Major exporter fears black-market sales will damage country's reputation in China.
One of New Zealand's biggest honey exporters says it is worried black market sales of its product could damage its reputation in China.
The smuggling has prompted a big supermarket chain in New Zealand to warn staff to look out for customers buying up products that could be exported.
Airborne Honey says large quantities of Honey For Kids bought in New Zealand were being shipped to Hong Kong and smuggled into China where it was sold online. The company is worried about its image and the reputation of all honey from New Zealand.
The sales and marketing manager for the Canterbury company, John Smart, said exporters avoid paying 17 per cent VAT in China, and can also claim back 15 per cent GST from the New Zealand Government. As a result, a squeeze bottle of Honey For Kids costs as little as 45 renminbi ($9) compared with 130 renminbi at stores and online outlets supplied by Airborne distributors.
"It's massively hurting our Chinese market. Our distributors are saying they can't develop this market because of these cheap online sales. It's holding us back because it's impossible to compete," Smart says.
New Zealand honey is prized for its purity, in much the same way our infant formula is trusted by Chinese parents. Honey prices have risen markedly in the face of international demand and recently a man accused of stealing $1100 worth of honey from three Auckland supermarkets reportedly stole honey to order, mostly for Asian clients.
Established in 1910, Airborne Honey is New Zealand's oldest honey brand, with sales to 17 overseas markets making up about a quarter of its business.
Smart says the fact that honey has been bought in New Zealand adds to its authenticity in China, where food safety is a big issue. A page on Taobao, the Chinese equivalent of Trade Me, shows a photo of a receipt for 30 bottles of Honey For Kids bought from the Glen Innes Pak'nSave in 2010, and below it material copied from the Airborne company website is translated into Mandarin.
Rob Chemaly, general manager retail for Foodstuffs Auckland, says customers can buy unlimited amounts of honey from its Pak'nSave and New World supermarkets but trade sales of bulk products from the stores are discouraged.
"An incident involving Honey For Kids was recently brought to our attention. After conducting an investigation we have pinpointed one case of large quantities of honey being purchased and this occurred some time ago. The store has been severely censured as they have not met with our trade sales policy." Chemaly says Foodstuffs is very aware of certain products being targeted by exporters and has a risk management programme in place at its wholesale stores (Gilmores, Trents and Toops).
"Foodstuffs recently reminded our stores of our retail standards and to make staff vigilant to the risks of certain products being purchased for supply to export markets."
Smart says the problem is not at the New Zealand end and Airborne Honey is very happy for Asian tourists to take its products home as gifts; the real issue is with illegal bulk shipments across the Chinese border.
Three months ago Airborne raised its concerns with New Zealand Trade and Enterprise and the Ministry of Foreign Affairs office in Shanghai to see if something could be done about the honey smuggling in light of action taken over illegal infant formula exports.
In March, limits were imposed on the amount of baby formula that can be carried into mainland China. Hong Kong Customs has since arrested hundreds of people for breaking the new law, including a syndicate in possession of tonnes of product.
Honey exported to China through official channels has to pass stringent food safety and compliance checks which are costly, but Smart says honey entering the country through the black market bypasses those processes.
"It has the potential to create a bad name for New Zealand honey if some of it is found to be tampered with, is fraudulent, or unhealthy."