June 23, 2020
Chinese meat importer could turn to US beef if China's ban on Australian abattoirs remains
China's recent ban on beef originating from four of Australia's biggest abattoirs has made business difficult for a major Chinese commodities trader.
The ban came as relations between both nations recently soured. Australia's call for an international inquiry into the COVID-19 pandemic has infuriated China, which has been widely considered to be the country where the outbreak first occurred.
The Chinese suspension of meat imports from the Australian abattoirs happened in May. China cited labelling and health certification issues for the imposing of the ban.
Due to the impact of the suspension, Xiamen Xiangyu Group, a state-owned Chinese company which imports Australian beef, said it could turn to US suppliers if the cost of getting Australian beef proves unsustainable.
More delisted Australian plaints would affect business, said Eric Huang, director of frozen food at Xiamen Xiangyu. "If these four plants are not relisted as early as possible, we will have to switch to US beef," he told The Australian Financial Review.
"We have time to purchase more, to make up our supply to our end-users. But if this lasts for six months, it is going to be hard because moving from one plant to other plants not only increases costs but we also have to educate our end-users."
Xiamen Xiangyu brings in about 20,000 tonnes of beef to China per month from Brazil, Argentina, Canada, the United States and Australia, according to the company. Australia makes up for between 1000-2000 tonnes of its beef imports per month.
Xiamen Xiangyu is also one of the largest Chinese buyers of Australian beef and owns 5000 head of cattle in Australia. The company remains keen in investing in Australia despite the recent development between the country and China, Huang said.
"The political risk is always a risk in our globalisation strategy. Not only in Australia but other countries, we have to consider political risk whenever we invest overseas," he added.
Despite the political tension, Chinese consumers still have appetite for Australian products, Huang pointed out.
- Financial Review