China: the grocery challenge

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When we talk about China, we tend to concentrate on the rapid growth in its manufacturing industry with companies moving production there from Europe or the US.

From a supply chain perspective, this has focused minds on getting components to the factories and moving finished products back to the big consumer markets of the West.

However, supply chain professionals are now facing a new challenge with the news that by 2014 China will overtake the United States the largest grocery market in the world.

A report by the Institute of Grocery Distribution suggests that in four years’ time, the Chinese grocery market will be worth £662bn, compared with £648bn for the US.

This prediction comes in the wake of the latest World Economic Outlook from the International Monetary Fund which projected real growth in gross domestic product of 11.44 per cent in China compared with 4.07 per cent in the US between 2009 and 2014.

The IGD, in its report 10 for 2010, reckons there are a number of reasons for this –  the US was hit harder by the recession than China;  investment and consumer spend has increased in China and private sector demand has been driven by the Government’s stimulus package; and over the next four years China’s population expected to growth twice as fast as the US.

The grocery markets in Brazil, Russia and India are also predicted to grow rapidly, outpacing countries like Japan, France and the UK.

This represents a substantial challenge – and an opportunity – for supply chain professionals to meet the rapidly growing demands of these markets.

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