Restrictive Requirements for Imports

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Quick Stats

Quick Stats

Organics Dashboard From Passport

  • Inner Mongolia Yill Industrial Group Co Ltd leads the organic segment in China with a value share of 22.8% in 2019, followed by China Mengniu Dairy Co Ltd with a value share of 13.5% and Abbott Laboratories Inc. with a value share of 13.4%.
  • With a recovery of YoY growth in 2019 post a decline in 2018, China records a Year on Year growth rate of 9.8%, higher than that of Asia Pacific (8.0%) as well as of the global Year on Year growth rate (5.0%) in 2019. Furthermore, this pattern is expected to continue, with China recording a higher Year on Year growth rate compared to Asia Pacific for each year over the forecast period 2019-2024.

  • Organic products in China recorded a market size of US$3.3 bn, representing roughly 7.0% of global demand. However, a per capita expenditure of US$ 2.43 indicates organic products in China are still a niche category.
  • With an increasing emphasis on the importance of organic products among the younger generation and a rise in demand for organic baby food due to the growing number of mothers in the workforce and the increasing adoption of the health and wellness trend, organic products are expected to record significant growth in China, registering a value CAGR of 10.2% for the forecast period 2019-2024, reaching a total of US$5.5 bn by 2024.
Qualitative Analysis

Qualitative Analysis

Quick Facts
  • Organic packaged food and beverages recorded a market value of US$ 3.3 bn in 2019, up from US$ 3.0 bn in 2018, registering a YoY growth of 12.2% for the period 2018-2019.
  • Within organic packaged food, growth was led by organic formula milk, registering a current value growth of 42.0% in 2019. A critical factor of this growth is the increased investment into the promotion of the benefits of dairy consumption by the Chinese government.
  • Organic beverages witnessed a value growth of 14.0% in 2019, partly due to an increase in average unit prices by 3.0% in 2019.
Market Trends
  • One of the primary categories gaining importance among organic product consumers is organic baby food, partly due to the entry of players such as Mongolia Yili Industrial Group and the high level of caution amongst parents on the contents of their baby food.
  • The high production costs, low consumer awareness and limited distribution have inhibited value and volume growth for organic fruit/vegetable juices in China with the majority of local manufacturers still not keen on organic farming. Although there are available organic choices such as goji berry juice from Damohong, the variety of offerings is limited. Thus, international players’ low involvement in the category has also contributed to its negligible size in China.
  • Within organic packaged food, the use of internet retailing to offer a wider selection as well as promote cross-border platforms is a crucial driver for consumers purchasing imported organic products. An example of this can be seen in Nestlé setting up a cross-border e-commerce business in January 2018 to gain access to more parents in bonded zones (exclusive trade zone created within domestic areas with special arrangements for customs duties, import/export duties and several supervision approaches) who are looking for organic baby food. Furthermore, considering the rapid growth of internet retailing in China, this channel is expected to become vital in the distribution of organic products, assisting in growth.
Competitive Landscape
  • The rising demand for organic formula milk has encouraged manufacturers to prioritize the category's offering. Consequently, in 2019, Chinese dairy giant Inner Mongolia acquired Australian infant nutrition firm Bellamy's organic, an organic formula milk company with an existing market in China.
  • With organic tea increasing in popularity in China, there are increasing efforts from existing and new players to develop sales, leading to an increasing level of fragmentation within the category. Additionally, the entry of traditional tea manufacturers such as Wu Yu Tai in January 2019 is adding to the level of competition among organic tea manufacturers. However, Huangshang Guangming Tea Industrial Co Ltd remained the top player in tea with a value share of 17.0% in 2019 owing to its strong offerings under the Qianqiuquan brand, which includes offerings such as Huangshang Maofeng and chrysanthemum tea.
  • The growing importance of the health and wellness trend has seen an increase in consumers' concern on what they consume. The low level of awareness on organic beverages in general presents potential for development, as a more educated, health-conscious consumer base would be ideal for demanding organic variants of juices and fruits and vegetables. This has encouraged players such as Hainan North Latitude 18 Fresh Fruit Co. Ltd., a company formed in 2015, to venture into organic juice offerings in 2019 under the 18 Degrees North Latitude brand.
Prospects And Growth Opportunity
  • The rise in working mothers and increasing health consciousness of Chinese consumers is expected to lead to an increase in demand for organic baby formula as more mothers look for healthy options to provide their children. Additionally, leading players’ rising investment such as Yili and Mengniu into the category combined with competition from large global players such as Nestlé and Abbott is expected to help further drive the category’s growth. Overall, organic formula milk is likely to account for 9.0% of the value sales of formula milk by the end of the forecast period 2019-2024, up from its share of 1.0% for the period 2013-2018.
  • The low level of consumer awareness about organic beverages is a critical factor for the small share of organic tea when compared to the contribution from non-organic variants in overall tea sales. Additionally, the primary concern for purchasing organic products in China is food safety rather than nutritious benefits. This prioritization is catered to by non-organic variants as high national standards currently ensure tea safety in China. As a result, consumers are paying more for high-quality tea, rather than for tea with organic labels. Additionally, the difficulty in getting organic certification is an inhibiting factor among manufacturers.
  • Sales of organic milk have been hampered by the continuous efforts by the Chinese government to promote dairy consumption, particularly among children, along with the introduction of fresh milk by domestic giants Yili and Mengiu in 2018, which helped push value sales of fresh milk to witness double-digit growth in 2018 and 2019.
General Health And Wellness Trends
  • Since the 2008 melanin milk scandal, Chinese consumers are extensively focused on what they consume. This increasing importance on healthy consumption helped drive sales for organic labels, particularly in baby formula and fruits and vegetables, assisting manufacturers in differentiating their offerings through the specific health benefits their products can provide.
  • The increasing product variety offered by internet retailing is also a significant driver of consumer preference for organic products. Furthermore, with an expanding focus on health and wellness and rising disposable incomes, online retailing of organic packaged food is witnessing strong growth, particularly among young consumers.
General Economics And Demographic Landscape

