Understanding the Chinese fruit market (Part 1)

The vast Chinese market for domestic and imported fruit is fueled by a population of 1.3 billion and a strong economy. Southern China is playing a key role, given its explosive increase in economic resources available for buying high-quality fruit. Within China’s broad range of wholesale markets, the Jiangnan Market in Guangzhou has become the main entry point and hub for virtually all fruit entering the Chinese market, either officially or through the “grey channel.”

I. China as a producer of fruit

Domestic fruit production has been growing by leaps and bounds; mainly apples, citrus, pears (Asian varieties), bananas and grapes. There is also a growing interest in raspberries, strawberries and blueberries.

For many years the quality of Chinese fruit production was inferior to foreign. But in recent years there has been a sharp increase in the operational side, post-harvest management has positioned the domestic fruit as a cheaper product that is more affordable to average consumers.

There are high technology initiatives and a willingness to create development hubs for production of high quality fruit that meets international standards.

II. The importance of imported fruit

Imported fruit will remain the first purchase option for Chinese consumers because of its high quality, appearance and flavor. Also, in China fruit is often purchased as a gift. Thus, higher quality reflects directly back to the giver.

There has been a steady increase in demand for imported goods. The following lists increases in the various types:

Bananas                                 23%
Longanberry               17%
Table grapes               14%
Citrus fruits                 11%
Durian                                    11%
Papayas and melons 5%
Apples                                    5%

Note: Imported plums, peaches and cherries occupy a very small niche.

Ranking of Countries exporting fruit to China:

6.New Zealand

III. Countries exporting to China

The United States are one of the largest suppliers of fresh fruit to China. In 2006, it supplied 43% China’s grapes, second only to Chile, which supplies 53%. Chile supplied 47% of apples in 2006, overtaking the United States.

For more than 20 years many Chinese consumers have been willing to pay premium prices for high quality Washington apples, grapes and the famous California Sunkist oranges.

Increased competition between foreign suppliers and Asian and Chinese producers has resulted in much lower prices.

China and the United States are in both in the northern hemisphere, American production is available at the same time that Chinese production. This has become an increasingly relevant topic to Chinese consumers, raising the challenges faced by American sellers.

September’s Moon Festival is an important date in the China fruit market and especially table grapes. Both the US and China have production available to the market. Chilean products are absent.

The situation reverses during the Chinese New Year (January to mid February) when the Southern Hemisphere’s production is present, especially early harvest from Peru and Chile, among others.

Apples are a different story because the US, like China’s domestic producers, supplies China throughout the entire year. High quality Fuji is sold at up to twice the US price, until March-September when Southern Hemisphere production arrives from Chile and New Zealand at US prices.

Even though New Zealand, US and Chilean products are of similar quality to those of domestic producers, marketing, advertising and onsite commercial representation are much more restricted.

Though it goes without saying, branding is paramount is a market where most people are not aware of where Chile is. It is critical to create awareness in the importing country’s market if a food exporter wants to become a powerful presence in this sector.

As a way to collaborate on the standardization of the fruit traits, I offer the following remarks:

• Red apples and Red Globe grapes are a typical gift, whereas their red symbolizes good luck in Chinese culture.
• Consumers in southern China prefer the scent of sweetness and acidity; therefore they prefer grapes, apples and cherries to citrus fruits.
• The demand for grapefruit is historically higher in eastern China, especially Shanghai and Beijing.
• In southern China, people prefer medium-sized oranges, whereas in the north, the larger-sized.
• As regards marketing cherries in areas with the highest purchasing power (Guangzhou and Shenzhen for example), consumers prefer darker-skinned cherries, which are associated with a greater degree of sweetness.

An important point to consider is the trend of counterfeit packaging, logos and presentation formats from unscrupulous market players. They counterfeit what consumers are buying: a high quality, imported product. But their products are of a very different quality and condition.