China direct

One Belt One Road a boon for global halal supply

By RJ Whitehead

- Last updated on GMT

China’s US$1tr investment in its “One Belt One Road” (OBOR) trade strategy is expected to accelerate the growth of the global Islamic food market and make halal products much cheaper for consumers.

Spanning more than 68 countries and encompassing up to an estimated 40% of global GDP, China’s OBOR project will create a direct land-link through majority-Muslim markets in the Middle East, Africa and southern and Central Asia, where it could roll out an increase volume of halal products. 

China, with 26m Muslims, has a flourishing domestic halal industry and continues with efforts to strengthen its halal ecosystem. 

Mohammed Saleh Badri, secretary general of the International Halal Accreditation Forum, said: “Gaining credibility in the global halal food market is crucial for China to increase its presence​.

The country is already the highest exporter of modest fashion to Muslim countries and has a high potential in terms of catering to the rapidly increasing demand for global halal food market, which will cross US$1.7tr by 2021​,” he said.

China has also created infrastructure to support the halal trade, including the construction of halal food and supplies manufacturing hubs, such as the Wuzhong Halal industrial park in the Muslim stronghold of Ningxia, which has attracted 218 companies. 

In 2008, China formed Ningxia Halal Foods International Trading Certification Centre, its first halal foods certification project, which created the General Provisions of Halal Food Certification in March 2013. This gained approval by local certification authorities the following year. 

A credible halal food certification is crucial for China to develop trust in these products on a global level, though Beijing is yet to come out with national law or regulations for the industry. 

China continues to be the UAE’s top trade partner, with total bilateral trade exchange amounting to AED170.2bn (US$46.4bn) in 2016, much of which is for halal food, according to the UAE Ministry of Economy statistics. 

GCC countries import US$50bn worth of halal products, according to a latest research by Farrelly and Mitchell, a food and agri-business specialist. 

Raees Ahmed, organiser of the biennial Halal Expo, which will take place in Dubai later this month, said: “Chinese investment in the One Belt One Road initiative will definitely accelerate the growth of the global halal consumption as it will reduce the cost of mass production and overland transport costs across Asia, Europe, the Middle East and Africa​—the world’s largest halal market​.”

China’s halal sector is expected to reach US$1.9tr by 2021, having grown at a rate of 9% annually since 2015, according to research. 

China has a strong domestic demand for halal foods, estimated at US$20bn even though it's Muslim population stands at just 2%.

Halal foods are considered to be healthy and hygienic. A growing number of non-Muslim [Chinese] consumers prefer halal foods, as they are deemed safer. As a result, the distribution of halal foods has expanded beyond traditional markets in cities such as Shanghai which has 80,000 Muslims,​” Ahmed said. 

China is witnessing a growth in the number of national halal food players as well as partial halal product lines. In addition to demand from the Muslim population, growing popularity of halal foods as a healthy option is also driving demand​,” he added. 

More from China…

Palsgaard opens Shanghai emulsifiers application centre

Global emulsifier manufacturer Palsgaard has opened an application centre in China, where its bakery scientists will help customers test and develop new recipes for cake mixes based on the company’s Emulpals and Palsgaard SA ranges. 

New ice cream application facilities are also in place at the Shanghai site to test and incorporate  functional emulsifier and stabiliser systems in frozen dairy products, to achieve the desired mouth-feel, creaminess, melt-down properties and fat content. 

Additionally, the centre will provide solutions to protect products against the effects of heat shock, which is becoming a focal point for ice cream manufacturers to maintain quality once the product leaves the factory.

Chinese food manufacturers have been coming under pressure from consumers and regulators to place their emphasis on healthier, safer and more sustainable products, Palsgaard said in a statement. 

As a result, the emulsifier specialist has developed a strategy to boost its ability to supply this demand. 

The company believes that China offers rich pickings in attracting customers looking for sustainable, vegetable-based emulsifiers at a time when a corporate emphasis on food safety and sustainability has been creating new opportunities. 

Palsgaard has been offering application service to its customers via centres in Denmark, Mexico and Singapore for decades and, as it plays a big part in how we can support our customers, we are thrilled to be able to offer this service to customers in China as well​,” said Calin Shi, managing director of Palsgaard China. 

With our global set-up, our application specialists can easily exchange ideas with their counterparts on the other side of the world, using trends from Europe and the Americas to come up with new ideas for customers​.” 

Huhtamaki acquires IP’s Chinese paper business

Memphis-headquartered International Paper (IP) has announced the completion of the sale of its foodservice business in China to Huhtamaki Group for an estimated EUR15m (US$18m).

Huhtamaki, a foodservice packaging business based in Finland with 74 manufacturing units and 24 sales offices in 34 countries, acquired two manufacturing plants in Shanghai and Tianjin from IP. 

These employ some 200 people and make one-time-use food containers for restaurants and other retail outlets.

The Finnish company said before the completion that the deal would boost its position as the leading foodservice packaging provider in China by expanding its manufacturing footprint into the east of the country. 

"It strengthens our operations in China significantly, both geographically and from a capacity point of view, allowing us to serve our customers even better in the future,​" Its chief executive, Jukka Moisio, said. 

The product range of the newly acquired units is similar to those currently manufactured by Huhtamaki in China, including paper cups for hot and cold beverages, food containers and snack food and ice-cream containers. 

IP’s China business was worth US$22.8m in 2016 and will become part of Huhtamaki's Foodservice Europe-Asia-Oceania business segment.

"We have an ambitious growth strategy​," said Eric Le Lay, its executive vice-president, when the deal was announced in June.

"This acquisition consolidates our business in North Asia and offers good possibilities to boost our growth. In addition, with the footprint expansion we improve our coverage of the vast market of China, which is good for our customers​."

Related topics: Markets, China, Asian tastes


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