China's food processing and packaging machinery sector has made significant strides and is closing the gap on the products made in other parts of the world, according to a new report.

Sales of Chinese food packaging machinery have almost doubled between 2001 and 2005, reaching CNY67.37 billion (€6.6bn), and the annual average growth of 17.52 per cent is well above the rate of the national machine industry during the same period, according to the report by Beijing-based market research firm, Research in China.

The growth is being driven by a double-digit increase in food industry sales each year – some estimate it to be around 25 per cent annually – as well as strong improvements in the technology.

"A batch of producing lines at an international advanced level has opened up new growth. The value it creates is incomparable with the singular technique of simple machines," says the report.

There are also improvements in the workshop and in devices, enhancing the quality of products.

"Accordingly, the reliability of products and trust in consumers has got better," the authors write.

While there were more than 6800 companies involved in food and packing machine production by the end of 2005, only 20 achieve annual sales of CNY1billion and 50 make more than CNY30 million.

But exports are increasing - in 2005, food and packing machinery exports reached US$607 million, a 31.4 per cent increase compared with 2001. The report predicts that food machinery exports will keep increasing by 12 per cent to reach US$1.27 billion by 2010.

The growth in imports is, in contrast, slowing, suggesting that a large portion of devices that originally depended on import are being substituted by domestic made devices.

China's food machinery industry still has some problems, however, such as inadequate investment of research and development, poor inflexibility, and a lack of talents in international trade.

However industry is also set to see further concentration, with the emergence of some bigger companies and brand names. Combined with China's low-cost advantage, the country's food machinery sector looks set for sustained growth. The report predicts that the sector will be worth CNY80 billion by 2010.

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