While Chile has overtaken Southeast Asian countries to become China’s leading fruit supplier, the sector has never been one to rest on its laurels as exporters continue to seek new ways to access and build markets within the world’s second-largest economy.
The industry’s potential, particularly for upcoming fruit campaigns and relatively new commodities in China, has been in the spotlight at event Fruittrade which kicked off in the Chilean capital Santiago yesterday.
The event got underway with a panel discussion moderated by Decofrut director Manuel José Alcaíno, including Chinese importers and ProChile’s Trade Commissioner in Shanghai, César Suárez.
“Chile has been able to reach not only the first place which represents approximately US$1.2 billion in exports according to figures from Chinese customs, but it also has 25-28% of the [import] market share in China,” Suárez told participants.
He highlighted the phenomenal growth experienced by the industry since a free trade agreement (FTA) was signed between China and Chile in 2005, as well as his country’s nous for making the most of market access deals.
“Now 98.7% of Chilean products that are exported to China are with zero tariffs,” Suárez said.
“Avocados were recently in 2015 incorporated in the products that could be exported to China and it was incredible. Just a year after gaining access to the Chinese market it became the leader, even overtaking Mexico.
“The presence of Chilean companies and representatives there is fundamental,” he said, adding fruit was now the country’s third-leading export sector behind mining and paper/forestry, ahead of the more iconic Chilean export product wine.
Moving fruit inland
Talk of the enormous potential of China’s second and third tier cities is nothing new, long proselytized by Chinese trade experts and the fruit industry itself. But at Fruittrade yesterday, the topic came to the fore after questions were raised about Chile’s standout fruit export in China – cherries.
“We are potentially facing a record season. Until now from what has been seen with cold hours, the load and everyone trying to thin as much as possible to gain size, we’re looking at a season where we could reach 30 million [boxes],” said Alcaino, Decofrut chief and panel moderator.
“Last year Chile sent 16 million boxes, which represents 85% of Chile’s [cherry] exports, to the Chinese market. If we look at the 30 million boxes we’re looking to export and 25-26 million boxes to China – which would be an increase of more than 50% – is China capable of absorbing that volume?”
“Yes, no problem,” replied Junjie Foodstuff Co., Ltd purchasing manager Anabel Li.
Alcaino joked that the Chilean industry would have to hold her to that claim, but she continued with the reasons behind her confident response.
“Last year it was 16 million but this year if we have more volume we can send more volume to the Chinese interior, because up until now it’s been mainly in the south in the cities on the coast,” Li said.
“If there is more volume we can have more channels.”
Eachtake Group general manager for imports, JP Zhang, offered words of caution however, emphasizing the Chinese market’s preference for firm, dark red fruit with high brix, and a need to maintain consistency.
“If there is rain don’t risk sending fruit to the Far East. You need uniform quality,” he said, urging the sector not to send “bad varieties”.
“You have to be prepared to move fruit to central or western China. This March-April we opened new offices in two regions in the west and center of China, to elaborate an evolution not just for cherries but also blueberries.”
Alcaino took the position that expansion into the Chinese interior was really the job of importers, but Suárez of ProChile joined the conversation encouraging exporters to form direct relationships with companies in central China.
“In truth for the first time this year in terms of commercial promotion we’ve taken a step of going from theory in books to strategy with concrete actions,” Suárez said of the second and third-tier city concept.
“It’s been developed both in Wuhan and Chengdu, very recently. Wuhan is like an Asian Chicago, a city with a favorable distribution – within 400km they have 400 million inhabitants.
“They [Wuhan fruit buyers] don’t want to have to go through Shanghai or Guangzhou – they want to deal directly with the producer.”
For those who aren’t ready to take the plunge into the country’s interior just yet, there are also significant changes underway in the import make-up of coastal China.
In Shanghai, the industry has had to adapt to the shift in leading wholesale market from Longwu to Huizhan, but there is another name to remember – Jiaxing.
