Convenience Food in China

Overview China’s domestic market is growing rapidly and is attracting many food companies around the world. Its huge market of 1.33b (World Bank, Jan 2011) is one of the reasons for many overseas food companies wanting to enter into this market. However, due to the complexities, companies willing to enter the food industry in China would need to understand the various distribution channels and buying power of the consumers before making any move in the market. This article below examines the various distribution channels available for food related products (FMCG) and the current purchasing powers of consumers residing majorly in 1st tier city like Shanghai in China. The article also illustrates the buying behavior and pattern of consumers residing in 2nd and 3rd tier cities like Chengdu to some extent.
Food Distribution Channel
There are various distribution channels available for entering the China market through distribution. Companies looking to establish the foothold in the China market via the local distributors can use this article as a starting reference point. This article might also be fruitful for companies who have already entered in the China market via a local China based distributor as it can help in understanding the various channels available in China and can help at the negotiation levels.
 According to research conducted by O&L Consultancy in Shanghai, the major Food Distribution Channel can be classified into 4 categories, Supermarkets such as Carrefour, Wal-Mart, Specialty stores such as “Friendship Stores” selling mostly overseas products, Convenience stores such as 7-11 & Family Mart and Local markets wholesale outlets.
 These days, local food market are losing their popularity in China, especially in the big cities such as Shanghai, Beijing and Guangzhou.(O&L field work, 2010) These markets normally only sell fresh vegetables, meat, seafood etc. from farms.
 Traditional Convenience stores such as “Mom” & “Pops” located in the