China  Imported  Fruit  Market  Overview  

March  26,  2015  

Fresh  Connec8ons:  China    

Mabel  Zhuang,  PMA  China  Representa<ve  

Overview  •  Introduc<on  

•  About  me  •  What’s  new  

•  China  Imported  Fruit  Market:  By  the  Numbers  •  Market  access  •  The  scale  of  trade  •  Fruit  imports  by  country  •  Fruit  imports  by  product  •  Price  comparison  •  Growth  leaders  •  Cherry  imports  

•  Looking  Forward:  Market  Trends  and  Dynamics  •  Fresh  fruit  e-­‐commerce  •  Free  trade  zones  •  The  changing  distribu<on  system  

Introduc8on  

About  Me  

•  Served  with  USDA  ATO  Shanghai  for  5  years  •  Led  one  of  the  first  China  delega<ons  to  PMA  Fresh  Summit  

•  Established  M.Z.  Marke<ng  Communica<ons  in  2005  •  Marke<ng  solu<ons  for  global  ag  exporters  

•  PMA  China  Consultant  since  2012  •  Third  year  presenter  at  Fresh  Connec<ons:  China  

What’s  New  

•  I  became  a  journalist  

•  Produce  Report  launched  in  May,  2014  

•  www.guojiguoshu.com  

•  News,  exclusive  interviews,  analysis,  opinion  

•  Produc<on,  varie<es,  policy,  technology,  markets,  trade  issues  

China  Imported  Fruit  Market  By  the  Numbers  

China  Market  Access  Country   Product  

In  2014  

Mexico   Raspberries,  Blackberries  

Holland   Conference  Pears  

USA   California  Citrus,  Washington  Apples  

Chile   Avocados  

South  Africa   Apples  

In  early  2015  

USA   All  Apples  

Peru   Avocados  

•  35  countries  •  ~  50  fruits  

Total  Fresh  Fruit  Imports  

2.9  

1.6  

2.7  

1.5  

3.4  

1.6  

China   Hong  Kong  

Volume  (million  tons)  

2012   2013   2014  

3  

1.8  

3.4  

1.7  

4.3  

2.2  

China   Hong  Kong  

Value  (billion  USD)  

2012   2013   2014  

Source:  China  Customs,  HK  Customs  

Fruit  Imports  by  Country  (million  USD)  

0   400   800   1200  

Australia  

New  Zealand  

South  Africa  

Ecuador  

Peru  

USA  

Philippines  

Vietnam  

Chile  

Thailand  

Mainland  China  

2014  2013  2012  

Source:  China  Customs,  HK  Customs  

0   200   400   600  

Japan  

New  Zealand  

Philippines  

China  

Peru  

South  Africa  

Australia  

Chile  

Thailand  

USA  

Hong  Kong  

0   500  

Bananas  

Strawberries  

Pears  

Guavas,  Mangoes,  Mangosteens  

Lemons,  Limes  

Apples  

Oranges  

Durians  

Cherries  

Grapes  

Hong  Kong  

Fresh  Fruit  Imports  by  Variety  (million  USD)  

0   500   1000  

Plums,  Prune  Plums,  Sloes  

Pineapples  

Lemons,  Limes  

Oranges  

Guavas,  Mangoes,  Mangosteens  

Kiwi  

Cherries  

Durians  

Grapes  

Bananas  

Mainland  China  

2014  2013  2012  

Source:  China  Customs,  HK  Customs  

2014  Price  Comparison  (USD/KG)  Descrip8on   China   Hong  Kong   Difference   Percent  diff  

Bananas   $0.72   $0.65   $0.07   10.8%  

Grapes   2.85   2.33   0.52   22.5%  

Durians   1.88   0.78   1.10   141.7%  

Cherries   8.14   5.83   2.32   39.8%  

Kiwi   3.11   2.58   0.53   20.4%  Guavas,  Mangoes,  

Mangosteens  1.99   1.23   0.76   61.7%  

Oranges   1.20   0.98   0.23   23.2%  

Lemons,  Limes   2.05   1.57   0.48   30.7%  

Pineapples   0.83   0.87   -­‐0.04   -­‐5.0%  Plums,  Prune  Plums,  Sloes   3.02   2.20   0.82   37.1%  

Average   0.68   38.3%  Source:  Produce  Report  (www.guojiguoshu.com),  China  Customs,  HK  Customs  

2014  Price  Comparison:  Ques<ons  •  Why  are  mainland  China  import  prices  so  much  higher  than  those  in  Hong  

Kong?  

