Changing the Tide: Chinese Startups in the Plant-Based Meat Revolution

China is the world’s largest consumer of meat, including nearly half of all pork globally. In 2021 alone, the country of 1.4 billion people is expected to produce 7.05 million tons of beef and a staggering 43.75 million tons of pork, according to a recent study by the U.S. Department of Agriculture.

Improvements in living standards and rising wages across the country in recent decades have expanded household grocery budgets, propelling China to the top of most measurements of the global meat industry. Meanwhile, shifting dietary trends and greater awareness of the role played by meat production in global warming has encouraged people around the world to cut back on their intake of animal products.

For some Chinese consumers, however, the call for reducing individual meat consumption is not a palatable subject. Earlier this year, a domestic celebrity named Gabrielle Guan sparked the ire of web users when she released promotional material for a domestic startup called Plant Plus, with many netizens turning to microblogging platform Weibo to voice their skepticism.

Also this year, Time magazine published an article entitled “How China Could Change the World by Taking Meat Off the Menu,” eliciting a response from the state-backed Global Times. In the rebuttal, the author accuses Time of perpetuating a double standard and “[glossing] over much higher levels of Western meat consumption,” when measured on a per capita basis.

It’s a daunting task, but a growing cohort of domestic startups in the meat-loving country, along with a few foreign firms, are on a mission to reverse the trend.

Vesta’s quest to reshape the Chinese meat industry

“I think in China the motivation of consumer behavior is going to be a collection of multiple factors including health concerns and environmental concerns,” said Zihan Xie, Founder and CEO of Beijing-based firm Vesta, in a conversation with Pandaily.

Vesta, which completed a $2.3 million funding round last year with investment from Xuerong Biotech, is aiming to develop plant-based products that can satisfy the high demands of Chinese consumers. With a team including scientists, food engineers and a three-star Michelin chef, the company is currently engaged in developing protein-rich products made from locally sourced, non-GMO soybeans.

The Chinese buyer, nonetheless, may prove to be a tough nut to crack. Xie said, “the [domestic] consumer is going to expect very high quality in terms of cost, taste and texture.”

Whereas the humble hamburger represents a relatively straightforward menu item to substitute with meat alternatives – given its simple cooking requirements and boldly flavored condiments – Chinese staple meat dishes are generally not as easy to emulate in a lab.

Creating steamed pork dumplings with only plant-based ingredients, for example, poses challenges that many Western dishes do not, including finding the perfect balance between taste, texture and consistency capable of swaying the consumer away from authentic meat options.

This, Xie says, “is going to be a challenge for all the players. On the other hand, it’s an opportunity because anyone who can fulfill this is going to enjoy the massive rewards of the market.”

While the firm strives to develop solutions capable of overcoming the hurdle of classic Chinese dishes, Vesta is currently working with a range of vendors to help introduce its products to domestic customers.

Earlier this month, the firm launched new cooperation with U.S. fast food chain Fatburger in Beijing. So far, the results are promising. “In the first ten days, we accounted for more than 10% of the total burgers they sold in the two initial pilot shops we worked with,” said Xie, adding that they are speaking to other franchise locations in the hopes of expanding collaboration with the chain across the Chinese market.

At the moment, Vesta is working to scale up its production capacity, which will be vital as it takes aim at the country’s vast consumer base, as well as bolster its R&D and sales teams.

A tough market

The Chinese plant-based meat industry has become more competitive in recent years, adding further challenges for young domestic startups like Vesta. Nonetheless, there is room to grow. Multinational agriculture firm ADM has predicted the country’s alternative proteins market to increase from less than $10 billion in 2018 to $14.5 billion in 2025.

Apart from Vesta, other Chinese firms such as Beijing-based Zhenmeat and Starfield Food & Science Technology, headquartered in Shenzhen, have secured substantial funding from venture capital investors lately as they compete for the small but expanding domestic market.

Meanwhile, major international players in plant-based proteins such as Beyond Meat and Impossible Foods have already made inroads with Chinese consumers, with the former supplying various products for Starbucks at locations across the country. In addition, Beyond Meat launched its first factory outside the U.S. earlier this year in a city neighboring Shanghai called Jiaxing.

A global leader in the plant-based protein industry, Beyond Meat announced the expansion of its partnership with KFC for the mainland Chinese market in October 2020. (Image: Beyond Meat, Inc.)

A San Francisco-based developer of artificial egg products called Eat Just secured a deal in January with Chinese fast food chain Dicos – one of the leading domestic competitors of McDonalds and KFC –  to provide the firm’s ‘Just Egg’ product, made from mung beans, for various menus items including bagels and breakfast sandwiches.

In addition to the presence of these established foreign firms, Chinese plant-based meat startups face another tough challenge. This competitor, however, beat them to the market by about 2,000 years.

Commenting on the domestic culinary environment for non-meat protein sources, Vesta CEO Zihan Xie said, “The Chinese market is more sophisticated than the Western market in that we actually have a very long history of eating plant-based food.” Tofu, already one of the country’s leading sources of protein, presents a unique test for firms seeking to capitalize on Chinese consumers’ migration away from meat-based diets.

Help on the horizon?

As crises such as global warming and sporadic outbreaks of swine disease continue to make headlines globally, China’s leadership has started to emphasize the importance of food security more and more.

Among measures such as an anti-waste campaign and enhancing support for agricultural technology, authorities have also announced the ambitious goal for the country to cut its meat consumption in half by 2030 in a bid to shore up public health. In a closely related issue, Chinese climate officials have set 2030 as the year in which they aim for the country to reach peak carbon emissions, followed by full carbon neutrality in 2060.

President Xi has expressed previously that “food safety is an important foundation of national security.” This framing coincides with how authorities once spoke about the domestic technology industry, which has benefited significantly from generous government subsidies and policies. The domestic plant-based meat industry could be in prime position for a similar boost.

Vesta CEO Zihan Xie acknowledged that while his firm has received modest support from local governments, “it’s not industry-specific at the moment – it’s only because we are a tech startup, but we expect more support is on the way.”

As regulators come under increasing pressure to meet the ambitious climate targets set by the center, more creative tactics such as offering financial assistance for domestic plant-based meat startups could become more viable.

Even if progress seems slow at times, Chinese entrepreneurs in the industry are confident. “I realized this is going to be a very long lasting trend,” Xie said. In the eyes of these startups, they have latched onto a paradigm shift that is unlikely to waver.