Economy:

  • China is witnessing a slowdown in real GDP growth. Investment is expected to remain steady at least for real estate, owing to a rise in government investment into infrastructure and growing disposable incomes among the Chinese population.
  • The recent migration slowdown from rural to urban areas has led to staffing difficulties, pushing firms to increase efforts to retain employees, which is partly a driver for unemployment remaining the same in 2020 as in 2019 at a rate of 4.0%, aside from an increase in real wages leading to an exodus for many manufacturers.
  • While the 13th Five-Year plan set a growth target of 6.5% for GDP during the period 2016-2020, real GDP growth is expected to slip to 5.6% in 2021, further falling to 4.9% per year by 2027.
     

Population demographics:

  • China's population reached nearly 1.4 billion in 2019, witnessing an increase of 135 million since 2000. The abandonment of the one-child policy in 2015 helped push the fertility rate to 1.1 births per female in 2019, with a further predicted increase to 1.2 births per female by 2030.
  • Rapid urbanisation has drastically shifted the urban/rural split between the population with over half of the Chinese people now living in urban areas in 2019, as opposed to less than 20.0% in 1980. Furthermore, the number of people living in cities is expected to reach 70.0% by 2030.
  • The rise in median age among the Chinese population to 38.5 years in 2019, an increase of 8 years from levels in the year 2000 is an indicator of rapid ageing in China. Furthermore, the median age is expected to reach 42.5 years by 2030. The population over 65 years totalled 166 million in 2019, representing 11.9% of the population. In 2030, this number is projected to reach almost 248 million, representing 17.4% of the population.
     

Income & expenditure:

  • China's saving ratio reached 35.6% of disposable income in 2019. However, the ratio is expected to decline to 35.5% in 2020. Consumer expenditure per capita in 2019 reached US$ 3,994, with the indicator expected to grow by 6.3% in 2020, with healthcare and transport categories holding the largest share of expenditure.
  • Overall, consumer expenditure, which represents 40.8% of GDP in 2020, is expected to increase cumulatively by 63.6% for the period 2020-2030, averaging 5.0% annually.
  • Disposable income per capita reached US$ 6,221 in 2019 and is expected to grow by 6.2% in 2020. For the period 2020-2030, it is expected to increase cumulatively by 64.3%, averaging 5.1% annually.
Data

