While U.S. beef still lacks access to the People’s Republic of China, exports to Hong Kong have been thriving. After setting an all-time record last year, exports to Hong Kong have continued to achieve explosive growth in 2011. Through the first five months of this year, exports totaled 50.8 million lbs., valued at just over $100 million. In terms of volume, that’s more than double the pace set in 2010. By value, it represents an increase of 140%.

Joel Haggard, U.S. Meat Export Federation (USMEF) senior vice president for the Asia Pacific region, is based in Hong Kong. Haggard says separate import regulations have created opportunities for U.S. beef in Hong Kong that don’t yet exist in the People’s Republic of China.

“Hong Kong, of course, is officially a part of China, but it serves as its own customs and quarantine administration zone, so it has its own rules,” Haggard explains. “For U.S. beef, it is open only to boneless beef from cattle under 30 months of age – and no offal. While that’s a constraint to our exports, the economy is so strong there that we are seeing very robust sales.”

Given Hong Kong’s enviable location as a commercial hub, this isn’t likely to change anytime soon.

“It’s sitting at the southern tip of China, where annual economic growth is about 9.5%,” Haggard says. “Hong Kong has become a huge shopping destination for tourists from mainland China. They come down to shop; they come down to eat; they come down to play. We’re definitely seeing a bump in our beef exports to China due to that influx of tourists. And we’re very competitive price-wise, so we’ve seen an incredible surge in interest in U.S. beef, not only by the five-star grillrooms, but all the way down to fast food.”

Breaking into fast-food market

Fairwood, a leading quick-service restaurant (QSR) chain in Hong Kong, recently agreed to partner with USMEF on a hot-pot promotion featuring U.S. beef. Fairwood’s use of underutilized U.S. beef cuts, as well as higher-value loin items, is a significant, first-of-its-kind breakthrough for U.S. beef in the Hong Kong QSR market.

Fairwood, a leading quick-service restaurant (QSR) chain in Hong Kong, recently agreed to partner with USMEF on a hot-pot promotion featuring U.S. beef. Fairwood’s use of underutilized U.S. beef cuts, as well as higher-value loin items, is a significant, first-of-its-kind breakthrough for U.S. beef in the Hong Kong QSR market.

“USMEF is seeing some very encouraging trends,” Haggard says. “Traders are making money off the product. Restaurants are making money off the product. It’s just a very, very vibrant market for us right now.”

Despite this outstanding level of growth, Haggard emphasizes that major opportunities are still being missed because of the market access restrictions facing U.S. beef.

“Canada has full access for boneless and bone-in beef, from cattle both over and under 30 months of age,” he says. “We’re obviously excluded from the bone-in and over-30 segments. There are restaurants here in Hong Kong – just as there are in the U.S. – that specialize in bone-in prime rib. We’re excluded from that market. Bone-in short ribs are a remarkably versatile item for a number of different restaurant users – from Western concepts to Chinese dim sum – and we’re out of that market as well.”

In one of the world’s most fiercely competitive beef markets, these are niches that competitors look to fill very quickly. Haggard says a level playing field is sorely needed.

“If we can gain better access to Hong Kong, U.S. beef will definitely achieve a significant increase in sales,” he says. “Demand for U.S. beef is very strong because of its superior quality and unique attributes. But we really need to be able to market a wider range of cuts in order for this market to reach its full potential.”