understand the characteristics
and benefits of U.S. food ingredients. Many U.S.
products introduced to local chefs through these
seminars, such as almonds, walnuts, and chestnuts, have
been widely adopted.
Yang, Mei is an agricultural marketing specialist in the
FAS Agricultural Trade Office in Beijing, China. E-mail: