People growing or trading organic food need passionate enthusiasm.

Terry Yu, general manager of LohaoCity Co Ltd, a company operating one of the pioneering organic food shops in Beijing, made the remark, saying ordinary people could not bear the hardship of the market.

Yu explained the meaning of "Lohao" as "Lifestyle of Health and Organic."

The "passionate enthusiasm" refers to growing a "totally" organic plant or animal, which requires at least five years.

Needless to say, the plants and animals, without fertilizer or synthetic feed, grow slower than ordinary ones.

For example, the maturation period of a pig with synthetic feed is only half a year, but it takes two to three years for an "organic" pig to be traded in the market.

Yu, coming from Taiwan, said, in his home province, it takes seven years to grow a kind of organic tea. And in the county of Yichun in Jiangxi Province, it took almost six years for a farm to be certified as an organic farm.

During the application process, the farmers could not bear the slow growing period of their plants and secretly added fertilizers. The authorities detected the fertilized soil and rejected the farm's application twice.

To help the farm become certified, the head of the town had to inspect every transportation vehicle going to the farm to ensure there was no fertilizer or pesticides being transported in.

Enthusiasm of farmers trading organic products is high, as they are expensive, or to certain extent luxurious. So the market is relatively limited to high-income people.

"There are many stockholders of LohaoCity, but they almost never ask about the sales performance of the shop since it opened early this year, as they know being in the organic food business requires patience," he said.

This niche shop aims to encourage people to "invest in their future," he said, believing the domestic organic food industry will take off within the next three to five years.

Operational approach

LohaoCity models its operations on the Nasdaq-listed Whole Foods Market in the United States, the world's largest retailer of natural and organic foods, with over 155 stores throughout North America and the United Kingdom.

Like the Whole Foods Market, LohaoCity has its own farm called Zhiwan Ranch, which provides standard organic plants and grains for the shop. The ranch also has some organic milk or herb projects and aims to create an "East Provence" there.

Five years ago, the president of LohaoCity from Taiwan, discovered some "virgin" land covering 1,500 hectares in the county of Miyun in Beijing, which was 1,196 metres above sea level.

The far-sighted businessman decided not to transform it into an industrial project, or real estate venture, but an organic farm.

It took three years for the farm to undergo examination and certification by the authority the Organic Food Development Centre (OFDC) of the State Environmental Protection Administration.

The farm has now been granted the "organic" status by the OFDC.

"The farmers working in the ranch are not ordinary farmers. They are 'workers' employed by our company. This is to prevent them from adding fertilizer to reap a bumper harvest," Yu said.

"Trust is fundamentally important for organic food, so we hire workers, instead of purchasing products from farmers," he noted.

In the meantime, LohaoCity also helps customers to look for standard organic foods at home and abroad.

"We choose the products from other companies based on the advice of the OFDC," said Yu, pointing out that its shop is highly selective about what it sells, dedicated to stringent quality standards and committed to sustainable agriculture.

It also offers some famous organic food products such as Peter Rabbit. It imports some cutting-edge products like organic towels from Japan, which are hard to find in ordinary shops in Beijing.

The shop is situated at Jingshun Road in Chaoyang District, adjacent to the Shunyi District, which is surrounded by many luxurious real estate projects such as the Palais De Fortune and Yose Mite Villa.

Most of its customers are the emerging middle-level income consumers - owners of the villas and foreigners.

Due to the shop not being able to reap huge profits quickly, Yu said his belief for future development is based on the growing wealth of people on the Chinese mainland.

"To date, there are 70 million people in the Chinese mainland whose annual per capita income exceeds US$15,000," he believes they are his potential customers.

In the meantime, people's contentiousness for healthy food keeps rising, as incidents such as poisoned rice and dye inside duck eggs makes people highly sensitive about their dinner.

The company is expected to open a second store near the west gate of Chaoyang Park.

LohaoCity Shop and Zhiwan Ranch will be open in Shanghai next year.

Eyeing the booming market of LohaoCity, two Taiwan and Hong Kong investors will open their organic food stores in major business blocks in Beijing.

Market profile

To date, 416 enterprises have been certified as organic food producers in China.

Half of the organic food is exported to foreign countries. The organic food accounts for less than 0.02 per cent of total food production in China.

"Organic food production is still in the developing stage and is set to flourish in the next 10 years in China. Production is expected to be 30 times higher than now," said Xiao Xingji, OFDC director.

He predicts exports of China's organic food will cover two to three per cent of the international market.

In the US market, from 1995 to 2005, organic food sales grew by 15 to 20 per cent and 40 per cent of US customers started choosing organic food.

"Customers' trust and recognition of organic food is set to be enhanced in China," he said.

(China Daily 11/20/2006 page8)