KEY POINTS:
The persistently strong kiwi dollar is holding back sales of New Zealand produce in the massive Chinese market but long-term damage to the trade will be averted so long as the currency weakens in the foreseeable future, says a major South China fruit distributor.
Hong Kong-listed Heng Tai
Consumables' New Zealand clients include Hawkes Bay companies Growers Trust and Opey and Otago stone fruit producer Hinton.
Since Heng Tai's mainland Chinese subsidiary Sino Combo International began distributing New Zealand apples in 2002, the kiwi dollar's rise has seen prices increase by up to 40 per cent which has inevitably had an effect on demand.
"Two containers a day has become two a week," said Jin Tao's global sourcing manager Freddy Lai.
With its "green" credentials, New Zealand had a strong brand in the Chinese market which was underpinning demand from consumers for the time being, said assistant general manager of global sourcing Benson Ong.
"The Chinese are very concerned about brand," said Ong. "But if the New Zealand dollar is high for a long time, they will switch."
With New Zealand produce such as Fuji apples selling for five times as much as the same fruit produced locally, New Zealand exporters needed to work harder to promote their products in China.
Despite the relative expense of New Zealand fruit, Ong and Lai say there is potential for increased sales in China.
Rising incomes has seen double digit annual growth in the high end fruit market over the past five years.
To cater to rising demand for quality fruit, Sino Combo International late last year opened its Jin Tao market, coolstore and distribution centre at Zhongshan. Its proximity to major cities, including Guangjhou and Shenzhen, means it can distribute to a potential market of 135 million within 72 hours.
Jin Tao also distributes to north eastern areas and is working to extend its reach to Russia's eastern market.
Ong says China's fruit market remains dominated by old fashioned "wet markets" with poor storage distribution which sees RMB750 million ($131 million) of produce lost to spoilage each year. But Jin Tao's temperature-controlled loading trading areas as well as Heng Tai's fleet of 5200 refrigerated trucks ensure an "unbroken cold chain service", which maintains the quality of high end produce.
The Jin Tao complex also features a business centre with a produce showroom and the company offers market research and intelligence services which can aid market development for exporters.
Ong believes New Zealand exporters could develop strong brands and sales in China by initially sacrificing margins which could later be gradually restored.
New Zealand remains a relatively minor exporter of fruit to China. Heng Tai handles between five and 10 containers of fruit from New Zealand each week compared to 100-200 from the US and 200-500 from Thailand.
* Adam Bennett travelled to China as a guest of Guangdong Overseas Chinese Affairs Office, Cathay Pacific, and the New Zealand Chinese Herald.