“There is the new market Jiaxing which is the biggest market for domestic fruit. The market is 1.5 hours in vehicle from Shanghai – next year in May it will have a new structure and better capacity,” Suárez told event attendees.
“It’s to compete with the market of Guangzhou – it has more benefits, it’s closer to the interior of China. They say that in two years it’ll be the most important in market,” added Li.
“It’ll overtake Guangzhou?” asked Alcaino.
“Yes,” replied Li.
What to expect from Chilean supply, Chinese demand
Alcaino also took the opportunity to ask panelists about what the Chinese market expects from several key Chilean fruit crops, from longstanding staple table grapes through to more in-development commodities such as avocados, blueberries and nectarines.
“Grapes are looking very promising this year,” Alcaino said from a market window perspective for Chile, drawing attention to several factors affecting other table grape-growing countries.
The expert mentioned an early and fairly complicated season for Californian table grapes, while Peru has been pulling out grape vines of Red Globes and was also been hit badly by a coastal El Niño this year.
“They’ve [Peru] had very low bud fruiting, so a very light low, especially in the zone of Piura where we’re talking a 40-50% less volume,” he said.
“In Ica it’s not so much but for the country it’s something close to 15-20% less altogether, which is undoubtedly an opportunity,” he said.
But regardless of short-term issues like this, Alcaino wanted to get to the crux of one of the biggest questions in the Chilean table grape industry. What varieties are set to have the biggest appeal now and into the future in China?
“The most popular variety without a doubt is Red Globe, but every day the volume of Crimson is increasing in China. Our supplier in Australia, our supplier of Crimson, is very worried as the quality of Chilean Crimson is getting better,” said Li.
“In all of Asia the trend is toward seedless. For example Chile has the very good Iniagrape-one, and also there are new ones like Sweet Celebration – these varieties are arriving in China,” added Zhang, also mentioning Sable Seedless, Scarlett Royal and Timco as promising cultivars.
In blueberries, Alcaino asked whether the smaller 125g clamshell packing format was in the Chinese market to stay, and he was met with a resounding ‘yes’.
Zhang highlighted Chilean competition in the blueberry space with Peru in China.
“I was there last week and they have new varieties [for Peru] Biloxi, Ventura – the climate is warmer and they also have new varieties from Australia; one that’s called Eureka, another from Hortifrut, Rocio,” he said.
“They can produce blueberries within 10 months, so in a year they can perfectly produce the first harvest.”
Li said that now the Chinese domestic blueberry season is finished, it is a good period for Peru to ship its blueberries but better quality was needed.
“Peruvian blueberry, it’s very acidic,” she said.
Zhang highlighted his company was one of the first to start importing avocados into China, with purchases now from three sources – Mexico, Chile and Peru.
“Chile has a great competitor in Peru – Peru starts from February to September, and Chile starts from early July to January,” he said.
“They complement each other but Chile also competes with the zone Ica in Peru.
While price records of US$18 FOB (freight on board) for a 4kg box were achieved in the Chinese avocado market this year, Zhang called on exporters to take care to not send excessive supply in any given week.
The trend worldwide – and segments of the Chinese industry – is toward ready-to-eat, pre-ripened avocados, but Zhang doesn’t see this as key for the timebeing.
“In China we are looking for products that have the concept of health, that it will improve the quality of life. That’s why fruits like avocados and berries – not just blueberries but other berries – are very desired in all markets, not just China.”
The most recent milestone for Chile in China has been the opening up of the mainland market to its nectarines, and the response from Chinese importers was clear – the fruit must be white-fleshed.
“You always have to think about Chile’s competitors. Chile competes with the nectarines from Australia, and Australia has better color and brix, so Chile will have to try to get fruit that ships well with higher brix and white flesh,” said Zhang.
He said while Chile’s yellow-fleshed nectarines were high in brix, and importers could try them out in the market, consumers were better used to the white-fleshed varieties as that’s what’s grown in northern China.