Trade between Chile and China grew 22% in the past seven years. China has become Chile's largest trading partner; for example, 70% of Chilean cherries are currently being exported directly to China.
While Chile seems to be making profits from the lucrative Asian market, Paul Chen, an avid observer of the Asian market and Head of Food & Agribusiness Research and Advisory at Rabobank, said that Chile is doing the wrong thing and that this would have consequences as China opens to other markets in the near future.
Chilean Fruits fail at establishing better prices
While Zespri's kiwifruits and Sunkist's oranges are known trademarks in China, Chilean fruits are falling behind.
"A brand means money and that's a great opportunity in China," says Paul.
Rabobank's representative explained that, in a supermarket in Shanghai, the Chilean green apples cost the same as the apples from Shandong China: ¥ 28 (U.S. $ 4.8) per 500 grams, while each apple from New Zealand cost ¥ 15 (U.S. $ 2,47).
"Chilean fruits are not branded," added Chen when explaining the drastic price difference. Despite their flawless appearance, those Chilean apples have no label on them, not to mention a wrapper.
"There's no reason for charging more when they are presented like this: where is the package, where is the information and where the background story? There is none of that," he said. "You can't even tell that the apples are from Chile. There's nothing special about them, nothing to differentiate them from afar," he said.
The background story to which he refers, Paul said, could be the image of an apple producer from Chile and the story of how they grows the fruit.
Paul also emphasizes that the era in which Chinese consumers bought fruit because it was cheap is coming to an end with the new Chinese generation.
"I don't buy cheap bananas or apples from Shandong. I consciously made the decision to buy Chilean cherries. But what Chile is doing to make me continue buying them? Nothing," he said.
Paul believes that the root cause of Chile's brand problem is due to the country's self-positioning as exporters.
"That's what you get when you use a distributor. A distributor is there to move your produce, not to tell a story. Chilean companies consider themselves as mere exporters of fruits and all they care about is volume. That is wrong, "he said.
Regarding price, Paul argued that Chilean companies were not adjusting their prices to the different places in China where their fruit is sold.
"Besides, if you have good fruit and package it properly, I'm sure people will want to eat those cherries, even at a medium to high price. Chile has never tried that before," he said.
"They have to look for opportunities, not just in Shanghai or Beijing," Paul concluded.