Chinese consumers develop taste for premium salt imports
Foreign suppliers to tap rising demand for quality products as mainland market opens
Foreign companies are hoping to find space at the table as the tightly controlled salt industry on the mainland is gradually opened up, boosted by rising demand for higher quality imports.
Ding's thyroid condition stems from excessive iodine intake, a non-metallic mineral added to salt in the production process. Iodine has been added to salt since 1996 because of a deficiency of it in the average diet.
Ding's need for higher-grade salt puts him among the thousands who are turning to premium products.
While China is the world's largest producer, a senior manager at a state-owned distributor concedes that premium edible salt from overseas is superior.
Beijing's identification of the salt industry as being of vital importance to the national economy has kept it in state hands, barring foreign producers from direct distribution but allowing them to link up with state firms in joint ventures. Price controls also are seen as hobbling the development of the industry.
Wang Xueshi, a general manager at China National Salt, said consumption of imported salt in Shanghai amounted to dozens of tonnes each month.
National Salt and other government-backed firms enjoy a monopoly on the distribution of edible salt on the mainland.
Wang said the rising demand for healthier salt prompted the firm to tie up with a major salt producer in the United States. The Shanghai branch signed a series of agreements with Morton Salt to import and sell a range of products including culinary salt and water-softening salts.
"This is important and a milestone for the global salt industry," Wang said. "We are demonstrating an increased level of cooperation with US commercial interests while also providing Chinese consumers with greater choice."
Last month, the two firms set up a packaging venture that will generate 5,000 tonnes of Morton salt products a year when it starts operation next year. Wang said he was aiming for annual sales of 20,000 tonnes of the products, based on rising interest in premium salt.
While he did not project sales for the venture, National Salt said it expected sales of more than one billion yuan (HK$1.26 billion) this year, including salt for industrial purposes - the biggest sector of the market. The Shanghai branch sells about 300 million yuan of edible salt a year.
The mainland consumes 4.5 million tonnes of edible salt each year, and imports a tiny portion.
Wang said the government's tight grip on the industry was the cause of the lower quality salt and the failure for local brands to become established.
Top planning agency National Development and Reform Commission controls the pricing of salt. Wang said this impeded the production and distribution of China's own premium salt.
"The agency sets a price cap on all kinds of salts, making it difficult for processors to produce high-quality salt," he said. "The pricing control foils their plan to sell more expensive, higher quality salt on the market."
Salt on the mainland is mainly produced through the evaporation of seawater. Elsewhere, it is extracted from sedimentary deposits. These are either mined directly, producing rock salt, or are extracted in solution by pumping water into the deposit.
China took a baby step towards liberalising the salt market at the end of last month, allowing foreign investors to engage in wholesaling in the Shanghai free-trade zone.
"The free-trade zone in Shanghai is not the reason why we are here today," Morton chief executive Christian Herrmann said. "We really believe it is time to introduce a broad array of premium products to China."
