We had two meetings today. The first was with Daniel Chan, Chief Representative of the U.S. Dairy Export Council. Mr. Chan is based in Shanghai, but was out of the country when we were in Shanghai. He made a special trip to Beijing to meet with us. Three takeaways:
1. It is an official Chinese goal to become self-sufficient in dairy, but the DEC's research shows that China will remain a net importer of dairy products for at least five years.
2. Per capita income, dairy consumption, and cheese consumption in particular--while all low by Western standards--are increasing in China. Mr. Chan reinforced a point we had heard earlier, that all of those measures increased significantly in Japan and Korea after they hosted the Olympics in 1964 and 1988, respectively. After next year's Olympics in Beijing, all of those measures in China are likely to increase even more rapidly than before.
3. The real reason for the breakup between Danone and Bright Dairy is that the Chinese were making knock-off Danone products in violation of their joint venture agreement. It is not clear that Danone has any practical recourse.
Mr. Chan was also helpful in explaining aspects of Chinese culture. Being originally from British Hong Kong, he had a good understanding of differences between Chinese and Western perspectives. Three examples:
1. The Chinese have a different concept of time. They have a 5000 year history of civilization, as compared to just over 200 for the United States. Things do not always move fast in China. When it is to the advantage of the Chinese to stall, they can be very patient.
2. Physical exercise has not historically been a big part of Chinese culture. (Indeed, I have seen few joggers.) Their diet reflects this. The Olympics may gradually affect the attitude toward exercise.
3. The Chinese are interested in the wellness aspects of their food. Additives with supposed health benefits are popular. (U.S. standards of truth-in-advertising don't apply.) This may be because medical care is scarce, hence prevention is important.
