China holds market promise for Chile and Latin America
Produce Marketing Association (PMA) China consultant Mabel Zhuang spoke with Chilean fruit producers and industry workers on Thursday, highlighting growing opportunities in the often difficult Chinese market.
Zhuang paid special attention to the possibilities for Latin America at the breakfast event. She depicted the US$7.5 billion dollar economy as a market giant, waiting for savvy exporters to break in.
"China is a big producer of produce, but much of it for its own consumption, and its consumption is so strong it needs to import produce from the world to meet its higher demand," she said.
China accounts for 22% of the world population but only 7% of arable land, she pointed out. As a major consumer of fruits and vegetables, domestic production simply is not enough.
Fortunately for Chile, the Latin American nation is already well positioned as an exporter to China. Chile ranks as the number one supplier to China of deciduous fruit and stonefruit.
In 2011, Chile outsold all Latin American nations in China, accounting for 89.84% of sales from the region with US$451 million worth of fruit exported, Zhuang said. The nation ranks only after Thailand for fruit exports to China, accounting for 18% of the market share.
Chile, Zhuang explained, has fallen in China's favor, in large part due to long-standing good relations between the two nations. Chile was the first country in Latin America to establish diplomatic relations with China in the 1970s.
"South America, Chile in particular, has an advantage to export fruit products to China. The first thing is a good bilateral relationship. I cannot emphasize this more. Because even though we are talking about trade, in China trade and business are all closely related to politics. By that, Chile enjoys a very good relationship with China. That will help to stabilize trade," she said.
Chile's favor with China means that the nation can now sell kiwifruit, apples, grapes, plums, cherries and, most recently, blueberries on its market.
In the case of grapes, for example, Chile's good relations become especially clear when looking at tariffs. The United States pays a 13% tariff on grapes exported to China, while Chile only pays 3.9%.
Even with the many factors in Chile's favor, however, the road to successful sales in China is not an easy one to follow.
Zhuang pointed out that Chile is lacking in many areas required for real success in China. Few Chileans speak Chinese, for example, and Chilean fruit companies have not yet begun to create websites specifically made for Chinese consumers, as is the case with many U.S. companies.
"Language could be a barrier and, especially, the Chinese prefer reading in Chinese. They are looking for a lot of information online and if you search for 'Chilean table grapes' or 'Chilean fruit,' sorry, there's no website," she said.
Consumer awareness of Chilean products is also low, she said. Chile may be a major fruit supplier in China, but few consumers know anything about the country.
"In China, your Chilean products are doing a great job. If you look at statistics, you are higher than the U.S. but consumer awareness is very low. And so, the sad story is, many Chilean fruits were labeled as U.S. origin because consumers are more familiar with U.S. origin," she said.
She suggested that, for success, Chilean exporters show a commitment to the market and explore new development opportunities. She emphasized the importance of marketing to win the favor of consumers through branding, social media usage and presence at important Chinese trade events.
Chinese per capita fruit consumption is expected to increase from 40 kilos to 48 kilos by 2020, so taking the right steps now could pay big later.