Fast-Rising Import China-Growth of imports improving prospects for foreign wine, beer and spirit producers

Imports China

Imports China
Imports China

Fast-Rising Import China-Growth of imports improving prospects for foreign wine, beer and spirit producers

China Import Boom

China is considered an exporting powerhouse and sees Growth in Imports in 2021. With new patterns and changing behaviour, it is hardly shocking that growth is expected to continue, despite a slight decrease of 0.9% in US imports due to Covid-19 in March.

Growth In China's Imports

Growth in China Imports is driven primarily by demand for commodities and consumer goods.

As Chinese consumers grow richer, their demand for higher quality products and services is also growing. Many are looking for foreign products because of continuing concerns among the Chinese about protecting domestically manufactured goods.

Imports of Alcohol Consumption China Development

Especially true for alcohol consumption in China, many foreign countries import what they have to sell. Foreign brands constantly take market share away from existing domestic brands in spirits, beer, and wine. With this tremendous growth potential, Mersol & Luo implement localised expertise to achieve forward-looking strategies and avoid common risks and challenges to importing China into a worthwhile company.

In certain respects, the Government is leading to this development, as it is constantly reducing the rate of VAT, duties and tariffs on international products. VAT is decreasing, and the Chinese Government is showing a wider tendency to reduce the cost of manufactured products. Countries with which China now has free trade agreements—will profit more from this.

Opportunities for Wine, Beer and Spirits Producers in the Growing Market

Imports China – Wine

Fast Rising Import Growth in North Asia

Wine is the most common form of Alcohol in China, with the country being the largest importer in the world. According to Chinese customs, 745.8 million litres of Alcohol were imported in 2017. The wine culture, which includes knowledge and understanding of wine, is growing, especially in large urban areas, although on a relatively low basis.

While France remains the single largest wine import source, this is changing rapidly as local customers grow accustomed to the quality and varieties of other regions and exporting countries, such as Chile, which benefit from free trade agreements, allowing higher price competition.

Imports China Growth In Alcohol

Imports China – Spirits Growth of imports

Spirits face tough competition from the nearby fiery spirit of China, Baijiu. Brandy accounted for 75% of all imported liquors in China in 2018, but other hard spirits have made massive inroads in the last few years. The number of brandy imports reached more than US$1 billion, a rise of 20.6 per cent from 2017. Whisky imports enjoyed a 27.6 per cent rise in value, while vodka and rum imports were worth US$16.7 million and US$7.9 million, respectively.

Imports China – Beer

Fast Rising Import Growth in North Asia

China is the world’s largest beer market, with an annual intake of 46 billion litres. In terms of capacity, beer dominates the country’s total alcohol market, accounting for 75% of alcohol consumption. Growth in imports has also doubled in digits over the last five years, mostly dominated by European brewers such as Belgium and Germany.

Demand for different mass and craft beers is rising as Chinese consumers—usually young and urban—have developed a taste for IPAs, stouts and other traditional and new varieties and flavours. Imported beer to China has seen a steady increase in sales volume and value over the last five years.

Tapping on China’s Growing Consumer Market

All of these points to an enormous opportunity for international wine, spirits and beer makers, as China’s drinking culture changes from conventional swill to fresh, innovative, more aromatic and better-quality alcoholic drinks. While large urban areas – such as Shenzhen and Shanghai – are leading the way in the adoption of new trends, smaller cities have also begun to follow – Both are major potential markets for producers of all sizes searching for their next (or first) export market opportunity under the guidance of Mersol & Luo.

The key to successfully tapping, expanding and successfully importing Alcohol to China is always to find the right partners, such as Mersol & Luo, who understand the market, who can properly locate your branding and marketing strategy.

Imports China – Australia 2020

Export of goods to China

The overall value and growth of products exported to China-driven exports of resource commodities, particularly metal ores (mainly iron ore) and coal. In 2019-20, the export of iron ore accounted for 56% of all Australian products exported to China and was a major driver of exports between 2014-2015 and 2019-20.

After the start of the China-Australia Free Trade Agreement (CHAFTA), there has been a major increase in exports of other goods, including meat (in particular beef), medicinal and pharmaceutical products, and beverages (in particular red wine).

 

 

Imports China - 2020 Australia| USA

Imports China – Australia 2020

Export of goods to China

The overall value and growth of products exported to China-driven exports of resource commodities, particularly metal ores (mainly iron ore) and coal. In 2019-20, the export of iron ore accounted for 56% of all Australian products exported to China and was a major driver of exports between 2014-2015 and 2019-20.

After the start of the China-Australia Free Trade Agreement (CHAFTA), there has been a major increase in exports of other goods, including meat (in particular beef), medicinal and pharmaceutical products, and beverages (in particular red wine).

Imports China – From January 2020 to July 2020

China Imports of Australian goods at the beginning of 2020 were reduced by 17 per cent and 12 per cent in January and February 2020, respectively, with decreases in exports of iron ore (lumps and fines) in line with supply disruption caused by Cyclone Damien.

