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The Chinese middle class is booming and the imports of foreign products reach higher levels.
I’ve written a number of guides, covering some of the most popular food products imported to China, for example, wine, meat, health supplements, and more.
Many believe that the olive oil market is small in China, in a way it still is, and will continue to grow much. Just giving you a number, from 2015-2016, Spain alone exported an impressing number of 32,100 metric tons of olive oil to China.
Before you start to export, or establishing contact with Chinese importers, it’s important that you understand the market a bit more in detail, what regulations that apply, how you should sell your products, and more.
In this article I explain the basics if you plan to export olive oil to China.
China’s olive oil market
The Chinese market has started to appreciate foreign olive oil for various reasons during the past years. Even if the global consumption of olive oil has decreased, it actually increases in China. With double digits annually.
Yes, olive oil is here to stay, and many predict that we’re set for a boom in the coming years, as the younger generation takes over and the Chinese look for healthier options to domestic oil products.
Chinese companies not rarely lack trust among local consumers, something that’s especially true for oil.
I was living in Shanghai myself some years back when reporters started writing about how everything from corporations to high-end restaurant used so called ‘gutter oil’, referred to as di-gou-you in Chinese (地沟油).
Simply put, gutter oil refers to oil that’s collected from kitchen drains, sewers, and more, purified and resold to customers. Thinking that you’ve probably consumed a couple of liters of gutter oil makes your stomach turn.
Not only do the Chinese buy imported olive oil due to previous food scandals, they also see it as a good replacement for local oils, for example soya bean oil, that doesn’t bring as many health benefits.
Not to forget, with increasingly more Chinese people that appreciate foreign food, especially salads, imports of olive oil will most likely increase over the years.
Countries like Turkey, Spain, Italy and Greece also have favorable climates for producing olives, something that can’t really be found in China.
Even if Gansu and Sichuan are some of the main producers, these provinces can’t keep up with the production volumes available in Southern Europe, for example.
From which countries do the Chinese buy olive oil?
The by far most imports are coming from Spain, that covers more than 80% of the market.
Italy is on the rise too, claiming 10-15% of the market. While Spain has seen decreased exports of olive oils, some countries actually see increases, for example Italy, Turkey and Greece.
80% of the olive oil is consumed in first tier cities like Shanghai and Beijing, probably this doesn’t come as a surprise as these cities are more developed, with people who have more money and a stronger desire to try out Western products.
Why does Chinese people buy olive oil?
Many Chinese starts to appreciate foreign food, but in a majority of the cases, the Chinese buy olive oil as gifts.
It’s a common practice to give more luxurious and expensive presents to friends and relatives.
The branding and packaging is therefore highly important and will determine your sales success.
Which olive oils are most popular?
Research show that extra-virgin oil is most popular, which is generally more expensive compared to refined olive oil.
Hence, selling a more high-end and expensive oil brand can be successful and doesn’t necessarily need to be a bad thing.
Selling more pricey products can be beneficial if you go for a cross border strategy online, as logistics cost tend to be rather high (more about cross border sales later).
Olive oil prices in China
Olive oil is comparably expensive to other oils in China, something we see in many other countries as well.
While you can find Chinese brands selling olive oil from countries like Spain or Italy, many customers get ‘tricked’ as that these oils often just contains some percentages of oil, the remaining part contains of other, cheaper oil products.
Imported olive oil from Spain usually costs everything in between RMB 70 up to RMB 200 per liter, something that Chinese are willing to spend. You can also find more high-end oil, with a higher price tag.
Olive oil prices averages at RMB 98 (USD 16.1) per liter, which is significantly higher than the remaining cooking oil market, which averages at RMB 17.
Import regulations for olive oil in China
Olive oil is edible and consumed by humans. If you sell the traditional way in-country, you’ll need to comply with a number of Chinese standards, register with local authorities and receive the necessary certificates.
Below I’ve included some of the main steps you need to manage, before selling olive oil into China:
1. Check that you’re allowed to export olive oil from your country of manufacturing
As an initial step, you should confirm that your country of manufacturing has a signed protocol with the Chinese government, allowing you to export your olive oil into China.
Americans were long prevented from importing beef from the US into China, due to a problem with mad cow disease that evolved in Washington years back.
2. Register your company with AQSIQ and SAIC
AQSIQ (General Administration of Quality Supervision, Inspection and Quarantine) is responsible for company registrations and the imports and exports of products out of China.
When registering with this authority, you’ll be requested to provide a number of documents, like test reports, HS codes, information about your company, and more.
The registration can be made directly on AQSIQ’s website.
You also need to register with SAIC, which will prove that your Chinese importer holds the relevant import licenses and is allowed to import the oil.
3. Register with the customs
The importer should register at the customs, in China referred to as GAC (the General Administration of Customs).
This is a common practice in Western countries as well.
4. Product testing
You should prepare test samples, to be sent to a designated test laboratory, preferably inside China. Some companies who offer lab testing services include Asiainspection and CIRS.
The test company can quote you prices and inform you how the products should be sent, what GB-standards you need to comply with, and more.
Can I sell olive oil online in China?
If you plan to sell online in China, you have two main options:
a. You sell the products both in-country and online. Selling in-country and on websites like Tmall will give you exposure to around 550 million consumers.
b. You sell via cross border e-commerce, on websites like Tmall Global, and avoid lengthy registration processes, and enjoy lower costs. This can be a good option to try out the market at a start, it’s a fast track to the Chinese market.
Even if the second option only gives you exposure to around 100 million consumers, it can be recommended for companies that are less experienced in the Chinese market.
Is it sustainable to sell olive oil via cross border e-commerce?
Sure, cross border e-commerce can be a very successful business model, there are many companies that have succeeded immensely this way.
But the Chinese government has started to clamp down on cross border sales, due to issues with everything from salmonella contaminated and expired products.
China has also introduced a so called Positive list, which includes 1142 product categories that can be imported cross border. The positive list has been postponed three times, currently until the end of 2018, it’s still unclear what will happen after that.
Fortunately, olive oil is included in the positive list, falling under the following tariff codes and descriptions:
Virgin olive oil
Refined olive oil
Other olive oils
Just keep in mind that regulations can change fast, and the cross border industry is not much regulated. Keep yourself updated in terms of labelling requirements, authority registrations, lab testing requirements, and more.
Olive oil is becoming increasingly popular in China, where Spain is the biggest exporter, contributing for more than 80% of the market.
Still, countries like Italy, Greece and Turkey see increased sales of olive oil in China.
Selling via cross border e-commerce is easier and less costly compared to traditional imports, as you won’t need to register with local authorities, provide test reports, comply with GB standards, and more (at least as nor now).
The Chinese consumers mainly prefer extra-virgin oil, pricing your products at a higher level might not necessarily be a bad thing. Especially as cross-border sales tend to have high logistics costs.
Luckily, olive oil is listed in the Positive list, which allows imports of 1142 different product categories into China. Still, it’s not clear when, and if, this list will be introduced.