How China’s Distrust in Chinese Products Benefits Australia

In Australia, we’re lucky that when we go to the supermarket, butcher, fishmonger, market — the list goes on — we don’t usually have to second guess or be concerned that we’re not actually getting what we asked for.

In China…it’s a different story.

You may remember a few years ago the Chinese lost their trust in locally produced products after mass death and illness was caused by contaminated baby formula. Now, many Chinese here in Australia are sending back Australian made formula to parents in China.

But it’s not only baby formula that the Chinese have been lied to about.

China’s rising middle class

Due to a rising middle class in China, many Chinese consumers now want the best of the best. Including healthy organic products and more exclusive foods, such as salmon.

And when the Chinese are paying premium price for salmon, they expect to be eating salmon. Except, that’s not exactly what they’ve been receiving. Instead, they’ve been eating rainbow trout that’s being sold as salmon.

Now, if you’ve ever looked at a piece of salmon next to a piece of rainbow trout, you’ll be able to understand why Chinese consumers may not have recognised the difference at first. They’re very similar, and they come from the same family. But just because they look the same, doesn’t mean Chinese consumers are okay with eating rainbow trout when they thought they were purchasing salmon. Once again the Chinese were being deceived and lied to. After the baby formula scandal, they were already skeptical, and this new issue didn’t help.

So it’s understandable that they wouldn’t trust products from China.

And the fact that, according to CNBC, China is now able to sell rainbow trout as salmon, doesn’t help. Their reasoning is that ‘salmon and rainbow trout belong to the same fishy family.

One of the Chinese companies with the responsibility of providing ‘salmon’ for retail sale, stated that Chinese consumers’ concern with buying rainbow trout instead of salmon was unwarranted. Not because they won’t be getting what they asked for, but because rainbow trout has a higher market value than salmon.

The company went on to claim that countries such as Chile and Norway ‘…prefer rainbow trout, and the price of rainbow trout is higher than that of Atlantic salmon.’

Based on that quote alone, it’s easy to see why Chinese consumers don’t trust Chinese products.

How can they put any faith in Chinese food products when the suppliers and associations such as the China Fisheries Association, don’t seem to understand why consumers are hesitant to buy Chinese products? Especially when they themselves are OK with not providing the people with authentic salmon.

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How can Australia gain from China’s distrust?

These aren’t the only issues of food fraud in China. There have been many cases, but the formula fraud and the salmon fraud have both featured heavily in Australian news. And with Australia now exporting salmon to China and many Chinese nationals sending baby formula back to their homeland, Chinese consumer distrust may just be a gain for Aussie companies.

According to Undercurrent News, ‘China imported 5,137 metric tons of whole fresh Atlantic salmon from Australia between January-October of this year, up 477% compared with the corresponding period last year.’

And as Tassle Groups managing director and CEO, Mark Ryan told Undercurrent News:

Supply volumes are seasonal, and the recent increases have been in part due to strong biomass growth from our farms, with fish reaching their optimal harvest weight and seasonality of market demand

We are harvesting some of the largest salmon in the world at present, meaning a strong supply of very large fish, which the Chinese tend to favor.’

Australia is currently the third largest exporter of Atlantic salmon to China.

But it’s not only our salmon and baby formula hoping to make an impact on the Chinese market. Capilano — Australia’s largest honey brand — is also starting to make waves.

The Sydney Morning Herald reported that Ben McKee, Capilano’s managing director, stated ‘We’re at a stage where our business has been growing over recent years, and now the export markets that we’re entering into, like China and so on, take a fair bit of investment’, in regards to their attempt to tap into China.

China is currently going through a food revolution. The rising middle class is no longer happy with just accepting fraudulent foods. They want organic, fresh and healthy food. Our very own Ryan Dinse, editor of Exponential Stock Investor is well aware of this trend, and has conducted extensive research into the middle class’s obsession with Aussie food.

Kind regards,

Alana Sumic,
Editor, Money Weekend

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Alana Sumic is part of the editorial team here at Money Morning. She contributes to bringing you Money Morning each day, along with all of Fat Tail Investment Research’s many other publications.

As the Editor of the weekend edition of Money Morning Alana brings you a summary of the news for the week, and her own take on the week’s most important story in markets. She is also a writer and editor for Fat Tail Investment Research’s political publication, The Australian Tribune.

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