Authored by Stella Chang, Agri-Food Transition Director, China
China’s agri-food sector is entering a more demanding phase of transition.
Across Asia, food companies are increasingly being assessed not only on product quality, price and scale, but also on traceability, sourcing standards, emissions management, supplier engagement, animal welfare, nature-related risks and disclosure quality. These expectations are no longer limited to sustainability teams. They are beginning to influence procurement, financing access, customer relationships, risk management and long-term competitiveness.
This shift was reflected in a recent webinar co-hosted by Asia Research & Engagement (ARE) and the China Climate Engagement Initiative (CCEI), which brought together stakeholders from finance, industry, sustainability initiatives and research to discuss how responsible sourcing, buyer-side expectations, FLAG-related emissions accounting, transition finance and investor-backed collaboration are shaping the next phase of China’s agri-food transition.
A key message emerged from the discussion: Asian food buyer companies are steadily moving in key areas, and Chinese buyers are also moving towards some more responsible procurement policies. For producers and suppliers, this means preparation needs to accelerate before customer requirements become formal procurement conditions.
Responsible procurement is moving into business strategy
ARE’s latest Asian Agri-Food Procurement Benchmark – the Asia Protein Buyers 100 (APB100) – assesses 100 of Asia’s leading listed food companies across food manufacturing, retail, catering and hospitality. The benchmark examines how companies are responding to climate, nature, animal welfare, antibiotic stewardship, traceability, labour, water and waste, sustainable seafood risks and protein diversification opportunities.
The results show clear momentum across the region. Since ARE’s first assessment in 2024, Asian agri-food companies have continued to strengthen their responsible procurement practices, with more buyers moving beyond basic awareness toward more policies and some structured implementation.
At the same time, no company has yet reached the top two leadership tiers, indicating that further progress is needed, especially on supplier engagement, operational delivery, annual progress reporting and verification.
For China, the findings are particularly important. China is Asia’s largest protein consumption market and a major organiser of regional supply chains. The way Chinese buyers strengthen their procurement policies, supplier expectations, due diligence and disclosure will have implications not only for domestic companies, but also for producers across the wider region.
China’s leading buyers are making steady progress
APB100 shows that Chinese food companies are improving, especially on foundational issues such as climate disclosure, labour, water and waste management. Several leading companies are also beginning to establish more systematic sustainable procurement frameworks.
China Mengniu Dairy Company Ltd. (“Mengniu”) and Inner Mongolia Yili Industrial Group Co., Ltd. (“Yili”) have sustained their place but increased their score in APB100’s third-tier “Strategic Evolution” category, strengthening aspects of governance, animal welfare, climate or nature disclosure. Their steady progress is important because dairy companies sit at the centre of complex supply chains involving raw milk, feed, farm management, methane emissions, and supplier /buyer relationships.
Mengniu has already developed animal welfare-related policies, now moving to farm-level standards covering dairy cow welfare, heat stress prevention, and silage quality management. The company has also worked with a key soy supplier to start implementing its zero-deforestation commitment, operationalising supplier engagement and collaboration.
Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (“Xiabuxiabu”) is another example of a Chinese food company moving from early-stage disclosure toward more structured commitments. According to APB100-related analysis, the company improved from the lowest benchmark category to the fourth tier and has advanced a “forest-friendly” supply chain approach, including a commitment to achieve zero deforestation across its supply chain by 2030 and some aspects of food waste policy and practices.
These developments remain nascent, but they show that responsible procurement is no longer an abstract concept in the Chinese market. It is beginning to appear in practical supplier engagement, execution and customer-facing business decisions.
Sun Art Retail shows how transition can become operational
One of the most notable Chinese examples is Sun Art Retail Group Ltd. (“Sun Art Retail”). Sun Art’s FY2024 disclosure shows how animal welfare and responsible sourcing can be deployed to value add and segment mature markets like eggs, chicken and pork, with measurable sales performance.
