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May, 2018

Australian beef producers struggle to contain Chinese counterfeiters

About half of the Australian beef sold in China is fake, causing Australia's farmers and meat exporters potential sales losses of about A$2 billion. While Australian wine is the highest valued Australian product in China, in terms of pure numbers, Australian beef may be the most counterfeited.

Analysis:

In China, beef consumption per capita is just 5.5kg per annum. That's low compared to Australia's 29kg or Hong Kong's 52kg. But China's appetite for beef did grow considerably between 2012 and 2016, when consumption rose 33% annually. In a March statement published by e-commerce giant JD.com, Adrian McCorkell, Director of Australian meat distributor, InterAgri, said: "The demand for premium Australian beef in China has exploded over the last few years, but we are still just scratching the surface of the addressable market." 


Naturally, counterfeiters see a big opportunity. Trent Lund, director of innovation at PricewaterhouseCoopers Australia, told The Australian: “Australia beef has an average selling price of A$38 per kg in China, and high-end products can be sold at A$120 per kg. However, China’s local beef is generally priced at A$4.5 per kg. The profit space between this is really tempting."


At the same time, in a retail setting, most Chinese consumers cannot distinguish Australian beef from a counterfeit product just by looking at the packaging. And they aren't usually familiar enough with the taste of Australian steak to know if they're eating a genuine product in a restaurant. In that sense, Australian beef producers face some of the same problems from IP thieves as winemakers. 


David Blackmore, founder of Australia's Blackmore Wagyu, told Australia's 3AW news channel that fake Australian beef in China “could be anything from buffalo out of India to meat from anywhere else.”


Blackmore pointed out that Chinese counterfeiters have figured out to produce convincing fakes of the cryovac bag in which exported Australian beef is sealed. That bag has a stamp on it identifying its source. Blackmore Wagyu also includes an insert in the bag printed on special plastic with "an easily identifable dye."  


“What we’ve found is that in China they’ve copied the cryovac bag, they’ve copied the insert, and they put someone else’s beef inside that cryovac bag," Blackmore said. He became aware of the problem after a chef in China who works at a five-star hotel called him, complaining about the quality of Blackmore's beef. 


JD.com is betting on blockchain technology to tackle the problem. The Chinese e-commerce giant is partnering with InterAgri to import Angus beef products that will be traceable on a blockchain. The blockchain sytem will record "where the livestock was bred and raised, where the meat was processed and how it was transported," the company said in a statement. JD plans to deploy the system sometime this spring. 

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