According to a report from agribusiness bank Rabobank, China’s pork industry has begun a new cycle around mid-2022. It is expected to see less volatility in price and more government monitoring. The main drivers influencing this cycle include policies, new industry structures, sustainability demands, and consumer trends. This cycle will offer market opportunities to both local and global players, with considerable growth potential.

As local players adopt different business models, one key trend is companies are moving toward a more vertical integration to reduce the cost of production, stabilize the supply chain, and maximize value. The new cycle is considered to have a slightly shorter length compared to previous cycles. Where cost leaders were the survivors from the previous cycle, in the longer term, winners will be those who are not only cost leaders but are also able to integrate supply chains.

In 2022, the consumption of chilled and prepacked pork products saw an increase. Government organizations like the State Council, NDRC, MARA, and provincial authorities announced funding opportunities for cold-chain and “last mile” infrastructure to support the expansion of e-commerce generally and into rural areas, these policies will encourage an accelerated shift towards refrigerated meat. Consumers will continue to seek out the “fresh” or “warm” meat category products through e-commerce channels as an alternative to local community markets, which have become less common in China’s city centers.

Fresh or warm meat refers to slaughtered meat from hogs that has not been chilled or refrigerated. Historically, live hogs were transported from production areas in the northeast and southwest to consumption areas where they would be slaughtered. China’s planning and regulatory agencies have increasingly discouraged the practice of transporting live hogs for slaughter to limit the spread of animal diseases such as ASF. Regulations on the transport of live hogs are forcing consumers to shift towards chilled or frozen pork meat consumption. The regional differences remain the extent to which refrigerated meat has been accepted by consumers.

China is currently in a transitional period of economic and technological development; new trends, like convenience, are influencing consumer demand. In 2022, membership supermarkets continue to expand across China. The popularity of this retail format has encouraged Chinese retailers like Hema X, Yonghui, and Fudi to open similar membership-style supermarkets. These retail outlets are perceived as higher-end and typically showcase more imported products, including meat. In 2022, branded and imported meat purchases are expected to benefit from the growth of these stores.

In 2022, consumption of processed pork, including prepacked, partially, and fully cooked products, will keep increasing. In 2021, consumer demand for these products grew following COVID-19 restrictions as food delivery surged. For example, ham imports from Spain experienced significant growth in that year, imports of unboned ham and other cold cuts increased their value by 62%, whereas bone-in ham raised by more than double, 125%. Therefore, it is estimated that in 2022 the processed meat category, which accounts for roughly 20 percent of total meat consumption, will expand into second and third-tier cities as companies look to enter new markets.

This year the volume of imported pork products sold through e-commerce platforms will also increase as this new distribution channel supports growth and product differentiation for imports. Popular imported cuts include pork neck, bone-in-ham, and leg/ham hocks, among others.

Given the strategic importance of its pork supply, China will continue to import pork as an important supplement to its domestic supply. China’s domestic pork price controls may reduce the price advantage of imported products, but consumers’ demand drives purchases of imported pork products, and they will continue to expand the use of e-commerce platforms for at-home purchases. This is a good opportunity for imported meat products to utilize these channels to expand sales and amplify consumer awareness of branded or specialty products.