The Opportunity




China, a hungry giant eager to choose


During the Middle Age, in very precarious conditions that we cannot conceive nowadays, Marco Polo and other voyagers – merchants and missionaries- challenged the distance and cultural differences to go deep into de heart of Asia. In his book of journeys Marco Polo tells that, in China, “When a good year and a plentiful crop arrive, and the great lord sees that there are plenty in the market, he makes everyone to gather a good amount and fill the barns and fix them in order to last three or four years. With this, I mean that he makes everyone to store all kinds of cereals: wheat, barley, birdseed, rice and others, and from all this, they pick a large quantity”.

By then, because of its size and population, China was already an economic power. A self-sufficient country, which its vast frontiers generated the necessary to keep the rhythm of it.

Nevertheless, in 2004, it wasn’t enough for China the good crops neither the stocks accumulation; that year, China introduced itself as a net food importer, a fact that happened again in 2008. Nowadays, China imports annually more than 47 thousand million dollars in food, four times of the total Chilean exports in this matter!.



In 2008, China imported US$ 50.000 MM in food, from which only US$ 335 MM came from Chile.
Source: TradeMap, Chile Customs.


Consumption has grown, boosted by a thriving middle class, that has more than 100 millions of people (six times all Chilean inhabitants) and which projection shows that by the year 2025, it will overcome the 600 millions.




Source: National Bureau of Statics of China; McKinsey Global Institute


Moreover, in 2004 China represented the 6% of the worldwide GDP. Previous projections indicated that by 2025 it would grow to 15% and by 2050 to 28%, beating The United States and leaving far behind The European Union and Japan.

Worldwide GDP Projections



Nevertheless, the financial crisis has accelerated this process. China has decreased its growth rhythm. But at an annual 8%, an unreachable target for many economies, even in prosperity times!

By this way, all these projections must be corrected, in fact, it has been already announced that in this year, minimum next year, Chinese GDP’s nominal value will overcome the Japanese one, a step that was foreseen for 2018.

China, as a worldwide power, is already here. The economic and political map rearrangement has already been produced. Where is Chile in this process? It’s true that, in the last eight years, our exports to the Asian giant have increased to the impressive average annual rate of 37,5%, but food participation is extremely low. For China, Chile is still a synonym of copper, because only the 3% of the total Chilean food exports is destined to this market.



Chile, an emerging alimentary power!


In 2008, the agro-alimentary industry exported more than 11.500 millions of dollars, consolidating itself as one of the areas more and better incorporated to worldwide economy, just behind mining.




Source: Banco Central, Foreign Trade Report


This impressive growth has placed us in number 17 of the worldwide food exporters ranking. The goal, as a country strategy, with the participation of the private and public sectors, is to duplicate, by 2015, the amount of food exports, placing us among the first ten exporter countries in this field.





*It doesn’t include Fish meal
Source: Banco Central, Chilean Food Projection, IGT Analysis.

Chilean business men exploit the wide climatic and seasonal variety to produce, with international quality standards, Premium products that have obtained worldwide recognition and a wide presence in European, North and South American traditional markets.

And, what happens with the most explosive growth market, which besides, because of its size, influences right away the worldwide numbers? Chilean food exports to China are less than 350 million dollars by year. Actually, Chile exports food to China at the same price that exports to Holland, a country with the 1.3% of the inhabitants that China has. From all the food that China imports, only the 0.7% comes from our country.

The food that Chile exports to China is the same to the one exported to Holland


But these markets are not the same



Here we find a huge opportunity gap. Not only because of the size of the Chinese market, but also because of the way the economic map is rearranging itself nowadays. The European Union, one of our main buyers of wine, fresh fruit and sea products, represented in 2004, the 34% of the worldwide GDP; according to conservative estimations, by 2050 it will be the 15%.

Our traditional markets are not the markets of the future. It is imperative to aim our sight to the East. There are already others there, and they have been there since a long time, like New Zealand, Australia and Spain, with a wide support from their governments. It is a strategic and economic option!.


Selling in China: from thousand-year-old barriers to the current challenge


The Chinese market is an opportunity, even in these present days with a crisis, like, most of all, for the future. But it also represents a huge challenge for our exporter industry.

We have the geographical distance and time zone differences: it will always be difficult to keep in touch with a business line that is in an opposite time zone.

There’s no doubt that the market’s size is attractive, but also frightening, because of the expectative to respond to high volume demands of any product.

But the biggest difficulty is in the large cultural differences, in the way of understanding business and in the personal relationships development. Different consumption tastes and styles, poor developed distribution nets and a high cultural complexity have caused that selling products to China to be a very hard job.

But globalization always operates in multiple senses. We not only find Chinese products in any part of the world; since a very few years, but quite quickly, the Chinese middle class in Shanghai and Beijing has been incorporating to its diet and consumption habits, western styles and products.


Adapting yourself to the Chinese market


The presence of many intermediaries and the persistence of deeply rooted habits for long time are facts that require, to achieve doing business in that market, patience, persistence and passion, as well as the willingness to invest lots of time in the construction of personal relationships.

But, most of all, it has to be clear that in order to succeed, you have to sell in China what Chinese people want and how they want it, as much as attractive that an own product could appear in other markets. 

The same thing is for company practices. It doesn’t matter how efficient is the model applied to export to other markets; in China you have to adapt yourself to the local uses, because it is a culture that privileges tradition and does not open many spaces for flexibility.

Therefore, is fundamental to maintain personal relationships in a systematic and regular way. This is what the Chinese people call guanxi, a friendly and knowledge relationship that is essential to close a business. It is most important than contracts and previous professional experience.

Because of this, you cannot do business in a distant way. You have to be there, to have a visible face that represents the company and to speak the language: many Chinese business men don’t speak in English and establish close relationships through interpreters is practically impossible.

And you have to accept long processes. The most millennial Chinese culture doesn’t have the western urgency sense in business fields, and negotiating during a long time, months, even years, is for them, a guarantee of perseverance and an insurance for long term relationships, the only viable relationships in this field.

With these difficulties, you can understand better the backwardness of the Chilean food industry in the Chinese market. There is isolated entrepreneurship, done at high prices and with results still limited, like the low amount of food exports to China proves.

Discover our Solutions and Services ,   Plans.