From March 2020, exports to China rose to $12.7b, up 32 per cent in February, mainly driven by exports of iron ore. Exports to China remained strong throughout April, May and June, with record-high exports of iron ore to China in June 2020, adding to China’s second-highest exports of products.

Off the back of the June 2020 high, July 2020 exports declined, down 17%, with declines in exports of metalliferous ores (largely iron ore) and coal. Year-on-year, exports to China decreased by 16% in July 2020.

China’s People’s Republic

U.S.-China Business Information Summary

  • In 2019, China’s GDP was projected at $14.1 trillion (current market exchange rates); the actual GDP was estimated at 6.1 per cent, and the population was estimated at $1.4 billion. (Source of the IMF)
  • US goods + services trade with China amounted to an estimated $634.8 billion in 2019. Exports amounted to $163.0 billion; imports amounted to $471.8 billion. The US trade deficit with China for goods and services amounted to $308.8 billion in 2019.
  • China is currently the US’s third-largest trading partner for goods, with $558.1 billion in overall (two-way) trade in goods during 2019. Exports of goods totalled $106.4 billion; imports of goods totalled $451.7 billion. The US trade deficit with China was $345.2 billion in 2019.
  • Trade-in services with China (exports and imports) amounted to an estimated $76.7 billion in 2019. Services exports amounted to $56.5 billion; services imports amounted to $20.1 billion. The US services trade surplus with China amounted to $36.4 billion in 2019.
  • The US Department of Commerce reporting, US exports of products and services to China provided an estimated 911,000 jobs in 2015 (the latest available data), with 601,000 jobs supported by goods exports and 309,000 jobs held by services exports.

Exports 

  • China was the third-largest export market for products in the United States in 2019.
  • US goods exports to China in 2019 amounted to $106.4 billion, down 11.5 per cent ($13.8 billion) from 2018, but up 53.2 per cent from 2009. US exports to China have increased by 455 per cent since 2001. (pre-WTO accession). US exports to China accounted for 6% of US exports in 2019.
  • The leading export categories (2-digit HS) in 2019 were: 
  1. electrical machinery ($14 billion); 
  2. machinery ($13 billion); 
  3. aircraft ($10 billion); 
  4. optical and medical equipment ($9.7 billion);
  5. Vehicles ($9.1 billion).
  • US exports of agricultural products to China totalled $14 billion in 2019, the third-largest agricultural export market in the United States. The leading domestic export categories include
  1. soya beans ($8.0 billion), pork and pork products ($1.3 billion);
  2. cotton ($706 million);
  3. tree nuts ($606 million); and
  4. Hides and skins ($412 million).
  • US service exports to China were projected at $56.5 billion in 2019, 0.9 per cent ($523 million) lower than in 2018 but 231 per cent higher than in 2009. They’ve been up about 952 per cent since 2001. (pre-WTO accession). The leading exports of services from the United States to China included travel, intellectual property (industrial processes, trademarks) and transport.
 

Imports China - 2020 Australia| USA cont'd

Imports 

  • China was the largest source of products imported by the United States in 2019.
  • US imports of goods from China totalled $451.7 billion in 2019, down 16.2 per cent ($87.6 billion) from 2018 but up 52.4 per cent from 2009. US imports of goods from China rose by 342 per cent from 2001 onwards (pre-WTO accession). US imports of products from China accounted for 18.1 per cent of the total US imports in 2019.
  • The top import categories (2-digit HS) for 2019 were: 
  1. electrical machinery ($125 billion); 
  2. machinery ($92 billion); 
  3. furniture and bedding ($27 billion); 
  4. toys and sports equipment ($25 billion); 
  5. Plastics ($18 billion).
  • US imports of agricultural products from China totalled $3.6 billion in 2019, making China the 6th largest agricultural import supplier to the United States. The main categories include
  1. refined fruit and vegetables ($787 million);
  2. snack foods ($172 million);
  3. spices ($170 million);
  4. fresh vegetables ($136 million); and
  5. Tea, like herbal tea ($131 million).
  • US imports of Chinese services were valued at $20.1 billion in 2019, 5.4 per cent ($1.0 billion) higher than in 2018 and 111 per cent higher than in 2009. It’s been up about 463 per cent since 2001. (pre-WTO accession). Leading imports of China’s services to the United States is in the trade, travel and research and development industries.

Trade Balance

  • The US trade deficit with China was $345.0 billion in 2019, down 17.6 per cent ($73.7 billion) from 2018.
  • The United States had an estimated $36 billion trade surplus in services with China in 2019, down 4.1% from 2018.

Investments

  • US foreign direct investment (FDI) in China (stock) amounted to $116.2 billion in 2019, up 6.3 per cent from 2018. U.S.-based FDI China is led by manufacturing, wholesale and finance insurance.
  • China’s FDI in the United States (stock) amounted to $37.7 billion in 2019, up 12.3 per cent from 2018. China’s FDI is the leading wholesale exchange, processing, and depository institution in the US.
  • Sales of services in China by majority U.S.-owned affiliates amounted to $54.9 billion in 2017 (the latest available data), while sales of services in the United States by the majority of Chinese-owned firms amounted to $18.0 billion.

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