Chile benefits from Zespri fine

Zespri was fined $457,000 by the Korean Fair Trade Commission for anti-competitive behaviour. Photo / Paul Taylor

Chile has grabbed a big chunk of the Korean kiwifruit market since Tauranga-based exporter Zespri International was fined nearly half a million dollars for anti-competitive behaviour.

Yesterday's Zespri annual meeting in Tauranga was updated on what had happened to the Korean market after Zespri was fined $457,000 by the Korean Fair Trade Commission last November.

The commission found Zespri wrongly sought favourable positioning from supermarket chains for its products.

It said Zespri arranged for Korea's biggest chain, E-Mart, not to sell cheaper Chilean kiwifruit, with a similar deal signed with Korea's third biggest chain.

Chief executive Lain Jager told the meeting Zespri would never deliberately contravene any law.

He said Korea continued to get harder for Zespri.

The volume of Chilean kiwifruit into Korea had increased by 77 per cent this season, with the Korean tariff on New Zealand kiwifruit nearly 37 per cent higher than on the Chilean fruit.

"New Zealand kiwifruit growers paid tariffs of $39.3 million in Korea last year - over $14,500 for every grower."

Jager said New Zealand was the only major kiwifruit producer without tariff relief in that market.

Progress on getting a free trade agreement with Korea was of critical importance.

He also said Zespri had shifted to a fixed-pricing regime for its key market of China after its independent Shanghai-based importer was arrested in a multimillion-dollar smuggling operation.

The import agent and chairman of Neuhof Trade Co, Liu Xiongjie, was arrested on suspicion of under-invoicing imported kiwifruit and has been accused of evading US$9.4million ($11.7million) of import duties.

As a consequence of the charges, the company had moved to fixed pricing to ensure "total transparency at the import customs point".

Zespri had also changed import partners to reduce the potential for disruption to its 2012 season from the consequences of the investigation.

The Bay of Plenty Times reported last year that Shanghai Customs' suspicions were aroused by price fluctuations declared for kiwifruit imports. The kiwifruit with a high declared price had the same specifications and trademark as the fruit declared at a low price.

Chinese authorities found that the price Neuhof declared to Shanghai Customs was greatly lower than that it gave New Zealand Customs.

Mr Jager said that although the arrest was partly to blame for small delays in clearing fruit into China, no fruit was seized and Zespri sold a record amount of fruit in China for record returns last season.