Change the only constant in China

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News and insight for North America's fresh produce buyers
Emily French

BY EMILY FRENCH

Change the only constant in China

Asiafruit Market Insight unveils a world of potential in China’s second-tier cities to delegates in Qingdao

Change the only constant in China

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China’s incredible growth, changeability and above all, untapped potential in tier-two cities, were the key themes at the inaugural Asiafruit Market Insight event in Qingdao this week.

Delegates attending Asiafruit Market Insight were addressed by speakers from some of the industry's leading players including Zespri, Naturipe, Lantao, Rijk Zwaan, Goodfarmer, Golden Wing Mau and Maersk.

The Chilean Ambassador to China, Luis Schmidt, and Hans Peter Reust, managing director of Metro subsidiary Star Farm, also spoke at the event, which took place at Qingdao's deluxe Intercontinental Hotel on 29-31 May.

Presentations in both English and Mandarin provided delegates with first-rate insights into exciting new opportunities to grow their business in emerging markets beyond the major cities such as Beijing, Shanghai and Guangzhou.

Untapped potential

Opening speaker Xavier Naville of Vision Management Consultants underlined China’s enormous untapped import potential when he pointed out that 40 containers of imported fruit would arrive in China in a 30-minute period, but 1,000 containers would be consumed.

While second-tier cities may appear to offer fewer opportunities than their bigger counterparts, Lantao president John Wang emphasised that many of these cities, such as Qingdao, Hangzhou and Nanjing, comprise of upwards of 8m consumers.

Furthermore, many smaller companies, while not widely known internationally, had established extremely successful businesses in second- or even third- and fourth-tier cities.

Speakers reported that as their companies have begun to invest in smaller Chinese cities, they have seen substantial growth while recognising that these are still early days.

Reaching consumers

Naville emphasised the importance of businesses establishing a connection with Chinese consumers and advocated social media as the ideal means to reach the younger population, for whom online communication is a major part of their daily social interactions.

“Social media is very different to traditional marketing,” he told delegates. “You are not just delivering a message to the consumer, but engaging the consumer.”

Naville’s message was supported by Daniel Mathieson, global president of sales and marketing at Zespri, which seeks to reach consumers through a range of channels, including sponsoring local community events in China such as education programmes in schools.

Berry bloom

As a region leading the way in the growth of China’s berry production and consumption, Qingdao provided the ideal setting for speakers from the berry industry to discuss their burgeoning business.

Nick Zhang of Legend Holdings, which owns leading Chinese blueberry grower-marketer Wallen Agri, charted the dramatic rise in the country's blueberry plantations over the past eight years, which in 2012 stood at approximately 10,000ha, yielding 12,000 tonnes. Production is set to see monumental growth in the next few years. “We anticipate production to be 60,000 tonnes in 2016,” Zhang said.

Zhang also reported that demand had grown ten-fold since its business launched and that, despite its period of incredible growth, it was “early days still”.

Bringing his global expertise to the session, Robert Verloop, executive vice-president of marketing at Naturipe, spoke on the importance of "creating demand" and engaging the consumer to build the berry category in China.

Verloop laid out Naturipe’s exciting vision for blueberries’ market potential in China. “We want to make the blueberry as conveniently available as Coca Cola,” he said. “A recent report by DGC Asset Management predicts that if China, Europe and South America were to see market penetration equal to the US, the global blueberry market would grow by 500 per cent.”

Looking at the future of the category in China, he also underlined the importance of introducing berry varieties that grow well in a location’s soil and climate but also meet the needs of the consumer. “Launching a successful variety takes ten years,” Verloop told delegates.

Forging connections

Speakers consistently emphasised the importance of establishing good supply and distribution networks to avoid delays in getting produce to the consumer.

“We want to see alignment from store to grove,” Verloop told delegates.

Jan Doldersum, Rijk Zwaan’s chain manager for Asia, echoed Verloop’s sentiments. “In China, we want to connect the farm with the market with the retailer,” he said.

With cold chain storage essential to maintain produce quality and shelf life, many companies have set up their own distribution centres to ensure optimum storage and transport for their product. Rod Hill, import manager for Golden Wing Mau, said his company had set up 40 distribution centres and 15 packhouses that allowed it to supply 2,000 retail stores daily.

Facilities to store produce properly were endorsed as important by Yujun Qiu, an analyst for Planet Retail, who identified “freshness” as the second most important factor for Chinese consumers when selecting their fresh produce, after food safety.

Meanwhile, Hans Peter Reust of Star Farm Consulting illustrated the ground-breaking work his organisation had been doing to train farmers and develop a traceabilty system to ensure safe food for consumers through a presentation involving the company's partners throughout the supply chain. 

In the closing session, Liu Zijie, chairman of Goodfarmer, also emphasised the importance of training and retaining young people to capitalise on the opportunities and overcome the challenges facing China's fresh produce business, adding that foreign expertise was also required in a number of areas.

 

 

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