Chinese consumers turn to Korean premium food products

SOUTH KOREA - With the rising interest of Chinese consumers in Korean foods thanks to hallyu, Chinese retail chains will start adding Korea to its overseas food sourcing network.

"We plan to source more Korean green and organic foods for our premium food chains as perception about the quality of Korean foods continue to be improving," Liu Hui Ling, assistant general manager of China Resources Vanguard, or CR Vanguard, said in a recent interview.

CR Vanguard is one of the largest retail groups in China running more than 6,000 supermarket chain stores nationwide. It has two premium supermarket chain brands ― Ole and BLT. Ole supermarkets target high incomers older than 35, while BLT chains concentrate on young professionals between 25 and 35 who emerge as a trend-setting group in China.

"Despite slower economic growth, the high-income Chinese who care more about food safety and quality have not cut their food expenditure for the past few years," said Ling who came to Korea at the invitation of the Korea International Trade Association for a meeting with high-quality Korean food makers.

Food expenditures have been changing rapidly in modern China as households experience income growth along with the continued economic growth. A more recent trend is the increasing propensity of Chinese consumers to purchase higher-quality as well as greater quantities of food.

"Quality has become a dominant word in the Chinese food industry," Ling said.

Among a variety of quality food items, demand for organic foods, which is still in infant stage, is growing faster than other items, particularly among the upper class, amid a string of food scandals, Ling said.

A report by retail researcher Mintel found that over half of urban Chinese consumers, regardless of income level, have purchased fresh organic foods in 2011, and over 80 per cent of them are likely to spend more on "all-natural" foods in future.

When it comes to consumption of high-quality food products, Chinese consumers heavily depend on imports of US and European countries. "About 70 per cent of food items distributed through our premium food chains are imports from developed countries,'' Ling said, adding only about 5 per cent of food items sold in Ole and BLT stores are Korean.

"Chinese retail groups are expected to increase imports of quality Korean food products as demand for Korean food products is sprouting in China,'' said Choi Won-ho, a general director of KITA.

Asked about Korean food items that she has an interest in, Ling listed semi-processed or organic food items.

"Premium Korean dairy producers could also appeal to Chinese premium food chains as they are looking for a replacement for New Zealand dairy exports, which the Chinese government suspended due to a recent safety scandal involving protein containment in dairy products,'' the KITA official said.

Despite growth potential in the world's most populous market, Ling advised Korean food makers to study complexity and dynamics of the Chinese market by region before entering the Chinese premium food market.

"For a business' success, it is important to understand that China is not a single consumer market. Our company also runs different sales and marketing strategies by region,'' she said.