Data

Organic Packaged Food And Beverage Data

Data type

Unit

2016

2017

2018

2019

2020

2021

2022

CAGR
(16-19)

CAGR
(20-22)

Health & wellness products consumption

USD million

101,066.5

107,464.4

115,479.0

123,565.1

129,142.3

134,782.6

140,479.5

6.9%

4.3%

Organic packaged food and beverages consumption

USD million

2,372.6

2,786.9

3,021.2

3,390.5

3,723.7

4,088.5

4,524.2

12.6%

10.2%

Organic packaged food consumption

USD million

2,336.6

2,744.0

2,971.3

3,333.4

3,659.9

4,018.7

4,448.3

12.6%

10.2%

Organic beverages consumption

USD million

36.0

42.9

50.0

57.1

63.7

69.8

75.9

16.6%

9.2%

Organic packaged food and beverages consumption as a % of total health & wellness products consumption

%

2.3%

2.6%

2.6%

2.7%

2.9%

3.0%

3.2%

-

-

Economic And Demographic Data

Data type

Unit

2016

2017

2018

2019

2020

2021

2022

Total population

million

1,374.6

1,382.7

1,390.1

1,395.4

1,400.1

1,404.2

1,407.8

% Middle and upper class of total population

%

21.5

21.7

21.7

21.6

21.6

21.6

21.6

% Population aged 65+

%

10.4%

10.9%

11.5%

12.0%

12.5%

13.0%

13.4%

% Population aged 0-14

%

17.4%

17.3%

17.3%

17.2%

17.1%

17.0%

16.8%

% Population with higher education degrees

%

13.7

14.0

14.3

14.5

14.7

14.9

15.0

Average number of children per household

children

0.6

0.6

0.6

0.6

0.6

0.6

0.6

GDP per capita

USD per capita

7,859.8

8,710.3

9,572.6

10,278.9

10,449.1

11,099.6

11,748.0

Consumer expenditure per capita (US$)

USD per capita

3,084.5

3,323.6

3,660.9

3,995.2

4,207.7

4,432.4

4,665.8

Consumer expenditure per capita on food and non-alcoholic beverages (US$)

USD per capita

685.5

721.1

792.8

868.2

1,017.8

1,104.0

1,150.9

Retailer And City Data

Top 5 Cities By Population

Data category

Rank

City/retailer

Population
(millions)

Top cities by population (2019)

1

Shanghai

24.2

Top cities by population (2019)

2

Beijing

21.8

Top cities by population (2019)

3

Tianjin

15.8

Top cities by population (2019)

4

Guangzhou

14.0

Top cities by population (2019)

5

Shenzhen

12.2

Top 5 Grocery Retailers By Sales

Data category

Rank

City/retailer

Top grocery retailers by sales (2019)

1

China Resources Holdings Co Ltd

Top grocery retailers by sales (2019)

2

Auchan Group SA

Top grocery retailers by sales (2019)

3

Yonghui Superstores Group

Top grocery retailers by sales (2019)

4

Walmart Inc

Top grocery retailers by sales (2019)

5

China Petroleum & Chemical Corp

United States Department Of Agriculture Global Agricultural Trade System Data

Top 5 Export Commodities To China

Year

Country

Rank of
Product/Commodity

Product/Commodity

Export Value (US$)

2019

China

1

Organic Carrots Fr/Ch

282,488

2019

China

2

Organic Tomato Sauce Ex Ketchp

233,659

2019

China

3

Organic Vinegar and Substitutes

142,841

2019

China

4

Organic Coffee Roast Not Decaf

124,091

2019

China

5

Organic Fruit Prep

108,995

2019

China

Total

Total Organics*

1,188,347

2018

China

1

Organic Cherries Fresh

1,863,467

2018

China

2

Organic Apples Fresh

669,346

2018

China

3

Organic Fruit Prep

542,174

2018

China

4

Organic Vinegar and Substitutes

312,960

2018

China

5

Organic Coffee Roast Not Decaf

276,515

2018

China

Total

Total Organics*

4,231,286

2017

China

1

Organic Cherries Fresh

3,043,971

2017

China

2

Organic Oranges Fr/Dr

727,936

2017

China

3

Organic Apples Fresh

608,683

2017

China

4

Organic Fruit Prep

562,418

2017

China

5

Organic Coffee Roast Not Decaf

382,072

2017

China

Total

Total Organics*

5,599,151

2016

China

1

Organic Oranges Fr/Dr

3,193,600

2016

China

2

Organic Cherries Fresh

1,334,756

2016

China

3

Organic Apples Fresh

1,036,003

2016

China

4

Organic Grapes Fresh

872,502

2016

China

5

Organic Tomato Other Fr/Ch

547,157

2016

China

Total

Total Organics*

7,847,225

Note : Total organics is the sum of all exports in a particular year  
Definitions

