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Industry

December 3, 2014

Cafe Culture launches in CHINA

The Gateway To China’s 30 Billion Dollar Café Culture 

Issue 2 of Café Culture Magazine China was recently released at FHC China, held in Shanghai in November 2014. FHC is China’s Global Food & Hospitality Expo for international suppliers selling to China, with over 33,000 visitors to the event. Received with an incredible amount of interest, full kudos goes to the team’s solid effort in co-ordinating such a mammoth task with the launch of the magazine.

In addition, Café Pulse and Café Culture China have completed a first ever café owners survey of the Chinese café market, and the results are in, with some exciting outcomes that would surprise the Australia market.

We all may have been at fault for the widely considered belief that Chinese people mostly drink tea. Many of us in the west have not yet understood that China’s hunger for all things “Western” has spurned a massive and potential café culture – so much so, that in time this may rival our own café success down under. The fact is that the Chinese economy is outgrowing the world averages and is now the no. 2 largest worldwide.

If you regard China’s growing café culture as a frivolous indulgence, think again. Starbucks, McCafé, Costa, MAAN Coffee, Café Bene, independently owned cafés, and espresso bars, may be havens for latte-sipping, skivvy-wearing artists, well dressed business professionals and inner-city China trendies. However, as China becomes more reliant on high-tech, knowledge-intensive industries, cafés are now certainly playing an important economic role.

A paradox of these knowledge-intensive industries, such as banking, professional services and IT, is their tendency to bunch up rather than spread out. Take banking, for example. It has been transformed by the digital age and yet, in Shanghai & Beijing as examples, financiers still tend to crowd around a few downtown streets.

‘’You create new knowledge and innovation by interacting with other people,’’ says the director of the Grattan Institute’s Cities Program, Jane-Frances Kelly. Now that’s where cafés, tea houses and bars come in. They provide a neutral space for knowledge professional workers to interact and share information, a process crucial to the innovation and deal making essential in the knowledge economy. Sometimes these meetings are planned, but chance encounters are also important.

‘’It’s no surprise there are lots of cafés near where there is knowledge-based economic activity,’’ says Kelly. ‘’This part of the modern economy needs access to places where people can bump into each other and meet informally, and China’s growing number of many Chinese CBD cafés are perfect examples of that.’’

Economists call this ‘’knowledge spill-over’’, and it’s one of the reasons banks, law firms and tech companies tend to be close to one another. Informal exchanges – in places like cafés – also allow knowledge-intensive companies to keep tabs on innovations and improvements made by rivals.

Knowledge-intensive industries are increasingly important for China. In a generation, the nation’s economy has shifted from one oriented to making things to one focused on knowledge. In the past 10 years, the contribution of manufacturing to China’s economic output has slowed, while the Chinese financial, property ownership and professional services have nearly doubled. And sure enough, the China major city café culture has flourished in that period. China’s modern knowledge economy seems to thrive on coffee, and will continue to do so for another 10 years plus.

China, once considered only a traditional tea-drinking country, is now the world’s second largest beverage market and is becoming more and more attuned to incrementing population demand.

China’s coffee market has grown by an estimated 10-15% annually in comparison to the worldwide average of just 2% over the past decade. In 2010, for instance, the coffee consumption in China was roughly 50,000 tons. However, as the consumption rate is constantly growing, some analysts predict that this number could reach 300,000 tons of coffee consumed annually by 2020. However, that’s only a fraction of what the café culture contributes to the economy once the information shared, the knowledge created, and deals done over lattes and cappuccinos is added.

Caffeine, coffee and cafés are helping to drive modern capitalism.

CONTACT

For more information regarding Café Culture Magazine China or the Gateway To China Café Market report, please contact David Parnham.
David@cafeculture.com or David@pulseplus.com.au

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