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China offers huge produce trade potential

by Tad Thompson | October 25, 2010
ORLANDO, FL — China is mysterious but has reason to its rhyme, according to Michael Colopy, a Washington, DC-based foreign affairs specialist. The fast- growing country has huge potential for fruit exporters, according to Chinese produce importer John Wang. The country is also a good source of produce exports, added Jim Provost, owner of I Love Produce LLC.

The three panelists for a workshop titled Market Watch: The Impact of China, held Oct. 17 during the Produce Marketing Association Fresh Summit International Convention & Exposition, here, painted an interesting portrait of China as a place to do business.

Mr. Colopy outlined a historical perspective on China, noting that actions that may be hard for outsiders to understand in fact make sense when one appreciates China's complex evolution. "To understand China is to understand how it sees itself," he said.

He added that “there is no business in the United States that won’t to some degree be affected” by development occurring in China.

China has “absolutely unique size and dynamics,” Mr. Colopy noted, and the fast pace of such a huge society is unprecedented in human existence. Among the country’s contradictions is the fact that the 60-65 percent of the 1.3 billion citizens that live in rural areas includes 500 million people just gaining access to running water. Meanwhile, other Chinese sectors regularly apply cutting-edge technology.

Mr. Colopy continued that Chinese government policies thus far have focused on keeping the nation’s labor costs low. But now the national focus is being invested in other ways and that includes importing food to “do what they need to take care of audience number one,” which is the Chinese populace. China “is running a big deficit in food,” Mr. Colopy said.

That fact comes as little surprise considering Mr. Wang said that 210,000 cases of fresh cherries can be sold in Guangzhou in three hours. Mr. Wang, founder of the fruit import company Lantao Shanghai Great Harvest, which has distribution facilities in Guangzhou and four other cities, started his company 27 years ago.

He said that China has a growing middle class and that the low-income residents “are now trying to improve their lifestyle.” Between 2004 and 2008, Chinese food imports increased at the rate of 17 percent each year.

While most Chinese fruit imports once passed through Hong Kong, that is no longer the case as the largest cities are now becoming direct fruit importers. In fact, all provincial capitals have direct fruit importers.

One large city can be served fruit from 12,000 street cart vendors. Mr. Wang said that when his firm opens a refrigerated container of fruit, there are 1,000 local vendors waiting to buy his product.

The Chinese require the highest-quality fruit, whether that fruit comes from the United States, South Africa or Chile. “We need for cherries to be firm like a rock,” he said.

Mr. Wang added that blueberries recently became popular in China and are now in great demand. Red Delicious apples, if they have good color and shape, also are in great demand, as are Gala apples and Red Globe grapes.

Mr. Wang said that 95 percent of the fresh produce sold in China goes through traditional markets, such as farmstands and pushcarts. The remaining 5 percent of produce sales go through supermarkets. He said that Shanghai has 10,000 farmstands to serve 35 million people.

Mr. Provost, whose firm is in West Grove, PA, in the southeastern part of the state, is a large-volume importer of Chinese garlic and also an exporter of fresh produce from the United States.

Mr. Provost defended the imports of Chinese garlic, acknowledging that the category has been criticized by some members of the U.S. produce industry. He said that if an importer goes to buy the cheapest Chinese garlic “at rock- bottom prices, you will succeed. But, there are also good serious partners” to ship high-quality products.

He noted that Chinese garlic has been exported to the United States for 15 years and has never been associated with a food-safety problem. China produces 70 percent of the world’s garlic, which is 12 billion pounds a year. Over 50 percent of the garlic consumed in the United States is imported from China.

To succeed in business in China, Mr. Provost said, a key factor is to understand “guanxi” (pronounced gwan-shee), which is a type of personal relationship based on hierarchy, respect, mutual benefit, obligation and “face.” The key to attaining a guanxi relationship is to invest the time to visit China and become acquainted with one’s business partners.

He emphasized that when doing business in China, “you are the importer of record” and must accept responsibility for “doing your homework” and meeting all regulations, whether those are from the U.S. Food & Drug Administration or the Chinese government.