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Chinese meat major signs deal with e-commerce giant Jingdon

By Elsa Reed , 16-Dec-2016

Shuanghui said Chinese consumers increasingly shop online for food
Shuanghui said Chinese consumers increasingly shop online for food

Shuanghui, China’s biggest meat company, has signed a strategic cooperation agreement with Jingdong (jd.com), one of China’s biggest e-commerce companies, to develop a new sales and distribution channel supplying fine-cut chilled meat online.

The move follows up on a pledge from Wan Long, Shuanghui’s president, speaking at an industry seminar held in Xian, Shaanxi province, on 4 December, to boost his company’s sales through consumer interaction innovations.

Data from Jingdong suggested that e-commerce could be a lucrative approach for China’s meat sector, with meat and poultry product sales through its online platforms growing 594% year-on-year in November, the start of a key winter shopping season in the country. The company said its strongest online meat brands were Chinese beef major Hondo, Shuanghui and another beef seller Aoniubao.

Tang Yishen, manager of Jingdong’s fresh products branch, said in a Chinese language statement that Jingdong wanted to work with Shuanghui to “enhance meat product quality for consumers” as traditional distribution channels often have weak quality control, causing contamination and spoilage, increasing health risks for consumers.

Popular pork

Ma Xiangjie, vice-president of Shuanghui’s development division and general manager of the company’s fresh food product branch, added that Shuanghui would first sell only fine-cut chilled domestic pork on Jingdong.

Pork is likely to be a key seller as it remains Chinese consumers’ favourite meat, although 80% of purchases are based in cuts from fresh carcases slaughtered the same day and delivered to market, rather than chilled meat.

However, this segment is likely to grow fast as China becomes wealthier: in developed markets, chilled meat consumption is far higher, so the potential market for chilled meat in China is big, said a note from Shuanghui.

Wang Zenglin, the industrial analyst of China Investment Consulting Group, which advises China’s financial institutions and state-owned companies, agreed.

Speaking to GlobalMeatNews, he said: “Selling fresh food products online is like tapping a blue ocean of sales. Meat’s traditional selling channels are stores, supermarkets and agricultural wholesale markets. Agricultural wholesales market will gradually disappear, as more and more Chinese move into cities. And that proportion previously going to the wholesale market, will be sold online.

Of course, chilled meat sales will need an effective cold chain and Wang thinks highly of Jingdong and Shuanghui’s cooperation, because Jingdong has strong logistics, while Shuanghui makes quality products. They will have competition, though. Retailers Alibaba, Shunfeng and Suning all have plans to sell fresh food products online through their own platforms or by investing other e-commerce companies.

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