Definitions

Term

Definition

Health and Wellness

Health and wellness is the aggregation of organic packaged food and beverages, fortified/functional packaged food and beverages, naturally healthy packaged food and beverages, better for you packaged food and beverages and food intolerance products.

Organic packaged foods and beverages

This category includes packaged food & beverages that are certified organic by an approved certification body. Organic production is based on:

• A system of farming that maintains and replenishes soil fertility without the use of toxic and persistent pesticides and fertilizers.
• Organic food & beverages are minimally processed without artificial ingredients, preservatives or irradiation.
• The use of GMOs (Genetically Modified Organism) is prohibited. “Certified Organic” means the item has been grown according to strict uniform standards that are verified by independent state or private organizations.
• Depending on the country, such products are called ‘organic’, ‘biological’ or ‘ecological’: For organic products to be included under Euromonitor definitions, the organic aspect needs to form part of positioning/marketing of the product. This is an aggregation of organic baby food, bakery, confectionery, dairy, ice cream, oils and fats, ready meals, rice, sauces, dressings and condiments, snack bars, soups, spreads, sweet and savory snacks and other organic food.

Note that fresh food products or individual ingredients are not included in this definition.

Compound annual growth rate (CAGR)

The compound annual growth rate (CAGR) is the average annual growth rate over a specified period of time. For instance, the CAGR consumption of from 2016 – 2019 will be the average growth rates across these three years.

USDA GATS data clarification

The data presented in table 2.4 represents the dollar values of the top 5 organic commodities as well as of the total organic exports of the trade partner for the period 2016-2019 as per the United States Department of Agriculture’s Global Agricultural Trade System, a database consisting of international agricultural, fish, forest and textile products trade statistics dating from the inception of the Harmonized coding system in 1989 to present.

Policy Information

Policy Information

Government Agency(s) / Competent Authority

Authorized Government Agency(s):

Standardization Administration of China (SAC) and the General Administration on Quality Supervision, Inspection and Quarantine (AQSIQ).

Agency(s) Contact Information:

Standardization Administration of China
No. 9 Madian East Road
Haidian District
CN-Beijing 100088
Tel: +86 10 8226 2622
Fax: +86 10 8226 0660
E-mail: sac@sac.gov.cn
Web

General Administration of Quality Supervision, Inspection and Quarantine
No. 9, Madian East Road
Haidian District
Beijing100088
People's Republic of China
Web

Organic Regulations and/or Standards

Name(s) of Regulation and/or Standard:

National Standards for Organic Products, GB/T 19630-2005 were updated in 2011 to National Standards for Organic Products, GB/T19630-2011.

GB/T19630-2011 consists of 4 parts:
GB/T19630.1 Organic Products: Production 
GB/T19630.2 Organic Products: Processing 
GB/T19630.3 Organic Products: Labeling and Marketing 
GB/T19630.4 Organic Products: Management System 

USDA has published an unofficial translation of Implementation Rules for Organic Product Certification

Date of Implementation: 2005

Regulation and/or Standard Scope:

The Chinese standard covers the general specifications and requirements for organic production, processing, transport, storage and packaging of crops, edible fungi, wild plants, livestock and poultry, aquatic products, textiles, and apiary.

China will begin new organic national standards for organic products and new regulations for certification and use a revised eligible products list on January 1, 2020. Products marketed in China as organic must comply with this standard and accompanying regulations.
 
The new organic standard includes changes to production and processing inputs, such as adding microbial preparations for control and prevention of animal diseases, adding detergents and disinfectants in plant production, adding requirements for packaging materials for feed products, adjusting lists of food additives, processing aids, and feed additives eligible for organic production and/or processing. The standard also changed the requirements for the labeling of organic conversion products. 

