Major products of Edible Vegetable Oil Processing Industry in China are soybean oil, rape seed oil, peanut oil and other edible vegetable oil. Soybean oil is the most commonly consumed edible vegetable oil in China. In recent years, as Chinese economy grows steadily and people’s living standards rise, consumption of edible vegetable oil increases rapidly. This has stimulated the rapid development of Edible Vegetable Oil Processing industry in China, represented by annualized growth of industry revenue of 20% from 2005 to 2009.

Due to domestic supply shortage of edible vegetable oil, increasing control of foreign capital on production capacity of edible oil, and high import volume of major raw materials, there has been high foreign influence on Edible Vegetable Oil Processing industry in China.

Large Gap between Domestic Demand and Supply
Production volume of edible vegetable oil in China has increased from 16.1 million tons in 2005 to 32.8 million tons in 2009. However, due to increasing domestic food industry demand and residential consumption demand, China has to import a large amount of edible vegetable oil to meet the demand gap. In 2009, China imported 8.9 million tons of edible vegetable oil, which is mainly comprised of palm olein, palm oil and soybean oil.

Strong Foreign Presence
After acquisition, merger and expansion in the past decade, foreign enterprises increase its control of on production capacity of edible vegetable oil. Take soybean oil for example, foreign enterprises such as Yihai, Noble Group, Cargill and Bunge hold a joint share of 60% to 70% of crushing capacity of edible vegetable oil in China currently. In 2009, in China’s small package edible vegetable oil market, brands of Yihai Group hold a total share of around 40%. The foreign control on crushing capacity of soybean and end products has made Chinese enterprises gradually lose pricing power of edible vegetable oil products.

Heavy Reliance on Major Raw Materials
The production volume of soybean in China is around 15 million tons annually, of which 40% was used for crushing. This has been unable to meet the large domestic crushing volume. Therefore, in recent years, import of soybean has been at high level. During 2008 and 2009, due to the government’s storing policies on domestic soybean products, soybean crushing enterprises in Northeast China (the mainproduction area of soybean) were faced with shortage of domestic soybean and had to stop production, while enterprises alongside the East and South coastal area increased imports of soybean to meet the demand. As a result, import of soybean increased by 13.7% in 2009 to reach a historical high volume of 42.6 million tons. In 2010, as major enterprises expanded production capacity in coastal area, imports of soybean is expected to remain at high level. China’s high dependency on imported soybean products will influence industry distribution and make Edible Vegetable Oil Processing industry in China increasingly controlled by foreign capital.