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The Fresh Fruit Sector in China: An Analysis of Market Performance & Market Access Requirements

  •   19 Jul 2019
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In tandem with China’s consumption upgrade, Chinese consumers are placing a higher priority on the pursuit of healthier dietary habits which has contributed to growth in China’s fruit sector. This increased demand will likely translate to better investment opportunities for both domestic and international enterprise, provided regulatory compliance obstacles can be surmounted. However, along with strong demand and preference for better quality fruit, consumers in China are now facing inflationary pressures and rising fruit prices. 

Does increased demand and higher fruit prices translate to better opportunities? 

Throughout 2019, high fruit prices have been a trending topic across China’s social media platforms. Take cherry as an example. According to data from National Bureau of Statistics and IImedia[1], in terms of value, Cherry was the number one ranked imported fruit in 2018. Chile was the number one ranked exporter to China, accounting for a quarter of the value of all imported fruit.
How much does this popular fruit cost in China? It varies from 90 to 140 yuan RMB/kg this year. According to the public price shown on MOFCOM platform[2], cherries in Beijing’s wholesale market cost 100 yuan/kg in April, 38.8% higher than last year. The market price is so high that Chinese netizens have come up with the humorous concept of “Cheery Freedom” an analogy referring to people in the enviable financial position of being able to buy as much cherries as you want without considering the cost and impact on daily expenditure.  

In another case one Chinese netizen bought a single cherry from the supermarket and posted the price online, inspiring millions of copycat posts across china’s social media platforms. From these posts we can see, the per cherry price ranges from 2-4 yuan in different places and for different brands (more expensive than a can of Coca Cola). Cherries have become a new way to show off wealth and people taking “Cherry Selfy” photos complete with taglines like, “want to be my friend ”? are becoming increasingly common across social media. 

Tang Ke, director of Department of Market and Informatization, Ministry of Agriculture and Rural Affairs actually responded to the high fruit price question[3] in June, starting out by reminding everybody that China is the biggest producer and consumer of fruits globally. In 2018, the output of domestic fruit reached 257 million tons and the volume of imported fruit was 5 million tons. Although the price of six major fruits (apple, pear, watermelon, grape, pineapple and banana) did increase by 34.6% in May, it was due to the lower domestic output, climate change, low seasonal market supply, etc. Tang Ke went on to state that the government will increase the stringency of market supervision of fresh fruits to safeguard the integrity of the supply chain and ensure safety and quality. 

Market Performance: Imported Fruit Segment Demonstrating Sustained Growth

According to the World Fruit Map 2018[4] released by Rabobank, China was the world’s second-largest importer of fruit in 2016. Moreover, according to a MOARA report[5], the value of imported fruit reached 8.42 billion dollars in 2018, with a YOY growth of 34.5% and was also the first time since 2004 that the value of imports exceeded exports.

How is China’s fruit market performing in 2019? Up to April, according to GAC data[6], the value of imported fruit from January to April in 2019 amounted to 4.2 billion dollars and a volume of 2.8 million tons, exceeding the 2018 H1 import value. 

Imported fresh fruit also performed extremely well during the 618 carnival[7]. According to data released by JD.com, the sales volume of fruit amounted to 1058 tons on the first day of the shopping carnival. High-end fruits are extremely popular among Chinese consumers living in first and second-tier cities:

  • The accumulated sale value of Zespri kiwi from New Zealand hit 100 million RMB on JD.com, and this milestone was achieved 3 months earlier compared with 618 2018. 
  • Uzbek cherries recorded staggering sales, with over 4700 batches sold within 3 hours after their launch on Tmall despite this being their first involvement in the 6.18 carnival. It is said that nearly half of the civil aviation capacity in Uzbekistan was used to ensure the cherry supply during the 618-shopping festival.

