China's catering consumption upgrading creates bigger market pie

BEIJING - Consumption upgrading in China's catering sector is accelerating as more catering services and management go online, creating fresh opportunities for domestic and overseas market players.

China's food production industry is becoming increasingly digitalized as technology involves the whole industrial chain, according to a white paper co-released by US health and hygiene giant Ecolab and Yicai Media Group with support from global auditing and consulting firm Deloitte.

China is now the world's second largest catering market after the United States, with total revenue topping 4.2 trillion yuan ($626.5 billion) last year.

The Chinese catering market is expected to see more fresh and niche brands and players expand in the chain store model, the report showed, adding that the application of digital technologies will be critical for ensuring food safety as the market becomes bigger and more sophisticated.

For the food retail sector, online-to-offline and new retail models will be the trend with more convenience stores and emerging supermarkets expected, the report predicted.

Increasingly tech-savvy Chinese consumers are looking for more high-quality, individualized, diversified and greener food products and services, according to Zhang Tianbing, managing partner for the consumer products and retail sector with Deloitte Asia Pacific.

"China's catering industry has shown increasing awareness of food safety, and displayed some unique business models thanks to its advanced development of digitalization," said Connell Zhang, executive vice-president and president of Greater China for Ecolab.

The rate of failed products by food safety regulators' random checks decreased from 5.3 percent in 2014 to 2.4 percent in 2018 thanks to coordinated efforts from all stakeholders, according to Wang Tiehan, food safety director with the State Administration for Market Regulation.

Industrial data showed that the country's food industry is in the midst of a transition toward health and safety. China's above-scale food industry firms shrank in size in 2018 compared with 2017, but the sector's profit growth far outpaced revenue growth.

The continuous evolution of China's catering sector will expand cooperation space for overseas firms and domestic partners, which may introduce more sophisticated management mechanisms and standards into the Chinese market, Zhang said.

Ecolab launched a joint platform Seven-Star Convention Alliance in 2011 with Yicai Media Group and catering industrial associations to promote effective food safety, management and quality control standards and practices. The alliance now has over 70 members made up of domestic and overseas players in food, retail, hotels and other related markets.