Following a successful pilot in East China, Sun Art expanded cage-free eggs into South China, with sales growing organically to RMB10 million (USD1.47 million), achieving a three-fold year-on-year increase. Cage-free chicken products became available across 234 stores nationwide, with cumulative sales reaching RMB36.86 million (USD5.4 million). In collaboration with Muyuan, Sun Art introduced “tooth-not-clipped” pork products across 15 pilot stores in East China, generating RMB27 million (USD3.97 million) in sales. Grass-fed free-range Australian beef reached cumulative sales of RMB225 million (USD33.1 million), accounting for a significant share of its beef sales. Active promotion and consumer education can further grow product sales.
These examples matter because they show how sustainability can be translated into commercial action. Responsible sourcing is not only about reporting. It can shape product assortment, regional expansion, supplier cooperation, customer engagement, and category segmentation.
For producers, this is a clear signal. As buyers test and scale higher-standard products, suppliers with stronger traceability, welfare standards, certification, data systems, and reliable delivery capacity will be better positioned to access premium channels and long-term procurement relationships.
Buyer-side signals are becoming clearer
Across APB100 and the webinar discussions, several buyer-side signals are becoming more visible.
- First, buyers are placing greater emphasis on raw material and supplier origin transparency. They want to know where products come from, how suppliers are managed, and whether high-risk inputs can be traced and mitigated.
- Second, standards and certification are becoming more important. Food safety, animal welfare, responsible sourcing, and sustainability claims increasingly need verifiable evidence.
- Third, product carbon footprint and emissions data are entering customer assessments. This is especially important for Scope 3 emissions, which often sit upstream in farms, feed, raw materials, and processing.
- Fourth, responsible antibiotic and veterinary medicine use is increasingly linked to food safety, public health, channel trust, and procurement risk.
- Fifth, high-risk commodities such as soybean meal, and beef, are building on palm oil and paper packaging, attracting closer attention because of their links to deforestation, land-use change, and biodiversity risks.
These practical signals are not only relevant to retailers, restaurants, hotels and foodservice companies. They are increasingly important for producers, processors, feed suppliers, and upstream agricultural businesses. The next phase of competitiveness will not depend only on production capacity and price. It will also depend on the ability to provide credible data, traceable supply chains, emissions information, verifiable management systems and ideally credible certifications.
Scope 3, FLAG and methane are raising the bar
The webinar also showed why the technical side of transition is becoming more important.
Zhang Nan from Carbon Information Technology discussed FLAG-related emissions accounting and target-setting. FLAG emissions are complex because they involve land-use change, land management, biological emissions, and carbon removals. For companies that purchase agricultural products, timber, paper or packaging materials, these emissions often appear in Scope 3 purchased goods and services.
This means that buyers will increasingly need better data from suppliers. Farms, processors and raw material suppliers may be asked to provide information on land-use history, farm management practices, emissions factors, manure management, fertiliser use, feed sourcing, and carbon removals.
Li Shaoxin from the Climate Bonds Initiative highlighted agricultural methane reduction as another critical issue. Methane reduction is highly relevant to livestock and rice production, and many solutions already exist, including feed optimisation, anaerobic digestion, manure management, and alternate wetting and drying in rice cultivation. These measures can reduce emissions while improving resource efficiency and lowering operating costs.
Finance is also becoming part of the transition equation. Green loans, green bonds, transition finance, and sustainability-linked instruments can help support credible methane reduction and broader agricultural transition projects. China has also begun incorporating methane reduction into transition finance and green finance support frameworks, which may create new opportunities for companies with clear targets, measurable data, and credible implementation plans.
For producers, the implication is straightforward: emissions measurement is becoming a market access issue as well as a financing issue. Companies that can measure, manage and verify emissions more effectively will be better placed to respond to buyers, investors, and financial institutions.
Corporate practice is expanding beyond disclosure
The webinar highlighted practical examples from companies and solution providers.
