Why Is China’s Cold Chain Infrastructure Underdeveloped?
It seems like a Catch 22. China is a country that has a growing demand for fresh food and could offer huge opportunities for exporters of perishable foods. Yet Chinese companies haven’t yet make the required investments in cold transportation, storage, and distribution infrastructures, to take care of the growing taste for fresh food among China’s more affluent consumers.
According to a recent report, shippers’ concerns over liability prevent them from offering door-to-door perishables services.
Shippers perceive that if they deliver direct to consumers, they will become liable for any tainted produce that may arrive. That, according to the report, is why door-to-door supply chains have not emerged in the Chinese perishables market even have they have elsewhere in the economy.
Perishables shippers want frequent updates on the conditions of their cargo. But this scrutiny usually doesn’t extend beyond the airport of entry into China. Ironically, Chinese consumers’ growing demand for imported perishables is driven largely by concerns over domestic food quality.
According to a report from a European bank that studied the issue, “China’s demand for fresh, safe and high-quality food is outstripping its capacity to produce and deliver domestically. The growth in consumption of perishable food in China will only continue if supply chains deliver on quality and safety. To a large extent this depends on the proper cooling of products during storage, handling and transport.”
Investments in perishable storage capacity and distribution channels are one of the keys to making this opportunity a reality, according to report. In fact, cold storage capacity grew by over 800 percent in China over a period of eight years but that still hasn’t closed the cold chain gap.
Concluded the report: “China’s cold chain sector is still lagging and needs to improve in terms of both quality and capacity.” China’s cold chain sector will only improve “once cold chain companies start adapting their business models into higher-value strategies in response to the higher service needs of their clients.”
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2019 Trends, Logistics, and Strategies