New laws put pressure on Chinese meat firms
Executives gathered for an annual forum in Qingdao last week, at a time when some of the country’s largest firms are coping with high levels of debt and have seen their share prices plummet. But most of the talking in Qingdao was on how to comply with a trio of new government laws put into force this year.
China’s new food safety law, entering force this week is the “toughest law ever” imposed on the nation’s meat industry, Chen Wei, the secretary general of China Meat Association, an industry lobby group, told media this week at the closing of the association’s annual conference in Qingdao, north-east China. The law will require “huge adjustment” from the meat industry to meet requirements on traceability, said Chen, particularly new requirements on labelling and traceability.
A new environment law has seen large-scale closures of farms and feed lots in several regions: this has tightened supply of livestock and poultry to meat firms and added costs in terms of costly remediation works on some farms by meat companies, some of which operate feed lots themselves. “There will be large costs in finding new land for farms,” explained an editorial in the Farmer’s Daily, a government-run daily publication.
A new advertising law, which kicked in from 1 September, is forcing companies to revisit their marketing budgets and strategies. The new law has promised to protect consumers by making food companies liable for false or misleading advertising – including nutritional claims for certain foods. Marketing campaigns that claim certain meats provide nutritional advances for infants, for instance, will have to provide scientific proof, according to a reading of the law posted on the website of China’s agricultural ministry.
Likewise, a leading Chinese meat company, like Grand Farm or pork leader Shuanghui, is no longer able to use the term ‘China’s largest meat company’. The new law has been very blunt in barring brands from using terms like ‘best’ or ‘biggest’ or ‘leading’, but a requirement for disclosure of feed and antibiotic input in meat labelling is proving very unpopular in the industry as it will be hard to enforce given much of China’s meat produce is sold in carcases, which are then cut to order in supermarkets and wet markets.
Online commerce is another focus of the new advertising law, compelling detailed disclosures of product inputs and origins in descriptions and adverts posted on e-shopping sites which now account for 12% of China’s grocery sales. This is significant given the country’s meat companies have spent large sums building up e-commerce systems and logistics. Many food companies have blamed investment in e-commerce and cold chain logistics for poor profitability in recent years.