“This story is fundamentally the story of urbanisation,” says Frank.

“Each year since the early 1980s about 20 million people have moved to an urban environment, from substance farming into light manufacturing and service industries, to increase productively.”

That transformation hasn’t been without its problems, but Frank says China has a system of government allowing it to set long-term goals and execute them in a very consistent and focused way.

“They don’t have elections, don’t have strong vested interest groups as democracy has. The bureaucrats and government leaders tend to be very experienced people, who start out very young running small towns and cities.”

By the time they get to national administration level they have 30-40 years of very rich experience in administration.

“Whatever we think of a non-democratic system of government in China, it has proven to be very efficient.”

Today China has an increasing middle class earning of about $US20,000 and is able to pay for housing, food, health care and have money to spend on mobile phones and TVs; and will number about 70 million by 2020.

China now has 660 cities with more than half million people; and of those 200 cities, has more than two million residents

“For an importer China is best approached as a number of different markets. Some companies break it up into about 10 clusters with a large number of cities inside each cluster, such as the Yangzi River delta which has 58 cities.”

However, most importers, including Fonterra and Zespri, concentrate on the largest, first tier cities where competition is fierce and growth is limited.

That’s because of the difficulties in transporting and handling product in the more lucrative and rapidly growing markets of the second and third tier cities.

Frank says long life milk is an example of what’s happening in the Chinese market, which annually consumes about 7.2 billion litres of UHT milk.

Of that 2.5 billion is local premium milk, which sells in 250ml tetra boxes and retails for $US3.60 per litre and is the most expensive UHT milk in world.

“Ninety per cent of that most expensive UHT milk is sold in second and third tier cities.”

China has a rapidly developing “modern trade” or supermarket retail model.

“Modern trade in China is as dynamic and as vibrant as anywhere in world. It is characterised by a large number of players unlike any other market.

“There are national leaders, big international players and regional dominators strong in certain regions.

“There are 250 important modern trade retail chains; and every city has key players to deal with. No other market in the world has 660 cities and 250 important retail chains, so China presents a different set of challenges.”

People talk about China westernising but Frank and Xavier believe China is modernising, not westernising.

“China is taking what it wants but retaining its own unique cultural attributes and heritage. In many areas China is leading the world.

“Online sales are growing rapidly at 10 per cent of total retail sales, which is bigger than the US and continues to grow more strongly than anywhere else. Chinese consumers are by nature innovative, early adopters of new things.”

They don’t trust traditional media but trust the advice and opinions of their peers on social networks when making decisions about what to purchase; and food safety is among their biggest concerns.

Chinese look for foods that offer medicinal benefits; and they’re prepared to pay a higher price for those with the functionality they seek.

Cheap loans are enabling people from other industries as well as farmers to invest in agriculture.

“They have clear vision, are well organised and while not yet generating significant returns, they are as yet less five years old and have deep pockets.”

To operate successfully in the unique Chinese market, foreign companies must develop local knowledge and capability in the market by not only employing Chinese people in China but also in New Zealand.