China and France have agreed to improve the trade relations for agricultural products between the two countries. Market intelligence firm CCM helps companies to get a deep understanding of the Chinese agriculture market and therefore enables effective business growth in the second largest economy worldwide.

 

French President Emmanuel Macron and Chinese President Xi Jinping have met in China recently to strengthen the economic and political ties between the two countries. Besides more cooperation in the nuclear and aviation industry, the leaders also agreed to better trade relations regarding agricultural products. In general, the consent of the meeting promotes cooperation in emerging areas including agriculture and food, health and medical services, urban sustainable development, green manufacturing and finance.

During Macron’s visit in the middle kingdom, it became clear, that both nations are seeking more cooperation and free trade agreements to counter the uprising protectionism tendency in Trump’s USA. This includes France’s support of Xi Jinping’s One Belt One Road project, that seeks to reactivate ancient trade routes, also connecting Western Europe and China.

In terms of agriculture exports to China, French authorities have expressed their wish to open the Chinese market for beef products. China agreed to lift a 16-year-old embargo on French beef within the next six months. China and France support cooperation in the fields of modern agroecology and food processing. Considering that the opening of markets for safe and quality products is in the interest of both China and France, they reaffirm the importance of facilitating trade in agri-food products based on international standards while respecting respective national legal procedures and intend to continue to deepen cooperation on quality control.

Furthermore, industry leaders asked China to abolish non-tariff barriers to trade on wine and spirits, which represent 50% of French exports.

The Chinese side undertakes to grant approval to French pork and dairy products companies, particularly infant dairy products companies, which meet the requirements. China intends to continue its exchanges with the French side on the prevention and control of bird flu and to work to lift relevant embargo as soon as possible. China and France fully recognize the active role of the China-France Mixed Committee on Agriculture and Agri-Food in promoting agricultural cooperation and will hold its fifth meeting in 2018 in France.

According to French officials, China is France's leading commercial partner in Asia, but France's trade deficit with China reaches about USD36.2 billion. Macron, who will travel with representatives of large French companies, wants to secure new deals that would guarantee reciprocal market access.

An agreement could be already achieved when Chinese online retailer JD.com announced that they are planning to sell French goods worth 2 billion euros to Chinese consumers over the next two years, which are including the economical important wines and cognac. This is a breakthrough of French traders, considering that China is the largest e-commerce market in the world with a market volume worth more than USD1 trillion in 2017.

According to market intelligence firm CCM, trading agricultural products with China is a crucial business goal, as the country is counting to the worldwide top growers of wheat, rice, corn, soybean, and cotton.

The Belt and Road plan is an outstanding chance for Chinese enterprises to expand their exports to the countries, extend their supply chain, and realise export structural optimization.

China’s export volume of vegetable seeds by export destination, million tonnes, 2012-2015

Source: CCM

 

On 21 Dec., Heilongjiang Tianzhao Pig Industry Co., Ltd. (Heilongjiang Tianzhao) received 1,000 head of pigs from France. It is known that the company invested USD45.41 million (RMB300 million) in constructing a pig breeding project (farm) and introduced 1,000 head of pigs for breeding. The farm will produce 20,000 head of pigs including Landrace, Large White, and Duroc every year, which can satisfy annual demand from pig breeding in Heilongjiang Province. It is predicted that the project can create an annual sale and profit of USD45.41 million (RMB300 million) and USD9.08 million (RMB60 million) respectively.

What’s more, concerns in France have arisen, targeting the purchase of farmland by Chinese investors. For example, a Chinese company has acquired hundreds of hectares of cereal-producing farmland in central France in 2017, which has evoked public complaints and sorrows for food security in France.

 

China is working hard to secure food security by investing worldwide in food production, ensuring a famine like the country experienced in before the 70th that cost a million lives will never repeat again.

 

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If you consider doing business in the agricultural market in China, you need to know about the market situation and industry trends to find the sweet spots of investment.

CCM is China’s leading market intelligence firm in the fields of agriculture, chemicals, food and feed. Get insights into China’s hardly transparent market with CCM’s monthly Newsletter on China’s agriculture, including market dynamics, company developments, trade trends, and other newsworthy stories.

 

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