China is a huge market, and this is almost every Australian’s knowledge. As the Year of the Ox is fast approaching, the Chinese beef import market is changing faster than Australians would like.
China's beef imports are quite diversified, and competition for beef market in China from various countries is fierce. The usual Chinese perception of almost anything Aussie means top quality, clean and safe, typically including wine, beef, health products etc, which have been working well, very much in Australian favour.
Import source country data from the Ministry of Commerce in China for 2019: Brazil (400,000 tons), Argentina (360,000 tons), Australia (280,000 tons), Uruguay (278,000 tons), New Zealand (190,000 tons), and the total of other countries combined (140,000 tons). Among them, in 2019, more than 50% of Uruguay's beef was exported to the Chinese market.
On December 10, Uruguay in South America, a country less than my home Hunan Province, with a population less than half of Changsha's -the capital city of Hunan Province, reached a live cattle trade agreement with China, which will increase the supply of 50,000 live cattle to China. Uruguay is the world's 8th largest beef exporter, with an average of 35,000 head of cattle per capita. The beef is of good quality and more affordable. As Uruguay has no free trade agreement with China, the current tariff is between 12% to 23%.
In the live cattle export market in Australia, Madam Freda Xie, one of the VIP memeber of Australia China Enterprenuers Club, has been pioneering the export. At least over 10 ACEC members were involved, and money invested in the export of such initiative, including, but not limited to the building brand of the new facilities in China since 2016 and the marketing and distribution of such beef. Unfortuantely, it seems to be so close now, but the success seem now more remote as the challenges seem to be growing.
But as Uruguay is the first South American country to sign “the Belt and Road Initiative” cooperation agreement with China, I don’t think it would surprise me if China would now consider Uruguay’s repeated request for a lower tariff, considering its current needs of diversification due to its tense relationship with Australia.
However, there is Mongolia, another more friendly and closer country, which did not request for any tariff reductions, but simply expressed the view that they could provide almost as much as what China wanted. In addition, A bunch of other countries have also expressed a strong desire about China's consumption upgrade market, they have been busy elbowing through various channels, determined to get a slice of a share of China's beef import market.
The 2021 is China's "Year of the Ox", and the "universal transfer" of the imported beef market is almost a certainty. A bit of worry for Aussie farmers.