Kiwifruit exporter ships 15-20 million trays to Asian giant that is destined to become its biggest market.
Zespri had its fingers burned in China in the mid-2000s when a small-scale trial run of its gold variety ended up with fruit being grown illegally.
The kiwifruit marketer is once again looking at growing fruit under its own brand name in the People's Republic - this time with its eyes wide open.
These days, kiwifruit bearing a strong resemblance to Zespri's gold variety - Hort16A - can be found in Chinese markets thanks to the unfortunate experiment. Zespri still smarts from the experience.
"It's not what we wanted to see," chief operating officer Simon Limmer told the Herald during a Zespri-funded trip to China's kiwifruit growing heartland - Shaanxi province.
"It is illegal and it is a challenge for us to enforce, so understanding how we would operate in that environment is something for us to work out," Limmer said.
The grower-funded organisation recognises China's explosive growth potential but will not be rushing into anything.
Nevertheless, it wants to become much more engaged with its most dynamic market and growing Zespri-branded kiwifruit is high on its agenda.
"The Chinese market as a destination for New Zealand kiwifruit is phenomenally important and the opportunity is almost difficult for us to measure," Limmer said.
Zespri sells about 15 per cent of its volume - 15 to 20 million trays - to China.
The way things are going, it will become Zespri's biggest market in the next few years in both volume and value.
Limmer said Zespri was talking with growers with a view to growing Zespri-branded kiwifruit in China but he made it clear that nothing is going to happen overnight.
"There exists an opportunity for us to grow Zespri branded kiwifruit in China," he said.
"Central to that is intellectual property protection, which is something that we are focused on."
Zespri already grows kiwifruit under licence in Japan, Italy, France and South Korea to ensure all-year-round supply to its export markets.
The gold variety Hort16A - which turned out to be highly susceptible to the devastating PSA virus - is quickly on its way out in New Zealand. The advent of the PSA-tolerant and more robust Gold 3, or Sungold, has driven a major turnaround in the local industry's fortunes.
Limmer says there are parallels with Zespri and the co-operative dairy giant Fonterra, which is already heavily engaged in China as a supplier but also as a milk producer.
"It will become our biggest market in the next few years, both from a volume and value perspective, so that's already one of the most important strategic priorities," Limmer said.
In his many talks with Chinese growers and businessmen, it is rare that they don't remind Limmer of where kiwifruit - then known as Chinese gooseberry - came from.
Kiwifruit seeds were brought to New Zealand from China in 1904. In 1959 the kiwifruit name was coined by Turners & Growers' former chairman Jack Turner. From humble beginnings, it has become a major export.
New Zealand may have well been successful in rebranding the fruit, but China remains by far the world's biggest grower - 300 million trays are grown and consumed within its borders.
"There is a huge range of quality from what you would consider to be high end all the way down to what we would consider to be third class, waste product," Limmer said.
Zespri is firmly positioned at the high end of the market, and its kiwifruit commands a big premium.
For all its allure as a market, China is not an easy place to do business, and Zespri has struck problems along the way.
Zespri appointed four new importers last year, including Dalian Yidu as its agent in Northeast China, after its previous China agent and importer, Shanghai Neuhof Trade, was found guilty on smuggling charges.
In 2013, Zespri's Shanghai marketing branch, Zespri Management Consulting Corporation, was found guilty of being an accessory to the under-declaration of Customs duties by its contracted importer, Liu Xiong Jie, over a three-year period.
The management company was convicted of smuggling general cargo and fined nearly $1 million. Its China manager, Joseph Yu, was sentenced to five years in jail for being an accessory.
"Zespri's challenges have been well documented over the last few years and the company now has a strategy of trying to develop more understanding and intimacy with the Chinese business environment," Limmer said.
"In the past we have been far too reliant on too few people to advise us on where we are at, what is required, and what the expectations are," he said.
"We have built a really strong brand in the market, but if we don't have the relationships, the depth, the diversity if you like in terms of our business structures and processes, we are likely to encounter more problems going forward."
Aside from the focus on Zespri's plant variety rights (PVRs), there is also the all-pervasive issue of counterfeiting.
"There are a lot of copy-cat brands and outright counterfeit brands as well, but we are trying to counter that as well," he said.
"It's about our PVRs being grown and sold - potentially in Zespri-branded boxes - outside the system that is a worry for us when we invest so heavily in that brand and the possibility of that being eroded."
For all the risks and possible pitfalls, Zespri remains committed to increasing its presence in China.
As evidence of how quickly things can change in the Chinese horticulture market, Limmer points to the fact that in just 10 years, it has become one of the world's biggest apple exporters.
The apple experience is significant because China is getting better at growing quality kiwifruit, with the potential to fill some of Zespri's sales windows in either China or in the export markets.
"The lessons from the apple industry are that they will get better and better at this and that over time they will become an exporter of kiwifruit as well," he said.
Zespri could take the approach of ignoring it and focus on our niche or become more proactive and engaged in China.
In opting for the latter, Zespri needs to know what it can bring to the equation.
That's not a simple process, because the agricultural environment in China is moving very quickly.
Large-scale land aggregation is taking place in the countryside, allowing bigger growing operations and more efficiency though economies of scale.
"It's almost inevitable, given the change that China is going through, that we will still see bumps in the road, but the opportunity in China is so great that we are very much committed to a long-term, deep-rooted business there," Limmer said.
"We will continue to ride them out and try and manage them as best we can."
• Jamie Gray travelled to China courtesy of Zespri.
Food quality a vital driver for Chinese consumers
"If you want to understand China's obsession with food quality, just look up," said one Westerner, pointing to the near-permanent blanket of smog that hangs over Shanghai.
His theory was that China's city inhabitants put up with so many conditions beyond their control, such as pollution, so if there is an opportunity to improve what's on the dinner table, consumers will grab it with both hands.
It goes some way towards explaining the premium Zespri enjoys in China - enough Chinese people have visited New Zealand to be confident about the food's quality, and the country's clean and green image holds water.
There is confidence that food from New Zealand has not been artificially altered. In the case of kiwifruit, the perceived health-giving properties are a big plus.
Concerns about food quality abound in China. One of Zespri's key customers in Shanghai, Fruitday, specialises in offering high quality, mostly imported fruit over the internet. Fruitday also makes liberal use of television in much the same way as people sell vacuum cleaners and the like here.
Orders come via the internet or over the phone. The fruit is then packaged in courier-friendly boxes for delivery to individual customers around the city.
Once again food safety is the big drawcard for Fruitday's customers because it cuts out the middlemen and reduces the chances of the integrity of the product being compromised.
Social media is huge in China and plays a big part in consumer behaviour for much the same reasons.
Customers are more likely to buy a product if it gets the tick of approval from one of their peers, rather than through the normal channels.
Trust is a big issue. As the middle class grows and becomes better educated, people are less tolerant of corruption and more vigilant about food standards.
President Xi Jinping's crackdown on corruption is being taken very seriously - so much so that it has created a kind of bureaucratic gridlock.
Things are taking longer to get done as officials become less sure of their ground and become more inclined to hold off on making big decisions.
It has altered the way business is being done and there is far more emphasis on how companies, foreign and local, comply with the law.
Zespri has had its problems in China, as have many other Western companies, but for most the size and prospects of the market are too big to ignore.
It's not so much a matter of whether big companies in the West should be in China, it's whether they can afford not to be.
Zespri in China
• Kiwifruit, or Chinese gooseberry, are native to Shaanxi province.
• Zespri sells about 15% of its volume - 15 to 20 million trays - in China.
• Expected to soon become Zespri's biggest market by volume and value.