Russia & China: the perfect food partners?


China’s rapid rise to soaring economic heights has put it front and centre of the global food trade.

Russia is reaping a lot of benefits, food-wise, from its southern neighbour; not just in imports, but exports too.
 

Sino-Russian trade ready to rocket


Russia is just shy of the world’s top ten economies, while China slots into second place with a GDP of approximately $11.2 trillion (roughly ten times the size of Russia’s own economy). Between them, both nations have exceptionally deep pockets. Trade is subsequently poised to rapidly expand between the pair. It’s estimated bilateral trade could reach a new high of $80 billion by the end of 2017. Both partners’ mutual economic activity grew 21.8% across the first six months of this year, demonstrating the healthy appetite for goods from each country.

One product group bringing China and Russia together is food and drink. Both states are huge producers of foodstuffs, and are massive import markets too. For Chinese exporters, however, Russia’s ban on imports of major products (i.e. fruits and vegetables, meat, and seafood) from the EU and US has played right into their hands. Russia has had to look elsewhere to secure supplies of such items – and China has been one of the nations able to fill market gaps.

Russia’s $1.8 billion import market for Chinese food China’s food exports onto the Russian market have been steadily growing year-on-year, but have been given a bump by the Russian embargo. If we examine 2016’s statistics, we can see a 17.5% rise in the value of goods sent to Russia for a total of $1.8 billion. 2016 Data from the MIT Atlas of Economic Complexity global trade database gives a solid overview of China’s most popular products for Russian buyers – and the huge sums being tossed around on imported Chinese food and drink:

• Fruits & vegetables (incl. non-processed produce) - $902 million
• Foodstuffs (incl. processed fruits, vegetables, juices, sauces, seasonings, fish & meat) - $736 million
• Animal products (incl. non-processed meat & fish) - $215 million

Big bucks to be sure, so let’s take a slightly more granular approach toward what individual agriproducts are proving big draws for Russian buyers.

For fruits and vegetables, the most in-demand varieties are those that Russia, thanks to its climate and underdeveloped agricultural sector, cannot currently grow enough of to suit domestic needs. Citrus fruits, for example, such as oranges, mandarins, and lemons, generated $162 million in revenue for Chinese producers in 2016. Tomato exports, no doubt fuelled by Russia’s restriction on Turkish produce exports, amounted to $86.6 million. Processed tomatoes represented a further $71.2 million in exports. Seafood is another area where China is clearly establishing a strong market presence in Russia. Its 2016 exports of fish and seafood, including processed, frozen, and fresh options, totalled $348.2 million. This is interesting, given Russia is also one of China’s biggest seafood suppliers. It seems the bounty of the sea holds great business potential for these neighbouring countries.

And there is tea. China’s relationship with tea is millennia old - but Russians are obsessed too, being Earth’s fourth largest tea drinkers. Fittingly, China is also Russia’s fourth largest supplier of tea, exporting $47.7 million worth in 2017. Fruit juices also perform solidly in Russia for Chinese companies, with revenues of around $55 million in 2016. China overtakes Turkey as Russian food’s chief buyer As we’ve seen, Russia is a keen buyer of Chinese foodstuffs. China, it seems, is also a big fan of Russian produce. In fact, it has overtaken Turkey as the world’s chief importer of Russian food and drink.

According to Russia’s Federal Custom Service (FCS), China imported food items worth $1.13 billion from Russia in 2016 – 22.1% more than the previous year. China’s furiously expanding middle class, expected to be over 550 million people by 2022, is a chief driver behind rising food imports, due to having more disposable income and a taste for international cuisines. They have more cash to splash than some members of Chinese society, and this is feeding into more imported food entering the country.

Frozen fish accounts for 60% of Russia’s exports to China. In 2016, China purchased frozen seafood worth $530.9 million from Russian suppliers. Next up on import manifests, and respectively covering 8.4%, 7.9%, and 4.1% of Russia’s total exports, were soy, sunflower, and soybean oils – likely destined for China’s monumental food processing industry. Fruit juices have been performing well too, with exports tripling in 2016 to hit $1.3 million. A comparatively small export value, but triple growth over 12 months is exceptional.

Russian wine exports to China, greatly expanded too – by 3.8 times – reaching $1.8 million. Ice cream sales were five times higher in the review period, achieving an export value of $4.2 million. The mutual food and drink trade between both China and Russia highlights their closer economic relationship. And, with Russia’s food sanctions not going anywhere soon, its $25 billion food import market remains very enticing for Chinese companies on the hunt for new markets. For both Russian and Chinese businesses, WorldFood Moscow is the perfect interaction point.
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