The new organic certification rules appear to have streamlined some certification practices. For example, an overseas organic production site which has been certified organic certification for at least four years can be waived from a 12-month organic conversion period before being certified to the Chinese organic standard. And if an organic product is produced or processed overseas, the product sample can be tested by a local testing agency. Site inspection requirements have also been simplified.

Imported Products

China does not allow equivalence agreements with other countries. US producers, even though they are USDA certified, will not be allowed to use the Chinese term for organic unless they receive Chinese certification. See the reports in Additional Information below for more detailed information about meeting China's requirements for imported products.

China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) plans to require importers of certain products to a review overseas exporters and producing enterprises. See the GAIN report.

Certification and Accreditation

Certification:

United States Department of Agriculture Foreign Agriculture Service UNOFFICIAL translation of certification rules .pdf (2012)

There are local and foreign certifiers available.
Two major Chinese certifying organizations: China Organic Food Certification Center (COFCC) and Organic Food Development Center (OFDC).
Joint-venture companies: BCS (Changsha); ECOCERT (Beijing); Japan Organic and Natural Foods Association (JONA) and Overseas Merchandise Inspection Company

Requirements for Foreign Certification Body (CB):

- Regulation on Certification and Accreditation (Decree No. 390 of the State Council of PRC) Requirements for all CBs, plus extra requirements for foreign CBs
- Requirements on approval of CBs (RMB 3 M, 10 full-time staff...)
- Foreign CBs must be accredited in its own country
- Foreign CBs must have organic experience over three years

Accreditation Method:

Government

Accreditation:

Certification and Accreditation Administration of China (CNCA)

China does not allow foreign assessment bodies, such as USDA, to accredit certifiers.

Additional Information

Reference Standards:

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=2019%20Official%20Exporter%20Guide_Shenyang%20ATO_China%20-%20Peoples%20Republic%20of_12-30-2019

Additional Information:

Food importers must register every four years. See GAIN Reports below for more information.

USDA's GAIN Report China Publishes New Organic Standard and Certification Rules (2019)

USDA's GAIN Report China Releases Draft General Standard for the Labelling of Prepackaged Foods for Domestic Comments (2020)
USDA's report on the 2015 Food Safety Law
USDA's GAIN Report China Implements Food Safety Law Implementing Regulations (2019) Includes unofficial translation.
USDA's GAIN Report Smart Consumers and ‘New Retail’ drive China’s Food Retail Sector (2019)
USDA's GAIN Report China Retail Foods Change and Opportunity (2018)
USDA's GAIN Report China Passes E-Commerce Law (2018)
USDA's GAIN Report 2019 Official Exporter Guide to China (2020)
USDA's GAIN Report Consumer Study on China's Imported Food Products (2018)
USDA's GAIN Report Annual Retail Foods Report (2020)
USDA's GAIN Report Organic Certification Issues Update from East China
USDA's GAIN Report AQSIQ to Require Importers to Review Overseas Food Producers 
USDA's GAIN Report Food Processing Ingredients (2019)
USDA's GAIN Report Retail Increasing Change and Competition but Strong Growth Presents Plenty of Opportunities for U.S. Food Exports (2017)
USDA's GAIN Report Food Service Industry Sector Overview - China (2019)
USDA's GAIN Report China Retail Foods Change and Opportunity (2018)
USDA's GAIN Report Macau Food Retail Industry (2018)
USDA's GAIN Report The Notice on the Technical Review of Relevant Standards for Imported Foods Without Applicable National Food Safety Standards (2020)
USDA's GAIN Report Food and Agricultural Import Regulations and Standards Export Certificate Report (2020)
USDA's GAIN Report Food and Agricultural Import Regulations and Standards Country Report (2020)

Hong Kong does not have a law regulating organic food products.  U.S. organic products can be sold in Hong Kong with the USDA organic logo. See the Global Organic Trade Guide's page for Hong Kong for more information about this Special Administrative Region of the People's Republic of China.

In September 2016, US shipments are subject to China's requirements designed to halt the spread of Zika-bearing mosquitos