Kyrgyzstan eyes China as an export market
A major beef processor in northern China, Liaoning Luyuan Meat Industry Co, is one of several firms visited recently by delegations from lightly populated central Asian state Kyrgyzstan, which wants the Chinese firm to set up processing operations in the country, which borders China’s western frontier. Chinese poultry producer Huaying Agricultural Development Inc was also visited by the delegation.
According to a Chinese government statement on the visit, an official Kyrgyz delegation of agricultural officials and businessmen has been pushing Chinese meat companies to consider setting up operations to kick-start the meat industry in Kyrgyzstan, which has been a market for packaged Chinese meat.
Kyrgyzstan is mainland China’s biggest destination for beef, and is the third-largest market for Chinese exports of sheep or goat meat, as well as poultry meat according to Chinese customs data and Chinese research consultancy Converging Knowledge. Much of this meat product, however, is shipped onwards through Kyrgyzstan to other former Soviet states.
Now the country wants to position itself as a supplier rather than a customer for China. In addition, a frequent visitor to China, former prime minister of Kyrgyzstan Joomart Otorbayev, has exhorted producers to position themselves as high-value organic meat suppliers to China’s consumer market.
Luyuan, which operates feedlots and meat processing plants in north-eastern China, distributes its ‘YingFu’ brand of chilled packaged products around China, but the firm also claims to sell halal-compliant beef to (predominantly Muslim) central Asia as well as Middle Eastern markets like the United Arab Emirates and Kuwait.
Home to six million spread over nearly 200,000sq km, Kyrgyzstan has struggled to find its way economically after the end of the Soviet Union. The country remains dependent on imports, which are six times more than exports that totalled almost US$2 billion last year, with the bulk of imports coming from China.
According to Chinese records Kyrgyzstan imported RMB46.2 million-worth of Chinese meat products in 2014, the last year for which there are full figures. There is no indication that China is importing any Kyrgyz meat through formal channels.
Any move by Luyuan to set up facilities in Kyrgyzstan would make sense, according to Chinese government policy. The visit by the Kyrgyz delegation to Chinese processors comes as China’s government seeks to promote its One Belt One Road policy, which is a cornerstone initiative of current president Xi Jinping’s administration: it seeks to use Chinese money (a US$60bn fund has already been established) to build infrastructure to revive the traditional Silk Road, which ran through Kyrgyzstan and Central Asia, and in turn stimulate sales of Chinese goods along the route.
Formerly part of the Soviet Union, Kyrgyzstan remains under Russian influence but relies on China for imports and earns fees as a transit trade route into central Asia. Crucially, late last year Kyrgyzstan became a member of the Eurasian Customs Union (EACU), a free-trade zone that also includes Russia, Kazakhstan, Belarus and Armenia. That means manufacturers or processors based in Kyrgyzstan will be able to sell duty-free into a large section of the former USSR. However, membership of the bloc also means higher tariffs on non-member states like China.
Even as China ships processed meat products to Kyrgyzstan, Chinese trade officials were instrumental in the opening of a ‘Lanzhou Chinese Beef Noodles’ restaurant in the Kyrgyz capital of Bishkek in December. Meanwhile, the slowdown in China’s demand for commodities like coal and ore has led to a rush of interest in the country’s beef sector from countries feeling the pinch. For example, Mongolia, a major supplier of coal and copper to China, is now seeking to supply the country with meat.