Start-ups and incumbents battle for China’s meatless future

4 min read
A supermarket advertises produce in Shanghai on March 22, 2019. (Image credit: TechNode/Cassidy McDonald)

This article was co-authored by Lucía Wei He.

According to a widely cited estimate by the OECD and UN Food and Agriculture Organization, China consumes 28% of the world’s meat and over 50% of its pork. Driven by economic growth and higher incomes, meat consumption has increased from 30 pounds per capita in the early 1980s to nearly 140 pounds today. The surge in demand for animal protein has made China highly reliant on agricultural imports such as beef and soybeans, which are used to feed pigs. At the same time, domestic meat production is placing significant stress on the country’s environment and natural resources. As a result of a swine epidemic outbreak that began in late 2018, China could lose up to one third of its pig population, which may increase domestic pork prices by 70%. Although Chinese companies have been producing “mock meat” for decades, a new generation of start-ups are leveraging innovations in technology and marketing to challenge market incumbents and broaden the appeal of plant-based protein.

Beyond Beyond Meat

Beyond Meat, a Los Angeles-based producer of plant-based burgers and sausages, listed on the NASDAQ stock exchange on May 2 and saw its share price jump 163% on the first day of trading, making it the world’s best performing IPO since 2008. Impossible Foods, a rival burger-maker also based in California, recently raised $300 million in financing with the backing of Hong Kong magnate Li Ka-shing. Both companies have successfully launched in Hong Kong and have their sights set on the mainland. San Francisco-based JUST, backed by Peter Thiel and valued at $1 billion, is already selling vegan mung-bean “eggs” on a number of Chinese e-commerce platforms including Tmall.com and JD.com.

It’s not only companies from the Golden State that are innovating in the space or that see a huge opportunity in the Chinese market. A growing number of Asian players are seeking to create innovative meat substitutes that are uniquely tailored to local palates and culinary traditions. The flagship product for both Beyond Meat and Impossible Foods is a burger patty—hardly an Asian dietary staple. This probably explains the duo’s decision to first launch in Hong Kong and Macau, where there is stronger Western culinary influence.

Asian contenders in the meat substitute space include Omnipork, a product made from soy, pea, and mushroom protein that seeks to replicate the texture and feel of real pork. Created by Hong Kong-based Right Treat, Omnipork is meant to be highly versatile as a cooking ingredient (for steaming, pan-frying, and dumpling filling). In addition to Hong Kong, the product is already available in Singapore, Taiwan, and Thailand, with plans to launch in mainland China later this year.

Cellular agriculture is another area of innovation. Meat cells are grown in a controlled environment using tissue engineering, eliminating the need for animal slaughter. Like their plant-based counterparts, a number of companies are developing products specifically tailored for the Asian market. Avant Meats, also based in Hong Kong, is currently testing a cell-based fish maw (swim bladder) prototype, although a commercial product will not be ready for at least several more years. Singapore’s Shiok Meats seeks to use cell-culturing to eventually grow crustaceans such as shrimp. Some argue that Asia is a more likely early adopter of cultured meat, due to favorable regulation, wider consumer acceptance, and strong manufacturing capabilities.

Not so new for China

Plant-based meat substitutes have been part of Buddhist cuisine for centuries, and Chinese companies have been producing “mock meat” on a commercial scale for decades, if not longer. Although data is scarce, a recent report by the Good Food Institute (GFI) estimates that sales of plant-based meat in China reached $910 million in 2018, on the back of annual growth of around 15% since 2014. GFI’s figures include sales of “traditional” vegetarian products, which are explicitly intended to replicate meat and often cater to religious customers, including plant-based versions of seafood, duck, beef jerky, and lamb. They exclude tofu and other soy-based products that are prevalent across Chinese cuisine but are not sold as meat substitutes. In short, plant-based meat in China has had a totally different market positioning and customer base compared to Western counterparts such as Beyond Meat and Impossible Foods, which according to the GFI authors have created a “2.0” product that is much more successful in replicating the experience of eating real meat.

According to local media reports (Chinese link), the three largest domestic plant-based meat players are Shenzhen Qishan Foods, also known as Whole Perfect Food in English; Suzhou Hongchang Foods, recently rebranded as Hong Chang Biotechnology; and Ningbo Sulian Foods. Historically, these companies sold their products mostly to religious establishments such as temples and monasteries, and they have only recently begun to reposition their businesses to appeal to a broader audience.

This change has been driven in part by the recent success and publicity of Western companies, which has created significant interest in China: following Beyond Meat’s IPO, there was a surge (Chinese link) in the share prices of several domestic companies that are tangentially related to plant protein. Some observers believe that Chinese incumbents lack the innovation and marketing capabilities to successfully transition from traditional food manufacturers to successful ‘2.0’ plant-based protein players. Even so, Qishan Foods scored a major victory earlier this year, signing a partnership agreement with Wal-Mart to develop and distribute plant-based meat products for the Chinese market.

In spite of China’s longstanding history with plant-based protein—the country is said to have invented tofu—“mock meat” has remained a niche product. Nevertheless, there are several factors playing in favor of international and local players betting on China’s meatless future: for the first time, technology is making it possible to use plant ingredients to mimic the taste and functionality of real meat, or alternatively, to make animals (mostly) redundant in the meat production process. Values-based marketing and product positioning, often targeting millennials and younger generations, have been very successful in highlighting the health and environmental benefits of alternative protein. Lastly, as Chinese consumers are faced with repeated food safety issues and more expensive meat, there is increased awareness of the vulnerability of the country’s food system.