Brief: The State of Protein Investments in China

Investment opportunities for protein innovation in China are wide open right now. Mr. Tao Zhang, co-founder of Dao Foods, an investment firm focusing on alternative protein innovation in China, recently shared with us his observations:

The popularity of plant-based protein is steadily rising, especially in Asia. As a matter of fact, 2020 saw an incoming investment larger than all prior investments in the industry combined. Entrepreneurs around the world are focusing on only one or a few links in the industry chain, but their products are beginning to diversify from just beef and chicken to more than 15 kinds of proteins!

Another interesting development is in fermentation technology. Mr. Zhang pointed out that, compared to cultivated meat, fermentation is a much cheaper option for source materials, and its use is growing. This was evident in 2019 when the fermentation protein industry raised capital rounds that are 3.5 times as large as overall investments in cellular protein.

And while it’s true that China has consumed vegetarian food for centuries (think: bean curd), for the plant-based food industry to develop, companies need to understand the mind of Millennials and Gen Z in China. These generations’ buying patterns are similar to those of their counterparts in other nations, but with specific tastes reminiscent of traditional dishes.

Mr. Zhang explained that the major challenges the industry faces in protein innovation is safety and core technology. Due to cellular meat’s complexity of production, without international collaboration to lower its cost, such products cannot be commercialized. In contrast, since fermentation is traditionally practiced in China, such practice only needs to be improved. China also has the productivity capabilities essential to the fermentation field. Fermentation has the incredible potential to meet Chinese customers’ demand of taste as well as delivering a cost that is more economical than other source materials.

In sum, we are anticipating great growth in the plant-based protein sector! As investors, researchers and entrepreneurs take advantage of all that this new field has to offer, we are also confident that the industry will soon see unprecedented innovation, creativity, and benefits for consumers.


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