While many countries are still counting their losses from the pandemic, China has already emerged from the crisis. The country’s GDP surged by more than 18% in the first quarter of 2021. China is home to at least 30% of the world’s entire middle class; it is a promising destination to consider for a new sales market. Most of the industrial production is also concentrated there, and the cost of production is 75–80% times lower than that of making similar goods in Russia. Which goods would it be profitable to export to China, and which ones should rather be imported into Russia?
Great demand, limited supply: What to export to China
China generates the largest share of the world’s fish market revenue. The figure is quite impressive — almost $85 million, or 7 times the fish market in Russia. Fish consumption is growing every year in China, which makes the country attractive for Russian companies working in this business: 500 g of frozen salmon cost RUR 1,150 ($15.7) there, against RUR 750 ($10.2) in Russia.
The second most popular product is flour. The Chinese market in this segment grows 3.5% every year. Two kilograms of flour in China cost RUR 188 ($2.5) while in Russia, the same amount is sold for RUR 82 ($1.1).
Honey in China is more in demand than sugar. China’s honey market is estimated to bring $106 mio in profit in 2021, which is 52 times higher than Russia’s estimate. In China, 0.5 kg of honey will cost RUR 1,500 ($20.5) against RUR 520 ($7.1) in Russia.
China is consuming increasingly more vegetable oil, around 6.1% more every year. Russian vegetable oil can be commonly found in grocery stores and is in demand by hotels, restaurants and food production facilities. One liter of vegetable oil in China costs RUR 158 ($2.1) against RUR 98 ($1.3) in Russia.
Imported dairy products account for a significant share of the market as animal farming is not the most rapidly developing industry in China. The stable demand is supported by the European cuisine trend. One liter of milk in China costs RUR 130 ($1.7) against RUR 84 ($1.1) in Russia.
Chinese consumers and the younger generation, in particular, are highly focused on maintaining a balanced diet. The grits and cereal market grows by 5.6% annually. A 500 g pack of oats in China costs RUR 120 ($1.6) against RUR 65 ($0.88) in Russia.
The Chinese confectionary market shows consistent 2.9% annual growth. A standard pack of chocolates (180 g) costs at least RUR 117 ($1.6) there while in Russia, it can be bought for RUR 59 ($0.8). A pack of vanilla ice cream (50 g) costs RUR 183 ($2.5) against RUR 47 ($0.64) in Russia.
Chinese consumers love Russian juices and lemonades. One liter of juice costs RUR 160 ($2.1) in China against RUR 90 ($1.2) in Russia.
Foreign alcohol is extremely popular in China, especially Russian wines, which cost significantly higher there than back home, or RUR 1,120 ($15) per bottle against RUR 350 ($4.7) in Russia. Beer is equally well-loved. Russian brews sell for RUR 78 ($1) per 450 ml. Russian vodka will cost RUR 1,178 ($16) per 500 ml in a Chinese supermarket against RUR 450 ($6.1) in Russia. The alcohol market in China is expected to grow further by 7.51% every year.
China is the biggest importer of Russian timber and processed wood, specifically, profiled logs, wall panels, thin planks, railroad sleepers, sheeting boards, planks and bars. COVID-19 restrictions have curtailed imports thus boosting prices in the segment. Industrial wood costs RUR 21,829 ($298) per 1 cubic meter in China against RUR 9,500 ($130) in Russia.
Light from the East: What to import from China
China is one of the world’s leaders in foreign trade, accounting for biggest exports of clothing, shoes, furniture, textile, watches, computers and other devices, various equipment, car and bicycle parts.
Clothing and interior items top China’s most popular exports. The second most popular niche is car parts and spare parts for various kinds of equipment. Supplying similar products from Europe to the Russian Far East would be substantially more expensive and time-consuming, Chinese prices also being more attractive.
Cosmetics, including facials, creams, makeup products and coconut oil, is also a lucrative type of export for China. Household items made in China are also quite popular. Russia imports kitchen utensils, flashlights, toys, vacuum insulated food containers and stationery. It is only the tip of the iceberg.
Lighting equipment is currently one of the Chinese imports with the highest profit margin. China has the world’s largest offer of all kinds of lighting, its high quality making it possible to mark up prices by up to 200%. Along with fitness, tea and coffee accessories and electric scooters, lighting is the most promising import category in the short-term perspective.
Another advantage of working with China is the fact that its manufacturers frequently release new products that are not yet available elsewhere. If promptly discovered and displayed on the Russian market, these products are a guarantee of extremely high profits.
By Dmitry Kovpak, entrepreneur, author of books and training programs for doing business with China, founder of DaTrade wholesaler platform