Dao Foods has just launched its first alternative protein venture fund which aims to invest in 30 China-focused alternative protein start-ups over the next three years, but will be placing more focus on plant-based firms for the first phase as local consumers are still having trouble accepting the concept of cell-based meat.
“What we are looking for are firms that can make a significant impact, have a lot of potential from a business perspective, and have good scalability and lasting power in China,” Dao Foods Co-Founder Tao Zhang told FoodNavigator-Asia.
“This is just the first cohort, so although I do believe that cell-based meat is the future for protein security and in the longer term we will be looking at including these, this is not to say we will be doing so as early as Day One as the sector is so far away from commercialisation.
“There are currently many challenges involved here - we’re talking about intense scrutiny by the Chinese government for one, and also a lack of consumer acceptance so far.
“I’ve had consumers come up to me and describe the whole concept as being very ‘creepy’ – the common question is, if pork or beef can be developed in the lab, does this mean that the same can be done with human meat too?
“Also, China was embroiled in a genetic reengineering scandal not too long ago, plus the issue of GMO vs Non-GMO is still a very big issue locally, and consumers tend to relate these things to cell-based meat. So the acceptance is still not there, and a lot more education is needed before we can reach that stage.”
The genetic reengineering scandal mentioned by Zhang was that involving Chinese researcher He Jiankui who genetically engineered the embryos of a HIV-positive father and HIV-negative mother which resulted in the in-vitro birth of three genetically-edited ‘normal and healthy’ babies in 2018. The whole affair is still shrouded in secrecy to this day, leaving much to guesswork by the public.
When asked about recent calls at a top-level government meeting to develop a national strategy for cell-based meat in China, Zhang said that the proposal did take place, but this does not mean it will materialise very quickly.
“This will still need to get high-level approval and support before being turned into policy, and definitely will take time,” he said.
“It does make sense for the government to pay more attention to alternative protein and pour resources here from a food security perspective though – we’ve mostly reached grain security after putting in so much work and using science and tech, so now it’s about time to also look at the more concerning issue of protein security, which is something China cannot afford to lose sight of and is actually a harder challenge to meet.
“For us though, we will wait for the right timing to bring in cell-based meat firms, and probably also look to the West to learn from any commercialisation success there first.”
Dao Ventures has already selected its first four plant-based ventures to support for the first cohort: Fresh Foods (plant-based yoghurt and dairy), Raw Plant-Based (organic plant-based smoothies), Wowfoods (functional plant-based protein drinks for children) and Kitchen 70/30 (plant-baed takeaway food), and all of these are based in China.
“We are committed to focus on the China market and making sure that products made meet China consumers’ tastes so are looking local first – we are not ruling out cross-border ventures with China as a main focus, but local start-ups will be our focus for the first one or two cohorts,” said Zhang.
“Definitely, if your firm is doing something good and appealing to the local market, and there is no one else in China doing that, we’re interested, but the thing is that we want to make sure the selected entrepreneurs get to benefit from the value-add our incubator can provide in addition to the capital, such as the mentoring, and it might be harder for non-local entrepreneurs.”
He also emphasised the importance of making good and appealing products if the plant-based industry ever hopes to go mainstream.
“The plant-based industry is still very nascent in China, and a lot more education is needed, but this cannot be done by NGOs – it must be done by the entrepreneurs, the product owners, and needs to be backed up by good products with good taste, price point and accessibility,” said Zhang.
“Chinese consumers are particularly discerning when it comes to food, and have much higher standards that they will not compromise for things like the environment or animal welfare – it’s not that they don’t care, but more like it’s not as high on the priority list.
“A lot of locals currently still feel there is no need for an alternative to animal protein as sustainability motivations do not resonate so well here, and the culture here is also very much to be balanced in terms of meat and vegetarian dishes – so it’s going to be a challenge.”
At present, the idea to overcome this is to conquer the young millennial demographic who is still willing to try new things as opposed to the more senior consumers, and to work on the health and wellness angle.
“The younger consumers will try these new things, but whether or not they become repeated users, that is up to the entrepreneur to make a product that makes them feel cool, sexy, healthy – anything to bring them back,” said Zhang.
We’ll be shining the spotlight on Plant-based Innovation in our Growth Asia 2020 interactive broadcast series, where Tao Zhang will be joining us for a panel discussion. Register for free here to see more of his insights into alternative protein in China.