Suppliers react to Chinese importer arrests

For fresh fruit and vegetable marketing and distribution in Asia
John Hey

BY JOHN HEY

@john_asiafruit

Suppliers react to Chinese importer arrests

Reports that managers of major importer Dalian Yidu have been arrested by China Customs spark supplier concerns

Suppliers react to Chinese importer arrests

Dalian Yidu controls an estimated 15-20 per cent of Chile's cherry shipments to China

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Reports that management of one of China’s leading fruit importers have been arrested by Chinese customs authorities have raised widespread concern among global suppliers and the local trade.

Liu Zhi, chairman of Dalian Yidu, a major importer and logistics and cold storage operator, and his younger brother, who is involved in the meat division of the business, were reportedly arrested by China Customs last Friday night (16 January).

Asiafruit undertands the arrests were led by the anti-smuggling bureau within China Customs. While many trade sources suspect the case to centre on under-declaration of customs duties, no official information is available at this stage.

The news has caused alarm among many global exporters, as Yidu is such a large importer with sourcing programmes spanning a diverse range of origins, including Chile, Peru, the US, South Africa, New Zealand and Australia.

Key Chilean cherry exporters are particularly exposed as Yidu is one of the biggest importers of the fruit, and the incident has occurred during the peak of their bumper shipments to China in the run up to the Lunar New Year.

Chile has shipped almost 4,000 container loads of cherries to China by sea this season, with an estimated 30 per cent of those shipments still on the water. Trade sources suggest that Yidu has handled as much as 15-20 per cent of the total volume. Major exporters have reportedly sent sizeable volumes to Yidu on consignment, with very little or no upfront payment.

While the majority of Yidu’s Chilean cherry shipments have arrived, the importer is understood to be holding large volumes in storage because Chinese New Year falls later on the calendar this year, on 19 February, and the market is currently slow. Many shipments are still on the water, and exporters are now seeking to change shipping documents and transfer shipments bound for Yidu to other import clients. That is likely to cause disruption and delays to shipments on arrival, according to market sources.

Shanghai Huizhan Wholesale Market was reportedly awash with Chilean cherries this morning (22 January), many of them selling at prices of RMB250-330 (US$40-53) per carton, compared with RMB400-500 (US$64-81) per carton at a similar stage last year. A high degree of splitting was reported in the fruit due to rains in Chile.

Zespri monitoring the situation

Yidu is also one of global kiwifruit marketer Zespri’s panel of four import agents in China, which were appointed last year. Zespri told local media today (22 January) that it was investigating the reported arrests, although there was nothing to indicate any investigation by authorities involves New Zealand kiwifruit.

Zespri communications manager Oliver Broad told the National Business Review a great deal of uncertainty remained around what has happened with Dalian Yidu, and that it was was trying to find out more. “It is one of Zespri’s importers into China, dealing with less than 5 percent of Zespri’s China volume,” Broad said. 

China took 10 per cent of Zespri’s 93m-tray export crop last year, with Yidu handling around 4 per cent of the volume, according to the report.

Zespri’s New Zealand supply season to export markets, including China, finished a few months ago and it has no financial exposure to Yidu, Broad said.

Rumours are rife in the Chinese trade regarding the case, but reports that Liu had been released following his arrest have proven incorrect. Other members of Yidu’s staff are said to be cooperating with the investigation.

While Yidu continues to trade, market sources noted that the company is under pressure as exporters divert shipments, while suppliers seek to collect payments and some of its customers stall on payments owed.

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