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Tea: UK Trade Mission Aims For China Deals

(c) Sky News 2012

Selling tea to China might sound mad, but it is exactly what a group of British companies is trying to do this week.

In an effort to help them through difficult economic times, a wide range of UK-based food and drink manufacturers are spending a week in China, taking advantage of changing Chinese diets.

The delegation is being led by Environment Secretary Owen Paterson.

He said: "From chocolate to cheddar, China's population is getting a taste for dairy, and Britain's world-class food industry can supply that demand.

"I'll be helping British businesses grab the opportunity with both hands, so our country competes and thrives in the global race."

The traditional Chinese diet is undoubtedly changing, with some foreign companies already taking advantage of this with staggering consequences.

Starbucks (NasdaqGS: SBUX - news) now has more than 500 outlets across China, and per store they are more profitable than in the US. In a remarkable feat for a country that does not traditionally drink coffee, China will soon become the company's largest market.

Subway is another success story. The Chinese are not, by tradition, bread-eaters, yet in all of Beijing's numerous Subway franchises, a lunchtime queue has become increasingly normal. A Western-style sandwich is now an acceptable alternative lunch option for locals.

Starbucks and Subway have managed what an increasing number of Western companies now want to do - to take advantage of changing tastes. When combined with potential numbers of customers available, the sums make perfect sense.

China's population is 1.3 billion, which is a fifth of the world's population. Some 691 million of those people live in urban areas. The Chinese middle class is now three times the size of the UK population and their number is growing all the time.

The Chinese also have an increasing spending power. According to figures released by the Chinese government, an average family of three earns the equivalent of about £5,600 a year. That is a tenfold increase since 1980.

In cities, where British companies will be focusing their efforts, the incomes are much higher. According to a recent survey by Beijing's University of Technology, the income of an average middle class family in the city is about £12,000 a year.

There will be a record number of British businesses at this week's Food and Hotel China Exhibition in Shanghai, who will have access to more than 30,000 Chinese importers.

There are also plans to meet with executives from Tesco (Xetra: 852647 - news) , which already has a foothold in China and may result in further British products being made available.

The Department for the Environment, Food and Rural Affairs believes there is a particular window of opportunity for the dairy market.

The UK has room to significantly expand its export market at a time when other EU countries are restricted by milk quotas until 2015.

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