As suggested above, the Chinese industry has undergone significant changes, not just in output, but in the structure of the industry and composition of product. Drawing on analysis in Waldron (2009), Figure 6 distinguishes captures the process of industry segmentation, by distinguishing between low, mid and high value segments.
At the top of the figure, beef in China is becoming a more differentiated product where, for example, a premium eye fillet marketed by a famous country or company can be ten times the price of a low value brisket in a wet market. Different categories of industry actors are aligned to produce product with different attributes, which form different – but overlapping – supply chains. Through this process, chain actors down through the marketing, slaughter and production sectors are becoming increasingly specialised.
A series of drivers – including policy, economies of scale and food safety are – from a low base – moving the relative importance of the industry from low value (on the left) to higher value (on the right) segments. The process is however subject to numerous constraints, most fundamentally higher cost structures and more formal institutional structures required to meet higher value markets.