How is China’s import market developing?

Published 28 February 18

In a previous Horizon report, AHDB identified China as a key market for dairy export opportunities, with scope for increasing exports of both premium and commodity dairy products. In this report we look at how Chinese imports have developed over the last 12 months.

The USDA forecasts that Chinese fluid milk consumption will grow 2.5% in 2018 to 38 million tonnes, with WMP consumption increasing 1% to just under 2 million tonnes in the same year. Per capita consumption of milk is about 34.1kg – less than one third of the world average. Consumers primarily focus on liquid milk, powders, and yogurt products made from these. Cheese and butter consumption is minimal, but import demand is growing rapidly, so there is considerable scope for market development – particularly as the low lactose content of butter and hard cheeses would be compatible with the high incidence of lactose intolerance in the Chinese population.

China imported 2.2 million tonnes of dairy products in 2017, with a combined value of roughly £3.8bn. Value is increasing faster than volume – an 11% increase in volume imports between 2016 and 2017 versus 54% increase in value. However, this will have been amplified by the turbulent prices over the last two years. In value terms, 46% of imports were powdered and concentrated milk and cream (mostly WMP and SMP), and liquid milk and cream accounted for 18%. Butter and cheese account for a further 20% of value despite only accounting for 9% of import volume. The USDA is forecasting an 11% volume increase in WMP imports in 2018, but also expects a decrease in liquid milk and SMP imports.

2018.03.01 China 1

The main sources of Chinese dairy imports are New Zealand (NZ) and the EU, which together accounted for 74% of Chinese dairy imports in 2017 by volume, and 82% by value. The main EU countries for this trade are France and Germany, with the Netherlands, Poland, Ireland and Denmark also of note. After New Zealand and the EU, the USA and Australia make up the bulk of the remaining imports, with all other countries accounting for just 2-3%. The UK currently only accounts for 0.8% of China’s dairy imports in value and volume terms.

2018.03.01 China 2

Chinese dairy imports stepped down in 2015, but have grown back to a record level since that date.  In volume terms, 2017 imports were 35% higher than 2015. Of the additional sales, NZ gained 49%, taking its overall share of Chinese imports up from 39% in 2015 to 41% in 2017. However, most of this was catch-up from the losses suffered in 2015, where NZ was disproportionately affected by the downturn, and NZ are still below the 52% overall share of Chinese imports that they accounted for back in 2012.

2018.03.01 China 3

If we look back over the last five years the UK, rest of the EU and Australia have grown their share of the Chinese import market since 2012, while the USA has lost out. Although New Zealand has increased its market share in the last couple of years, it still has less than 5 years ago.