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Business Economics & Trade

Food industry buzz

Anyone who has ground his teeth on the imported golf balls that pass for strawberries in Hong Kong will be transported into a sensory delight munching on their Mainland cousins sold on the streets of Hangzhou or any other city near strawberry fields.

But, almost immediately, the astute muncher will wonder why it is he is denied such a pleasure in Hong Kong where imported berries from California and other places dominate the market.

The answer is that China lacks the processing and packaging resources to move its exquisite produce more than a truck farmer's run into the next town.

This is slowly changing. Latest food industry data indicates that the sector posted a year-on-year increase of 26.6% in the January-July period putting it in line for a FY 2004 increase of 20% over 2003. Much of the credit for this roaring growth, in the face of higher raw material costs, power shortages and other problems, is laid to improvements in the processing industry.

"The good performance is attributable to the country's enhanced efforts to bolster the agricultural sector's expansion, particularly supporting food processors," Wang Wenzhe, president of the China National Food Industry Association, told state media. "In addition, food firms have reacted and adapted themselves to match market demands."

According to the National Bureau of Statistics, China's food sector generated an industrial value of US$104.8 billion in the first seven months of this year, contributing nearly 10% of the country's total industrial value. Food firm sales topped US$101 billion, a 28.3% year-on-year increase in the January to July period.

Customs Administration data for the period also showed China food exports on the rise: they totaled US$10.69 billion, a 7.7% year-on-year increase. But there were more sobering customs figures for the food industry to digest: food imports had jumped 50.6% year-on-year, reaching US$11.47 billion, making for a food trade deficit.

Official hoopla over industry growth cannot disguise the fact that foreign competition is growing much faster and that China has to move at speed if it is to compete with the giants of the agribusiness world.

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