According to data released by the Chinese Customs, in 2016, Chile exported about $1,200 million dollars of fresh fruit to China, i.e. 22% more than in the previous year, replacing Thailand as the largest supplier of fresh fruit for China.
What is so special about Chilean fruit? How could it suddenly replace Thailand and become the largest source of imported fresh fruit in China?
China's fruit demand has grown strongly, and Chile has the advantage of offering fruit in the off season.
The Chilean fruit industry was born in the 60s, and after decades of development, it currently produces more than 130 varieties of fruit each year. The country exports more than 2.4 million tons of fruits and vegetables to 80 countries and regions of all the world. The fruit industry accounted for almost 40% of the country's total agricultural production, providing about 450,000 jobs a year.
Today, Chile is the largest fruit exporter in the southern hemisphere, and the largest exporter of grapes and plums in the world. Chilean fruit exports to China increased in recent years. In 2007, they accounted for less than 2% of Chile's total exports, but last year they accounted for 25%. The three most exported fruits from Chile to China were cherries, grapes, and plums.
"Ten years ago we wouldn't have dreamed of becoming China's largest supplier of fruit. At that time we believed that Thailand was almost impossible to overcome," said Luis Schmidt, the president of the National Trade Federation of Producers of fruits and former Chilean ambassador to the People's Republic of China. However, in 10 years, fruit exports from Chile to China increased from 67 million dollars in 2007 to 1,262 million in 2016, i.e. almost 19 times.
Thailand was, for many years, China's biggest supplier of fruit because of multiple reasons, such as the short distance between the two countries, Thailand's short harvest period, and because of the abundance of some types of tropical fruits that the country has.
Schmidt said fruit exports from Chile to China have grown rapidly, mainly due to the huge demand of the growing Chinese market. In the past 10 years, China's demand for food imports, including fruits, increased by 10%. If we consider the steady growth of the middle class in China, demand for high quality fruit will continue. As a result, Chile will undoubtedly become an excellent supplier.
Chilean fruit, which has a high quality, is very convenient for the Chinese market as Chile's supply comes out in the counter season, as winter in the northern hemisphere coincides with summer in the southern hemisphere. Thus, it compensates the lack of fruit in China's offseason. The harvest season of the Chilean cherries, for example, takes place between November and January, which coincides with the Spring Festival in China. As a result, despite having entered the Chinese market in 2010, last year they were Chile's most exported fruit to China, to the point that Chile sent 85% of its domestic production of cherries to that country. In order to export fresh cherries in time for the Spring Festival, China Eastern Airlines has arranged special flights to transport the cherries.
After the signing of the Free Trade Agreement between China and Chile, the Chilean fruit sector enjoyed a 13% tariff reduction.
In 2006, China and Chile began to formally implement the Free Trade Agreement, according to which 97.2% of total goods traded between the two countries will be tariff-free in a period of 10 years. Chen Jianhua, the secretary of the president of Joy Wing Mau Group, said that, after the signing of the FTA between China-Chile, the Chilean fruit entering China is exempt of a 13% tariffs thanks to preferential policies, which has decreased the price of Chilean fruit and increased its profit margin, which in turn intensifies competition in the market.
Last month the first batch of nectarines exported from Chile arrived in China. As agreed in the agreement signed between the two countries last year, Chile became a new supplier of this type of fruit to China. "We hope that the Free Trade Agreement includes more varieties of Chilean fruit in the future, and that Chilean exports to China amount to 4 billion dollars in three or four years," Schmidt said.
Even though exports to China are increasing, some Chilean orchards find themselves at a crossroads. The producers in the vineyards of Juan have placed their packed grapes in cold storage to ship them to China. This vineyard, which has more than 100 years of history, currently produces about 500,000 boxes of grapes per year, nearly a quarter of which are exported to China. Regarding the Chinese market, Juan said: "China is a very attractive big market. However, the more grapes we export to China, the more their price has fallen in recent years."
The development of the Chilean fruit industry has been hindered by different factors, such as declining profit margins, rising labor costs and exchange rates, and insufficient domestic investment in Chile. "We hope that the Chilean government increases its investment in the fruit industry. The main export destination within the Chinese market is its east coast, so we hope to gradually increase our exports to the western part of China," Schmidt said.
In the long run, Chinese companies will demand higher fruit quality
In recent years, several Chinese companies have actively participated in the trade of Chilean fruit. In 2013, the Joy Wing Mau Group acquired five fruit orchards where they cultivate grapes, kiwis, and blueberries.
Chile is the first place abroad where the Joy Wing Mau Group has purchased fruit orchards. The company chose Chile because of its developed fruit industry and because of the cost of the investment. "Fruit is a special agricultural industry, and the harvest largely depends on labor," said Chen Jianhua, adding that the Chilean workers' wages in this sector is a tenth of what Australian workers receive for the same job.
The kiwi harvest season started in an orchard that is two hour away from Santiago, Chile's capital. "These kiwis will be sold in the local market. The ones that are exported to China have already been collected," said Claudio, the orchard's manager, adding that their orchard's area amounted to 2000 mu (1,332,000 m2) and that they had an average yield of about 2 tons per mu (1 mu equals 666 m2).
"Our acquisition in Chile is not the biggest, but we can learn about the local management and cultivation techniques through these companies. Additionally, we can have a deeper understanding of the Chilean market," said Chen Jianhua, who also praised the technology used by Chile in its fruit crops. "Local companies can take pictures of their cherries from 24 different angles and all of them show that the fruit has an excellent quality," he said.
The kiwi orchard uses advanced technology to grow the fruit. The fruit is separated and classified by size so they can perform better irrigation and fertilization; the soil's moisture is monitored at all times with depth and humidity sensors up to 1.5 meters deep and every 30 cm. These sensors have data collection devices, which are synchronized at all times with the phone of the person responsible for overseeing the data. If the humidity is lower than the predetermined value, the drip system starts working automatically. "We applied many of the experiences we learned from the Chilean orchards in Chinese orchards and have had very good results," said Chen Jianhua.
Earlier this month, Joy Wing Mau Group and the large joint Chilean fruit company Hortifrut have promoted the fruit industry in China. "Ultimately, the fruit industry that reaches China must belong to the top end of the industry chain," said Chen Jianhua, noting that the world's major fruit companies rarely engaged only in trade. The supply is particularly important for the fruit industry, and the Chinese enterprises should also pay attention to the upper chain, and fight strongly against the force of the supply.
Source: El Pueblo en Linea