Ready for China
With AAK’s new factory in Zhangjiagang up and running, the company stands well
prepared to fully service one of the largest edible oils and fats markets in the world.
Insight met up with AAK China’s General Manager Weiyu Fan to discuss the potentials
and challenges in this highly competitive market.
AAK has been present in China since 2011 when a sales
office was opened in Shanghai. What is it that makes China
such an interesting market?
The Chinese market is one of the largest edible oils and fats
markets in the world with 30 million MT of total consumption.
We estimate that 5–8 percent of the total market can be
considered speciality or semi-speciality, for which the main
users are packaged food product manufacturers within
segments such as chocolate and confectionery, bakery,
dairy, nutrition, and foodservice. AAK’s broad global product
portfolio, innovative application know-how, and co-development
approach allow us to develop partnerships with key
customers in China and serve them with our speciality and
semi-speciality oils and fats products – a market that is still
growing at 10 percent a year in China. In addition, many of
AAK’s key customers in the US and Europe have come to
China to establish manufacturing bases. Our global partnerships
combined with our local teams have put us in a very
good position to serve these customers in China.
What is the potential in the Chinese market and within
what particular segments?
As the speciality and semi-speciality oils and fats market
grows about 10 percent a year, we believe the market
size will reach 3 million MT in five years. With the recently
adopted two-child policy and an expanding senior population,
the nutrition segment will grow even faster. The dairy
segment is also very interesting as Chinese consumers are
becoming more health-conscious and as the plant protein
drinks segment has seen very rapid growth in recent years.
The bakery segment continues to be very innovative with
new hot products hitting the market every year. With our
innovation focus, our newly inaugurated plant and its ability
to deliver tailor-made solutions with local taste and flavor
profiles, we are confident that we will grow our volume and
market share aggressively in this important segment.
What characterize Chinese consumer preferences and
how does this impact AAK?
China is moving from an emerging market to a more
developed market, especially with a growing middle class
in tier one and tier two cities. More consumers are looking
for higher-quality food products from their trusted brands,
focusing on better taste, food safety and health. Chinese
consumers are very sensitive to taste and flavor and will not
compromise taste for other characteristics. Therefore, AAK
must develop products that enhance the sensory experience
of local consumers. This means that we must understand the
Chinese preferences and develop innovations for local products.
Very few have succeeded in China by directly copying
a western food product into the Chinese market. Localization
is a critical step.
What is the competition like in China and how will AAK
position itself in the market?
China overall is a hyper-competitive market. The competition
in the oils and fats market is also extremely fierce. There are
quite a few established players, including local, state-owned
and multinational corporations with a much larger scale/
volume and multiple plants located in different regional
markets. Our way to success is to provide innovative and
value-adding solutions to our customers through our codevelopment