Fujian Sunner Development Co., Ltd. (“Fujian Sunner”) shared its circular economy and low-carbon practices, including a large-scale chicken manure biomass power plant, expanded solar photovoltaic capacity, green power procurement, and high-value utilisation of by-products from slaughtering and processing.
Beyond energy and waste management, Fujian Sunner also represents a relevant example of how poultry producers can link sustainability with upgraded production. Sunner Group has received HFAC broiler animal welfare certification, while its proprietary white-feather broiler breeding line, Shengze 901, has supported improvements in feed conversion efficiency and domestic breeding resilience. These developments are relevant to animal welfare, biosecurity, feed efficiency, and long-term supply chain stability. They also point to the broader opportunity for poultry producers to strengthen feed management and explore lower-soy or more resource-efficient feed strategies (although there is as yet no public information indicating Fujian Sunner has set a formal soymeal-reduction target).
Food waste reduction is both a climate and business opportunity
Food waste reduction is becoming an increasingly important part of agri-food transition, especially for hotels, restaurants, and foodservice operators. It is both an environmental issue and a direct business issue linked to procurement efficiency, margin protection, and Scope 3 emissions management.
Meat waste is particularly important. Compared with many other food categories, meat products usually carry higher procurement costs, require more cold-chain, storage and preparation resources, and have a higher embedded carbon footprint. Reducing avoidable meat waste can therefore generate environmental and economic benefits: lowering emissions, reducing unnecessary upstream resource use, improving kitchen efficiency, and protecting gross margins.
Winnow Solutions Ltd. (“Winnow Solutions”) presented how artificial intelligence and weighing technologies can help commercial kitchens reduce food waste by turning kitchen waste into structured operational data. For hotels, restaurants, and foodservice operators, food waste reduction is increasingly linked not only to emissions reduction, but also to cost savings, margin improvement, and operational transparency. Its examples illustrate how digital tools can help companies move food waste management from estimation to measurable, data-driven action.
Why producers need to prepare now
The key question for producers is no longer whether buyers will raise expectations. The direction is already visible. The question is how quickly suppliers can prepare.
Producers should consider four priorities:
- First, build recordable, traceable, and verifiable management systems. This includes supplier admission, raw material sourcing, farm records, veterinary medicine use, food safety management, emissions data, and certification coverage.
- Second, strengthen Scope 3 and product-level data capability. As buyers improve their own disclosure, they will need more reliable upstream information from suppliers.
- Third, prepare for responsible sourcing requirements on animal welfare, antibiotic stewardship, zero deforestation, and high-risk commodities. These issues are increasingly connected to brand trust, investor expectations, and customer procurement decisions.
- Fourth, explore product diversification and higher-standard products, including cage-free eggs, higher-welfare animal products, and alternative proteins. These areas may help suppliers build stronger relationships with leading buyers and access differentiated markets.
Companies that begin early will be better placed to respond when requirements become more formalised. They will also be more likely to participate in pilot projects, premium product lines, supply chain finance opportunities, and long-term procurement partnerships.
Continued engagement will shape the next phase
China’s agri-food transition will not be driven by any single company or institution. It will require continued engagement between buyers, producers, investors, financial institutions, policymakers, technology providers, and research organisations.
Buyers need suppliers that can deliver credible data and implementation. Producers need clearer market signals, technical support, and financing tools. Investors need comparable disclosure and evidence of progress. Financial institutions need credible project pipelines and measurable transition outcomes.
This is why continued stakeholder engagement matters. It helps translate high-level sustainability commitments into practical tools, supplier expectations, financing mechanisms, and measurable progress.
The direction of travel is clear. Asian buyers are moving faster on responsible procurement, and Chinese buyers are steadily strengthening their policies and practices. For producers, there is an opportunity in preparing ahead of the curve.
The next phase of China’s agri-food transition will depend less on whether companies have sustainability statements and more on whether those statements can be translated into operational systems, credible data, verified progress, and commercially viable products.
From disclosure to delivery, the winners will be those who can turn market signals into practical capability.
