The chief of China’s retail organisation has predicted food retailers and suppliers will adopt safety certification-based assessment systems to adapt to leaner demand as the country’s economic growth slows.
Speaking at a Global Food Safety Initiative (GFSI) conference in Beijing, Pei Liang, secretary general of the China Chain Store and Franchise Association (CCFA), said food businesses would view such programmes as a good way to improve operating efficiency. “Many of our retail members are seeing revenue growth in 2012 slow down to single digits and some have even experienced negative growth.”
Pei said senior members of the CCFA are complaining of high rent and labour costs and are responding by increasing local sourcing and launching own-brand lines. This tougher market is prompting investments in new food production and handling technology and is an “opportunity to adjust”, he said.
The secretary general said his group is promoting the use of standards such as GFSI to improve supply chain efficiency, while saving on compliance costs. “The number of [China food] enterprises recognising GFSI however is very limited,” he warned.
Market fragmentation is one reason. While a new wave of Chinese convenience retail chains are growing fast, the top 100 have only a 10% share of the market. Because net profits are low at 3-5%, low cost sourcing has been important said Pei, and this can encourage companies not to make food safety a priority, he warned.
The GFSI is a global food industry initiative launched in 2000 after a number of food safety crises hit consumer confidence.