China eyes dom­i­na­tion of cof­fee mar­ket

China Daily (Canada) - - FRONT PAGE - By XU JUN­QIAN in Shang­hai

xu­jun­qian@chi­nadaily.com.cn

It may just be a mat­ter of time be­fore China over­takes the United States to be the world’s big­gest con­sumer of cof­fee — it is es­ti­mated that Amer­i­cans drink 400 mil­lion cups daily.

The re­cent es­tab­lish­ment of the Cof­fee Ex­change (Cen­ter) in the China (Shang­hai) Pi­lot Free Trade Zone sig­naled China’s in­ten­tion to be a ma­jor player on the global stage where they can ex­er­cise some in­flu­ence on the pric­ing of the world’s sec­ond most traded com­mod­ity af­ter crude oil.

Fur­ther­more, cof­fee con­sump­tion in China is grow­ing at a rate of 15 per­cent per an­num, mak­ing it the world’s fastest grow­ing mar­ket for cof­fee, ac­cord­ing to sta­tis­tics from the China Cof­fee As­so­ci­a­tion in Bei­jing.

Be­cause of its ideal ge­o­graphic lo­ca­tion at the FTZ , which has re­duced or elim­i­nated a se­ries of trade bar­ri­ers in­clud­ing fi­nance, tax­a­tion and lo­gis­tics, it is be­lieved that the cof­fee ex­change can even­tu­ally be­come a ma­jor trad­ing hub in Asia while sub­stan­tially re­duc­ing the price of cof­fee beans mov­ing through or ex­ported to China.

“Es­sen­tially, we hope it (the cen­ter) can help China be­come a leader in the global cof­fee in­dus­try. And this should not only be about the con­sump­tion of cof­fee per capita per day, but also about the growth of cof­fee plan­ta­tions and the price de­ci­sion process,” said Wang Zhen­dong, chief of­fi­cer of the cen­ter.

Trade value of the cen­ter is ex­pected to reach 84 bil­lion yuan ($13.5 bil­lion) by the end of 2017 and sur­pass 120 bil­lion yuan a year later. When that hap­pens, the cen­ter will over­take Sin­ga­pore as Asian’s largest com­mod­ity ex­change for cof­fee fu­tures and be ranked among the world’s top three along­side New York’s In­ter­na­tional Ex­change and Lon­don’s Euronext LIFFE.

In ad­di­tion to the busi­nessto-busi­ness plat­form, the cen­ter will also have a re­tail space for the coun­try’s cof­fee lovers to sam­ple beans from other coun­tries, an in­ter­na­tional barista train­ing cen­ter and a cof­fee-ori­ented ser­vice cen­ter that aims to bring to­gether in­vestors and young en­trepreneurs who “may have any novel idea about cof­fee”, added Wang.

While the main fo­cus of the cen­ter is on im­port­ing cof­fee beans that are grown around the world, there is also hope that the cof­fee ex­change can raise aware­ness of China’s own cof­fee beans from Yun­nan province and en­able it to be priced in the mar­ket, as well as ex­ported to neigh­bor­ing coun­tries such as Ja­pan and South Korea.

China may be a tra­di­tion­ally tea-sip­ping na­tion, but it is no stranger to cof­fee. In­ter­est in the prod­uct has been steadily grow­ing since 1999 when Amer­i­can cof­fee chain Star­bucks opened its first store in Bei­jing. The brand now has more than 1,000 branches across the coun­try and can be cred­ited for hav­ing in­tro­duced con­tem­po­rary cof­fee cul­ture in China, pop­u­lar­iz­ing ter­mi­nolo­gies like cap­puc­cino, latte, and grande.

Wang added that many of the in­de­pen­dent bou­tique cafes that have been sprout­ing all over China to­day have used Star­bucks as a ref­er­ence when de­cid­ing on their menu and prices. The pro­lif­er­a­tion of these cafes has also re­sulted in an in­crease in the num­ber of cof­fee afi­ciona­dos sign­ing up for com­mer­cial train­ing cour­ses of­fered by in­sti­tu­tions like the Spe­cialty Cof­fee As­so­ci­a­tion of Amer­ica.

Cof­fee shops had flour­ished in Shang­hai from as early as the 1930’s. While most of the cof­fee shops dur­ing that era no longer ex­ist, there are a few sur­viv­ing ones still fre­quented by cof­fee en­thu­si­asts who are as old as the shops. Shang­hai is still the cen­ter of China’s cof­fee cul­ture to­day — the city has more than 100 Star­bucks out­lets, in ad­di­tion to a thriv­ing spe­cialty cof­fee scene. The av­er­age an­nual cof­fee con­sump­tion per per­son in Shang­hai is about 20 cups, one of the high­est in China.

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