China Snapshot: Chile's growing fruit trade with the Asian giant

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China Snapshot: Chile's growing fruit trade with the Asian giant

In June this year Chile took a great leap westward in its position as the Southern Hemsiphere's leading fruit exporter. After three years of negotiations and a backdrop of several competitors also vying for market access, Chile and China signed a phytosanitary protocol allowing for the continuous export of fresh blueberries and camelids.

The agreement not only came as a healthy addition to Chile's growing list of fruits it could sell to China, but marked its place as the only direct exporter of fresh blueberries to the Asian country.

The approval followed a long list of negotiations between the two countries which had also led to entry approval for table grapes, apples, cherries, plums and kiwifruit, which incidentally traces its roots back to China.

A lot has been said about what the Chinese fruit market means for the Chilean economy, but what about the other side of the yuan?

Avid fruit eaters in the Middle Kingdom

The Chinese land mass has around 960 million hectares with 157 million hectares that are suitable for agricultural cultivation, which is partly why it ranks as one of the three largest agricultural producers in the world.

In terms of horticulture this translates to apples and citrus fruits, with South East Asia and Russia as its major food export markets. However, these advantages are not enough to feed a population of 1.3 billion habitants who currently consume a marked amount of fruit in their daily diets.

Agricultural Attache for the Chilean Embassy in China Álvaro Aspee, says as the country's economy grows so too is its consumption across most food categories.

"China is a big consumer of food, with fruit being an important part of the diet. The economic factor also plays an important role," he says.

"The increase in incomes produces changes in the quality and quantity of food consumed, increasing in meat, fruit, drinks, and in the expense of cereals.

"With the generation of trade and cultural exchange, non-traditional food is starting to be introduced for the Chinese, like blueberries for example."

While the Chinese take pride in cuisine and are open to new products, the 'Made in China' brand has taken some serious hits in the food industry over recent years, with many retailers abroad refusing to buy Chinese produce.

Despite often lower prices, Chinese products struggle to sell with western consumers and it seems a similar trend is taking place with the locals too

"Recent scandals with melamine tainted milk and pork with clonbuterol for example, have made consumers lose confidence in local production in favor of imported food," says Aspee.

"Urbanization and the development of supermarket chains has favored demand for certain products, including fruit. Finally, we must not lose sight of festivities and the custom of giving fruit as a gift."

South American blueberries arrive in China

The southern Chinese province of Guangdong - home to manufacturing mecca Guangzhou - not only produces the iPhones that are now so common among Chile's growing middle class, but also acts as a major import-distribution hub for food exports.

Month after month, container after container of fruit arrives from the likes of Thailand, Chile, the Philippines, the U.S., Vietnam and New Zealand, to be transported the rest of China.

Guangzhou Jiangang Fruit & Vegetable Market public affairs representative Yetao Lin, says Chilean blueberries are yet to make their mark in China, but other Chilean fruit have proven to be very successful.

"If we analyze the complete volumes, Chilean blueberry imports until now haven't had a main role in terms of total fruit imports," he says.

"Cherries and grapes from Chile are much more relevant. You have to consider that the U.S. is also an essential exporter and has some advantages over Chile. One of these is the better quality of the product.

"For example, often it happens that we open up a shipment from Chile and inside it we find that not all the fruit are the same size. Secondly, for being a shorter distance, a shipment from the United States goes for cheaper than a shipment from Chile."

"However, we can't complain. Chilean blueberry imports offer a better price and excellent quality. For this they are currently occupying second place in this specific business."

He says the business has only just begun.

"In the medium term blueberries will become a really important food in China. What is happening is because of the moment, people don't know it much, and there's a lack of publicity about the product," says Lin.

Just a few months ago Chilean marketing agency ProChile opened up an office in Guangzhou, appointing Nicolás Serrano as its director.

"At ProChile in Guangzhou we want to promote Chilean investments in the province of Guangong and its surroundings. Although now blueberries aren't so known in China, we have the view that in the near future the situation will change," says Serrano.

"The Chinese like sweet fruit, and also healthy eating, which is a trend that has increased during recent years on a global level, and China has not lagged behind."

The future of Chilean imports in China

Aspee highlights the Chinese Communist Party's important policies towards food security for its citizens to ensure supply.

"Production is very fragmented, with about 200 million farming units, also at distances far from productive zones for consumers, and there are a significant number of links in the supply chain," he says.

"In fruit we see similar shifts in search of more profitable crops that have the most efficient use of water. In this modernization process, it's blueberries precisely that have been planted in some areas of China. However, there is a demand for safe food, which could be in part answered by imports.

"The Ministry of Commerce said in June that it would implement a food monitoring system by 2015 in all cities with more than one million inhabitants, in order to ensure food safety. This obviously raises the standard of production required, where Chile is highly competitive and able to respond to the challenge."

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