GRAB A BIGGER BITE

Multinational food companies who rushed into China following the country's entry to the WTO set up plants, sales dealerships and stores. They have stepped up mergers and acquisitions since 2010. Now, more and more foreign market players are exploring deeper into this food-loving country by establishing research centers focused on developing local products.

Nestle has established its third China R&D center in Dongguan, Guangdong Province following Beijing and Shanghai. Coca-Cola set its largest R&D center outside the United States in Shanghai and Kraft Foods located its largest biscuit R&D center in Asia Pacific in Suzhou.

Most food companies try to locate their own niche market. The General Mills Innovation, Technology and Quality Center mainly targets fresh food freezing techniques, taste studies and food safety, while Nestle's researchers focus on candies and icecream.

"This is a very competitive market with global competitors across all sectors. Food is very much culturally based and the only way to stay relevant is innovation and continuing to turn out tailored products based on insight of emerging consumer trends," said Powell.

SAFETY FIRST

While the market is enticing, health consciousness is growing. Food safety has become a "sword of Damocles" hovering over foreign food companies in China. Previous cases of contaminated milk, drinks and hormone-rich meat have stained several global food heavyweights.

"Chinese consumers are increasingly alert to food safety nowadays, and once there is a food safety issue, there is a crisis of confidence," said Meng Suhe, secretary-general of Chinese Institute of Food Science and Technology.

In late June, Chinese lawmakers considered revisions to China's food safety law. Tougher rules on food production, sales and supervision are on the horizon.

The proposed amendment increases the number of articles by 50 per cent. Manufacturers or operators who add chemicals other than approved additives may have their licenses revoked and face fines of up to 30 times the product value.

"In a global perspective, healthy, nutritional and convenient food is what most customers need and also the standard for food companies' operations," said Gary Chu, president of Greater China, General Mills.

"Food companies will face tougher challenges with the new revision, and it calls for their continued food safety technology advancement and enhanced cooperation with local watchdogs," Meng added.