MEDIA STATEMENT
MPIC GRABS OPPORTUNITY TO PENETRATE BAKERY FATS
MARKET IN CHINA TO STRENGTHEN MALAYSIA’S PALM OIL
DOWNSTREAM SECTOR

1. THE encouraging outlook of China’s baking industry with baking fats (shortening) being one of the key raw materials augurs well for the downstream segments of Malaysia’s palm oil sector.

2. With baked goods such as cakes and bread becoming increasingly popular among the Chinese populace, so does the demand for palm oil-derived shortening and margarine which are both vital raw materials in the production of bakery-related products.

3. With the annual production of shortening in China far from meeting its growing domestic consumption demands which is escalating every year, the country has resorted to importing the main raw material from Indonesia and Malaysia whose export of shortening to China stood at 7,655 metric tonnes (MT) in 2021.

4. On the same note, China’s margarine market is also growing rapidly with an annual growth rate of 20%. The world’s most populous country which is also the second largest global economy
mainly imports margarine from Indonesia, with 650 MT coming from Malaysia in 2021, an increase of 10% from 590 MT in 2020.

5. Even though Malaysia’s ‘cake’ in China’s bakery industry is small at this moment, the world’s second largest palm oil producer is capable of expanding its market share in China’s bakery ingredient market with the right promotion and marketing strategies. With this is mind, home-grown shortening and margarine manufacturers should proactively weigh in on prospects of forging tie-ups with reputable bakery enterprises in China.

6. Although there are still sporadic lockdowns due to its ZeroCOVID-19 policy, the gradual re-opening of China’s borders to business travellers in the near future can serve as a good
opportunity for Malaysian bakery fats players to build business contacts, thus riding on this growing opportunity.

7. From 2017 to 2021, the market size of China’s bakery market has risen to 265.7 bil yuan (RM172.53 bil) from 187.7 bil yuan (RM121.88 bil) with an average compounded annual growth rate
(CAGR) of about 9% which is much higher than the growth rate of the global baking industry’s market size. It is expected that the market size of China’s baked food industry will reach 287.4 billion yuan (RM186.62 bil) in 2022.

8. Moreover, the registration of bakery-related companies in China has surged from 2,040 to 6,395 during the 2017-2021 period with an average CAGR of about 33%. In 1H 2022 alone, the number of registered Chinese bakery-related companies stood at 2,815. 2021 also saw the investment in China’s bakery industry topping 26 other industries with a total amount of 6.14 bil yuan (RM3.98 bil) which is attributable to post-COVID-19 recovery in economic activities.

9. To complement palm oil downstream players who are interested in solidifying their overseas business presence, I wish to highlight that the Ministry of Plantation Industries and Commodities (MPIC) has embarked on “The Global Movement to Champion the Goodness of Palm Oil” campaign as a platform to spark awareness about the high quality of Malaysian palm oil as well as to counter the various misinformation and false information levelled at our golden oil.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
21st SEPTEMBER 2022