• Mainland  China  import  volumes  much  larger  •  Should  receive  lower  prices  

• Mainland  China  has  import  tariffs  and  VAT  •  Provides  incen<ve  to  under-­‐report  shipment  values  

• Higher  cost  of  doing  business  in  mainland  China  for  exporters  •  Phytosanitary  standards:  cold/heat  treatment  •  More  air  shipments  

•  It’s  a  seller’s  market  •  China  demand  is  just  too  strong  •  Many  newly  emerging  fruit  companies  

Growth  Leaders  (million  USD)  Fruit   2013   2014   Growth  

Avocados   2.4   11.9   400.1%  

Lemons/Limes   14.6   61.2   319.1%  

Blueberries   15.6   40.8   160.7%  

Bananas   332.4   806.8   142.7%  

Cherries   296.1   529.1   78.7%  

Kiwi   121.2   195.4   61.2%  

Pears   6.9   10.1   46.8%  

Mandarins   20.4   29.3   43.9%  

Pineapples   40.6   58.2   43.4%  

Grapefruit   23.7   30.6   29.0%  

Source:  China  Customs  

A  Closer  Look:  Cherries  2012   2013   2014  

Country   Volume  (KG)  

Value  (USD)  

Volume  (KG)  

Value  (USD)  

Volume  (KG)  

Value  (USD)  

Chile   33,048,223   235,628,008   30,955,654   238,619,039   52,790,030   426,403,812  

USA   8,509,766   70,416,468   5,915,328   51,221,269   10,162,346   82,523,809  

Canada   369,370   4,176,110   1,356,901   12,141,927  

New  Zealand   30,566   348,622   226,422   3,308,353   348,193   5,537,851  

Australia   66,345   1,086,288   334,793   4,019,125  

Tajikistan   4,560   21,690   53,436   243,836  

Kyrgyzstan   17,500   35,000    

Total   41,588,555   306,393,098   37,537,679   298,432,749   65,063,199   530,905,360  

Growth   -­‐9.7%   -­‐2.6%   73.3%   77.9%  

Source:  China  Customs  

A  Closer  Look:  Cherries  2012   2013   2014  

Port   Volume  (KG)   Value  (USD)   Volume  

(KG)   Value  (USD)   Volume  (KG)   Value  (USD)  

Shenzhen 7,498,611   52,171,515   13,614,183   104,012,355   32,205,367   254,951,011  

Shanghai 14,075,070   104,993,464   12,526,392   107,856,989   22,263,004   189,762,475  

Dalian 2,921,729   17,730,303   3,948,742   21,095,482   5,205,219   37,162,333  

Beijing 1,619,213   18,251,773   1,866,770   20,961,308   1,967,429   20,616,417  

Guangzhou 15,303,352   111,998,306   5,009,565   40,093,862   917,820   8,640,276  

Gongbei 59,000   531,000   809,411   5,973,641  

Shantou 150,451   1,191,202   726,722   5,377,743  

Zhengzhou 459,758   4,661,036  

Huangpu 68,960   452,313   91,800   532,440   183,768   1,348,545  

Ningbo 69,602   626,402   87,176   849,931  

Tianjin 65,826   472,795   99,718   755,526  

Xiamen 72,850   536,494   130,788   1,037,224   54,672   436,453  

Urumqi 4,560   21,690   68,936   263,471  

Jiangmen 13,922   104,412  

Chongqing 277   2,090  

Qingdao 28,770   258,930  

Summary  of  Observa<ons  •  Mainland  China  imports  approximately  twice  as  much  fresh  fruit  as  Hong  Kong,  although  its  popula<on  is  about  193  <mes  larger  

