However, the high number of nausea-inducing food scandals is very much at odds with the rapid rise of China’s consumer class. China’s strong economic growth has resulted in a wealthier population, which in turn has increased levels of consumption. With increased purchasing power comes the demand for higher quality, and this is especially true in terms of food consumption.
While the government has already made some efforts to crack down on food safety, the public remains sceptical. After the tainted milk scandal, for example, there was a significant drop in domestic output of baby formula. The Chinese consumer made it clear that safety matters, and subsequently almost half of the country’s milk powder market has now been dominated by foreign brands, which are perceived as more trustworthy.
What this tells investors looking to cash-in on China’s changing consumer class is that reputable food suppliers are a pretty good bet. Reputable doesn’t always necessarily mean foreign though: One high-profile food safety scandal in China involved a U.S-owned meat factory operating in China that sold tainted meat to clients including McDonald’s, Starbucks, KFC and Pizza Hut.
|Aquatic Foods Group Plc seafood product
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