Article provided by Thibaud Andre
Daily evolution in China's fruit and vegetable market
This huge market accounts for about one third of the total value of agribusiness in China. Fruit & vegetable market in China shows daily evolution. While it is still seen as a traditional business in China with many unequipped producers still using old-fashioned ways, there is a trend to transform this industry with modern and dynamic techniques and enterprises. Farms are more and more specific and specialized and producers invest a lot in automation and equipment for the harvest, the sorting or even the treatment of the crop. The aim of every producer is to establish itself as leading actors of this growing market. Some of them have sales up to $350 million.
Equipment and automation ration increase in farms. Therefore, production of fruits & vegetables shows an increase about 8% in a per year basis while agricultural area almost did not grow these few years.
The main production of fruit in China includes apple, pear and grapes.
The fruit market has 2 different standards. There is an important market for low-cost and low-quality fruit (including mainly apple and mandarin), with mass production. But since few years, a market of high-end production is steadily growing in China. It includes mainly imported fruits, but there are more and more China-based production selling high-quality fruit. However, this market is still lacks of production.
Finally, there is also a market for fruits issued of the organic farming agriculture. This market is booming in the biggest cities such as Beijing or Shanghai, where price can be 3 or 4 times higher than other fruits.
New investors are coming to the fruit market in China. Most of times, they are looking to diversify their activities, sometimes quite surprisingly. The IT firm Lenovo is a good example, as it comes from computer market to kiwis and blueberries. Today, some of the biggest actors of fruit markets extend their presence to stock market.
The distribution of fruit also shows some changes in China. Retail chains accounts now for more than half of the market in major cities. Moreover, fruit markets experienced the boom of specialized outlets and e-commerce. Indeed, the chain Bai Lao Yen opened more than 400 shops in the last decade to reach more than 2 billion RMB of sales every year. E-commerce is flourishing especially in the largest cities such as Shanghai or Beijing. Online retailers mainly focus on high-quality products and developed a strong service of delivery. Generally speaking, e-commerce in China experiences a growth of 70% in a per year basis and will soon become the biggest online market in the world.
Last year, China exported nearly 5 million tons of fruit, mainly to Indonesia, Malaysia and Russia, while it imported about 3.5 million tons (from the US or Australia). With the development of high-quality fruit and thus the higher margins that results, the balance are going to change. In the next few years, consultants expect to see Chinese importation become higher than exportation. It means the potential of this market is going to keep growing, in particular toward a middle class who shows growing income and standards of living.
The 2014 iFresh Shanghai Fruit & Vegetable Exhibition will be held in 20th-22nd November 2014 in Shanghai International Exhibition Center. This is most important exhibition of fresh products in China. Over 350 exhibitors and 15,000 professional visitors are expected during this event. IFresh is an obligatory stop in mainland China for every producers, distributors and retailers of fruit willing to export in Asia. The Chinese market is today a crucial stake for all these actors of fresh products global market.
Article provided by Thibaud Andre, consultant for Daxue Research and The Store-Checkers