•  Import  prices  generally  lower  in  Hong  Kong  

•  Significant  growth  in  2014  for  most  imported  fruits  

•  More  countries  and  more  products  gaining  market  access  

•  More  regional  China  ports  receiving  fresh  fruit  shipments  

Looking  Forward:  Market  Trends  and  Dynamics  

Changing  Market  Dynamics  

•  Fresh  Fruit  E-­‐commerce  

•  Free  Trade  Zones  

•  Changing  Distribu<on  Systems  

Why  Fresh  Fruit  E-­‐commerce?  •  The  allure  of  China:  

•  1.4  billion  popula<on  •  Rapid  income  and  consump<on  

growth  

•  The  reality:  •  Highly  fragmented  •  Different  distributors  and  

retailers  in  every  city  

•  The  poten<al  of  e-­‐commerce:  •  Consolidated  marke<ng  efforts  •  Access  to  the  whole  country  •  Audio-­‐visual  and  informa<on-­‐

based  branding  

Fresh  E-­‐commerce  Challenges  

•  Most  cold  chain  infrastructure  concentrated  in  <er-­‐1  ci<es  •  Home  to  approximately  3%  of  China’s  popula<on  

•  Online  price  balles  •  Lead  to  low  profits  

•  Gaining  trust  and  changing  consumer  habits  •  Most  consumers  s<ll  prefer  to  purchase  fruits  at  more  tradi<onal  retail  outlets  

Status  of  E-­‐commerce  in  China  

0  5  

10  15  20  25  30  35  40  45  50  

2000  2002  2004  2006  2008  2010  2012  2014  

Chinese  Ne8zens  (%  of  popula8on)  •  S<ll  a  new  opportunity  

•  In  2014,  Tmall.com  launched  a  fresh  food  channel  

•  In  2015,  JD.com  launched  a  fresh  food  channel  

•  Room  for  growth:  •  S<ll  less  than  half  of  popula<on  online  

Free  Trade  Zones  •  Shanghai  Pilot  Free  Trade  Zone  

•  Launched  in  September,  2013  •  CIQ  inspec<on  for  fruit  launched  

September,  2014  

•  Offers  significant  advantages  for  e-­‐commerce  •  Tax-­‐free  consumer  purchases  

•  Advantageous  policies  for  •  Business  registra<on  •  Currency  exchange  •  Wholesale  trade  

•  Dozens  of  addi<onal  FTZs  are  currently  being  established  

Distribu<on:  Tradi<onal  Supply  Chain  

Small  Growers   Aggregators  

Secondary  Aggregators  &  Middlemen  

Wholesale  Markets  

Family  Owned  Stores  

Consumers  

Supermarkets  

Street  Vendors  

Wet  Markets  

Secondary  Wholesale  Markets  

Importers  

Distribu<on:  Emerging  Supply  Chain  

Large  Growers  

Wholesale  Markets  

Consumers  

Supermarkets  

Fresh  Fruit  Chain  Stores  

Importers  

E-­‐Commerce  Websites  

Growers  Exporters  

Summary    •  Fresh  e-­‐commerce  is  s<ll  in  its  early  development  stages  •  Challenges  from  cold  chain,  consumer  habits,  and  low  profits  •  Opportuni<es  from  vast  growth  poten<al  and  more  branding  opportuni<es  

•  Free  Trade  Zones  also  in  early  development  •  Greater  educa<on  s<ll  needed  regarding  FTZ  benefits  •  Poten<al  to  change  wholesale  and  e-­‐commerce  trade  

•  Direct  sourcing  will  con<nue  to  gain  popularity  among  fresh  produce  retailers  and  distributors  •  May  become  easier  as  a  result  of  FTZs  

Thank  you!  M.Z.  Marke8ng  Communica8ons  

Web:   www.mzmc.com.cn  www.guojiguoshu.com  

Email:   info@mzmc.com.cn  

Phone:   (+86)  21-­‐65216751