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

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Presentation on theme: "China: Opportunities & Challenges for Produce from South America Mabel Zhuang Director, M.Z. Marketing Communications PMA China Consultant."— Presentation transcript:

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

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

3 Chinas 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 Chinas Production of Food & Agriculture Products and World Rank

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

7 China Opportunities - The Magic of 22/7 China has 22% of the worlds population …yet only 7% of the worlds 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 Source: WTO Chinese Imports are Outpacing Exports

9 Rising Middle Class in China – Import Opportunities

10 Time Net food import Net food export Initial Industrialization period Interim industrialization period Late industrialization period China joined WTO Food trade deficit begins Reform and opening up Now In short, here is the opportunity for suppliers… 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) CountryImport Volume(kg)Import Value($)Percentage Chile172,693,095451,858, % Peru15,777,08443,387, % Ecuador9,105,7735,475, % Argentina874,5172,206, % Columbia19,23740, % Total198,469,706502,968,175

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, Chiles 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 countryCatalog PanamaBananas EcuadorBananas ColombiaBananas Costa RicaBananas UruguayCitrus (mandarin, orange, grapefruit, lemon) Argentina Citrus (orange, grapefruit, tangerines and their hybrids), apples, pear ChileKiwifruit, apples, grapes, plums, cherries, blueberry PeruGrapes, 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 Challenges 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 Vendors 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 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 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 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 Buyers Delegation to Fresh Summit Presentation at the Logistic Forum of China Chain Store and Franchise Associations 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 Thank You! For More Information: Mabel Zhuang

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