Food Processing in China: Porter's Five Forces Strategy Analysis

The food processing industry is developing rapidly in China. The food industry is one of the basic industries to meet people's living needs. Rapid economic growth combined with higher disposable income means stronger demand for high quality processed food by Chinese consumers. To meet this demand, China's food processing industry also continues to grow at double-digit rates in excess of 10%. Experts predict that the Chinese food processing industry will surely have a bright future because currently only about one-quarter of China' food production is processed compared to about 80% in more developed countries.

Aruvian Research analyzes Food Processing in China in Michael Porter's Five Forces Analysis. It uses concepts developed in Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro-environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.