March 18, 2010 / 7:35 AM / 10 years ago

Organic food sales a tough slog in China

BEIJING (Reuters) - Beijing Organic and Beyond Corp Chairman Zhang Xiangdong has a shoe leather approach to organic fruit and vegetable sales in China’s capital that is a lesson for any firm trying to enter the world’s biggest food market.

Packaged organic mushrooms are stacked on shelves in Los Angeles November 7, 2007.REUTERS/Lucy Nicholson

Zhang came back from the United States in 2005 and started to grow organic fruits, vegetables and rice and delivers supplies directly to friends in Beijing to get word out in the market.

Major supermarket chains like France’s Carrefour (CARR.PA) also try and convince Chinese consumers about organic products through massive promotions to pay more for items from soy to pork called organic or some variation like healthy.

But Zhang says trust needs to be earned one customer at a time. “We are working hard to establish our brand. Only with a good brand can consumers trust you,” Zhang said.

Still Zhang faces skepticism from potential customers that have contended with adulterated food outbreaks in the past few years from milk tainted with the chemical melamine to last month’s widely publicized reports of toxic cowpeas grown in Hainan province.

“Is it really organic? Some consumers are full of doubt,” Zhang told Reuters in his Beijing office.

“They know organic food is good, but they wonder if they are paying for real organic food.”

A majority of middle-income consumers also have such concerns, partly because organic food is three-to-five-times as expensive as conventional food and not clearly defined as a product by government authorities, he said.

Efforts by Zhang and other firms to get the farm ministry to define organic food under China’s food safety laws has so far failed.

“What the Ministry of Agriculture cares about is the quantity and the supply, not only food quality.”

But he is hopeful after Beijing set up the country’s first National Food Safety Commission, with high-ranking officials holding posts, which could increase awareness and help boost his sales, which he declined to quantify.

He also has to contend with food labeling in China which can vary from “non-polluting food,” “green food” or “organic food” leaving customers baffled.

“These labels are so confusing. Even my friends ask me what the difference is,” said Zhang.

“The organic food business is just too difficult. But still, there is a big market potential.”

Additional reporting by Beijing newsroom

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