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China: Opportunities & Challenges for Produce from South America

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Presentation on theme: "China: Opportunities & Challenges for Produce from South America"— Presentation transcript:

1 China: Opportunities & Challenges for Produce from South America
Mabel Zhuang Director, M.Z. Marketing Communications PMA China Consultant

2 Agenda A Little Background: China’s Economy Overview
Setting the Context: China’s Fruit Imports The Opportunities for South American Produce to China

3 China’s GDP in 2011 has reached $7
China’s GDP in 2011 has reached $7.5 trillion with annual growth rate at 9.2% China has surpassed Japan and become the second largest economy over the world only next to the United States The predicted growth rate for would be 7.5%

4 Map of China (Major Ports)

5 China’s Production of Food & Agriculture Products and World Rank

6 China is the world’s largest agricultural producer
Fresh Apples (U.S. 2nd) Fresh Pears (U.S. 3rd) Fresh Tangerines (U.S. 4th) Fresh Apricots (U.S. 5th) Fresh Peaches (U.S. 6th) Fresh Plums (U.S. 2nd) Fresh Grapes (U.S. 6th) Pork (U.S. 3rd) Rice (U.S. 10th) Cotton (U.S. 3rd) Dairy, Dry Whole Milk Powder (U.S. 13th) Peanuts (U.S. 4th) Walnuts (U.S. 2nd) Source: USDA/FAS PSD online

7 China Opportunities - The Magic of 22/7
China has 22% of the worlds population …yet only 7% of the world’s arable land. Over 200 cities in China with a population 1+ million people…only 35 in all of Europe In early 2012 became the largest grocery market in the world Third largest ag importer…and moving up

8 Chinese Imports are Outpacing Exports
Source: WTO

9 Rising Middle Class in China – Import Opportunities

10 Food trade deficit begins
In short, here is the opportunity for suppliers… Net food import Initial Industrialization period Interim industrialization period Late industrialization period Time Food trade deficit begins China joined WTO Now Reform and opening up Net food export Source: COFCO

11 China Fruit Imports (2010 [blue] vs 2011 [red])
Source: China Ministry of Commerce

12 2011 Imported Fruit based on value

13 Future Opportunities Fruit and vegetable imports well positioned – especially for branded products. Large and growing middle class Domestic production costs rising Willingness to source globally

14 Consumer Fruit Consumption Trend
Daily consumption habits & recognition of its general health benefits Fruits used as a major gift item for holidays, family visits, and specials occasions Preference over imported fruits and more choices of varieties compared with two decades ago Growing concerns over the food safety

15 South American Fruit Export to China, 2011 Statistics
(Source: Ministry of Commerce, PRC) Country Import Volume(kg) Import Value($) Percentage Chile 172,693,095 451,858,045 89.84% Peru 15,777,084 43,387,978 8.63% Ecuador 9,105,773 5,475,537 1.09% Argentina 874,517 2,206,379 0.44% Columbia 19,237 40,236 0.01% Total 198,469,706 502,968,175

16 Peru Fruit Export to China
In 2011, Peru achieved growth of 126%, which increased its market share from 1.2 to 1.7 percent. Peru is the third largest exporter of grapes to China after Chile and the U.S.

17 Chile Fruit Export to China
Chile is the number one supplier of cherries and grapes to China, and one of the major suppliers of apples along with the U.S. In 2011, Chile’s fruit export to China has enjoyed a growth rate at 78.5%, increasing their market shares to 18% next to Thailand only.

18 Permissible Fruits to China
Import country Catalog Panama Bananas Ecuador Colombia Costa Rica Uruguay Citrus (mandarin, orange, grapefruit, lemon) Argentina Citrus (orange, grapefruit, tangerines and their hybrids), apples, pear Chile Kiwifruit, apples, grapes, plums, cherries, blueberry Peru Grapes, mangoes, citrus (tangerines, orange, grapefruit, lime)

19 South America Advantages
Good bilateral relationship More market access Counter Season Low Tariff for fruits (Peru 5.2%, Chile 3.9%) Competitive Price Improved Quality Strong Interest from the Chinese Trade

20 China Challenges Language & distance barriers
Low consumer awareness-South American Fruits often labeled as from other origins Under-developed cold chain infrastructure

21 Fruit Distribution in China
Export to H.K. still dominates but declined last year due to tight government control Jiangnan Wholesale Market in Guangzhou is the largest for imported fruit in China, distributing to many secondary wholesale markets in China Direct Import from major wholesale markets with on-site CIQ office: -Shanghai Longwu Fruit Wholesale Market - Shanghai Agricultural Products Wholesale Market (SAP) Importers on the wholesale market makes the purchasing decision, while the market provides logistic service.

22 Wholesale Market in Shanghai
Vendor’s booth

23 Fruit Retail in China Modern Retailers Chains, like Walmart, Tesco, Metro, Carrefour, along with local chains mostly sourcing from whole-sale market Mom & Pop Stores/Wet Market Specials channels: --Fruit Shop Chain Stores growing fast --On-line Fruit Shops with home delivery ---TV shopping Food Service: Restaurants, Bakeries & Juice Bar

24 The First China Fruit Chain Store Summit

25 Fruit Juice Bar

26 Import Documents Required
Phytosanitary Certificate Certificate of Origin Invoice Packing List Bill of Lading Non-wood packing materials certificate or Fumigation Certificate if wooden Pallet used

27 Quarantine Requirement
The only stricter quarantine requirement to Chilean fruit: Pallet must bear the pallet number and the pallet number must show on the phytosanitary certificate for air shipments. Cold Treatment: only to fruits from V & RM, conditions normally 0.5 degree Celsius for 15 days. Ocean - Air: this is forbidden to all origin, but other origin does not use this transportation, while Chile does. On the site inspection, the same to all origins.

28 Projection for Future Increased consumption for both domestic and imported fruits, per capital fruit consumption is expected to increase from 40 kilos to 48 kilos in 2020. More direct import to mainland China. Volume will continue to increase, but the growth rate will slow down. High value products will have good future, like blueberries.

29 Commitment to the Market & Exploration of New development
Some Suggestions Commitment to the Market & Exploration of New development Trade Education-seminars, trade delegation, trade shows in China Consumer Promotion & Branding-retail promotion, Advertising, P.R., Social Media Chinese-speaking supporting staff on the market

30 PMA in China Two-day Produce Cold China Training, Sep., 2012
Extensive Research & Market Development Strong relations with Chinese associations and importers PMA Roundtable with China Produce Industry, June, 2012 Two-day Produce Cold China Training, Sep., 2012 Chinese Buyer’s Delegation to Fresh Summit Presentation at the Logistic Forum of China Chain Store and Franchise Association’s annual convention Presentation at China Fruit and Vegetable Trade Fair Engagement with American/Chilean Embassies in China Global Development Council Meeting in Shanghai, March,2013

31 E-mail: mabel@mzmc.com.cn
Thank You! For More Information: Mabel Zhuang


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