The director of the Peruvian Chamber of China Commerce (Capechi), Miguel Galvez Escobar, stated that the Peruvian agricultural companies who export to China have a high rate of defection because they don't continue doing business there.
Galvez Escobar said there were 73 Peruvian companies exporting agricultural products to China in 2010 (the year that the FTA between Peru and China came into force) and that in 2016 there were 174 companies exporting agricultural products to China, i.e. 100 new companies joined the exportable supply
"However, its quite alarming that there has been a significant drop-out rate in this period (2010-2016). Between 2010 and 2016, there is an annual average 38% drop-out rate in the companies that start exporting to this market," he said.
Thirty eight percent of the 73 companies that were exporting to China in 2010 stopped doing so in 2011, and 38% of the companies that started exporting to China in 2011 left that market in 2012, i.e. a little more than one-third of the companies that start exporting to China quit this activity.
In addition, he said, only 27 companies of the 73 companies that started exporting to China in 2010 continued doing it until 2016. The other companies simply disappeared or stopped exporting to China and have focused on other markets.
"63% of the agricultural companies that began exporting to China stopped doing it, that is to say 6.5 out of 10 companies abandoned their business of selling agricultural products to China. It is a rate that attracts attention," he said.
Capechi seeks to identify the causes of desertion
Miguel Galvez said that this high drop-out rate could be due to a lack of information from companies, despite having made a first sale or because the Chinese market is very competitive, because it has many providers from various countries doing business, and maybe the domestic companies didn't make an effort to consolidate themselves in that market.
"Maybe they couldn't consolidate their business relationships because many employers sold their products at a distance and were not present at the time of the arrival of their first order. Therefore, they couldn't shake hands personally with the customer, which is one of many very important cultural aspects in doing business with China and to generate a relationship," he said.
"Capechi has the firm intention of identifying the main problems which forced these companies to leave the Chinese market in order to either recover that business or to transfer their experience to new companies wanting to do business with the market," he said.
Source: agraria.pe