US President Donald Trump’s trade negotiations have brought chaos and uncertainty to many corners of the world. For instance, the new dynamics have incentivised China and Japan to move closer together. One sign of these warmer relationships is the recent access for Japanese Wagyu beef to China, which was granted on 11 July. Three and a half tonnes of premium Wagyu were ordered the following day and have since arrived in China.

While Chinese negotiators were pushing for access to Japanese Wagyu genetics (which wasn’t granted), China is happy to allow this concession as American beef will have less presence and Japanese Wagyu in reality never left the market (yes, people used to fly to Japan and bring back Wagyu in their suitcases).

China has been developing its own Wagyu herd and according to the Angus magazine statistics, there are upwards of 200,000 crossbred Wagyu animals in China, making it the third-largest Wagyu herd globally (after Japan and Australia). With purebred animals making up 40,000 of that number, China is well poised to capture the large demand for premium beef. Chinese Wagyu, depending on the grade, will range from €20-€200/kg in the supermarket and higher in restaurants.

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Some of these Wagyu producers are either very well-heeled or highly supported by their local government combined with a good dose of entrepreneurship. The high-end market promises to show year-on-year double-digit growth.

Where will it go?

However, things are not all that rosy. China’s economic slowdown has caused a startling slowdown in super premium restaurants and this has been compounded by the austere government policies where lavish dining by officials has been outlawed. Where will all this extra Wagyu beef go? Firstly, the domestic producers are very keen to stress that they see huge market potential as Chinese consumers even amongst top earners are consuming Wagyu at a fraction of a level of their Japanese neighbours. Chinese consumers like marbled beef and Wagyu producers argue that the richness and complexity of Wagyu is enjoyed by an ever-growing segment of the population.

The strategy of Chinese Wagyu producers is to utilise online platforms and communities to reach those top-end producers and educate them on the benefits of Wagyu, thereby side-stepping traditional channels.

The second strategy will be to continue to leverage government support to drive costs down through subsidy and improving efficiency to potentially end up being competitive with Australian Wagyu. In one province in Western China, Wagyu semen is fully subsidised, embryo transfers are subsidised by €1,100 and each cow is given a €300 subsidy each year.

Finally, like most Wagyu producers around the world, there seems to be something mystical about engaging with this breed and it seems to capture people’s imaginations. Music for the cattle, massages and beer creates a feel-good vibe that seems to continue to fuel these players and the dream that Chinese Wagyu has the potential to hit the mainstream in the coming decades.

Irish position

For Irish beef, as we continue to struggle with market access in China, does our grass-fed story or our genetics leave us in a position to be able to capture this type of vaulted position? I have heard many anecdotal stories of the popularity of Irish beef and how people in Shanghai like the flavour, but how can our story land versus the Wagyu story in the market? In reality, that’s where we are competing. The low-cost market belongs to Brazil and domestic Simmental producers. Can the green Irish message shine through? I believe heavily marbled beef has its limitations, but Wagyu has by far the best narrative around.