China’s Streamlined Market Access is Facilitating Imports

China has gradually opened its fruit market to overseas enterprises and issued lots of measures to accelerate customs clearance and lower cost[8]. (Read more at China Trade Facilitation Measures Offer Big Opportunities for International Food Sector [9]) On June 4th, 2019, Thailand began deliveries of its durian and pineapple directly to Hunan Province (a province in the center part of China) by air through Changsha Huanghua International Airport, which was just designated for customs clearance of these commodities in May. According to the importer, it has significantly lowered logistic costs and simplified procedures. The market price of these fruits is expected to decrease by 10%.

At the same time, China is also opening up its business environment. It has signed many Phytosanitary Quarantine Protocols about fruits with trade partners. For example, Mexico[10] signed another protocol related to the banana trade with China on May 15th. After GAC releases the individualized phytosanitary quarantine requirements and provided Mexican bananas meet these requirements they can then be exported to China. 

Here are the Phytosanitary Quarantine Requirements of Imported Fruits released by GAC, 2019, which means the following countries can export specific types of fruit to China provided regulatory requirements are met. 

Phytosanitary Quarantine Requirements to Imported Fruits released by GAC, 2019

DateCountryFruit CategoryLink
Jan 11ArgentinaFresh cherryNotice
Feb 13the PhilippinesFrozen banana, pineapple, mangoNotice
Mar 20PanamaFresh pineappleNotice
May 6SpainFresh grapeNotice
May 6ItalyFresh orangeNotice
May 8the PhilippinesFresh coconutNotice
May 10ChileFresh pearNotice
May 30IndonesiaMangosteenNotice
May 30MalaysiaFrozen DurianNotice
May 30UzbekistanFresh cherryNotice
June 5KenyaFrozen avocadoNotice
July 4LaosFresh watermelonNotice

A promising market

As Nielsen pointed out in this market insight report[11], it's already a consensus that Chinese people are becoming more aware of healthy living. If we take a broad look at the Chinese food sector in recent years, we can find the total market value of healthy food like soybean milk and Yogurt climbed quickly from 2015 to 2017 while categories like candy, chocolate, and chewing gum have decreased gradually. (Read more at China Embracing Global Plant-Based Nutrition Movement: Whole Foods, Organic and Plant-Based Trending Hard[12])

And fruit is considered a healthy food category. According to research released by the Lancet, low intake of fruits has become the third leading dietary risk[13] factor for deaths in China. Besides, taking more fruits is also one of the goals to be completed in the newly released Healthy China Action (2019-2030) [14] document.

In 2017, 11 million (95% uncertainty interval [UI] 10–12) deaths and 255 million (234–274) DALYs (disability-adjusted life-years) were attributable to dietary risk factors. High intake of sodium (3 million [1–5] deaths and 70 million [34–118] DALYs), low intake of whole grains (3 million [2–4] deaths and 82 million [59–109] DALYs), and low intake of fruits (2 million [1–4] deaths and 65 million [41–92] DALYs) were the leading dietary risk factors for deaths and DALYs globally and in many countries. Dietary data were from mixed sources and were not available for all countries, increasing the statistical uncertainty of our estimates.

The optimal level of fruit intake (optimal range of fruit intake) is 250 g (200–300) per day.

Moreover, the new retail model, which is characterized by combining online and offline retail into a unique experience, has also accelerated fruit consumption. Since 2015, lots of funds have been funneled into new retail of fresh fruits and other FMCG. People can buy vegetables and fruit easily via online platforms and enjoy immediate delivery from offline fresh food stores nearby. (Read more at New Retail in China’s Fresh Food Sector[16])

Compliance tips: market access procedures

So how to export fruit to China? There are two stages, each involving different procedures that need to be completed:

Stage 1: Before importation

  • Ensure the exporting country and fruit category have all obtained a market access permit. You may check these two lists for reference:
  1. Fresh Fruits Allowed to be Imported to China and Exporting Countries[17]
  2. Frozen Fruits Allowed to be Imported to China and Exporting Countries[18]
If the fruit isn’t included in the catalogue, then the competent authority in exporting country shall submit relevant risk analysis materials to China GAC and apply to GAC for approval. 
  • Enterprises shall pass quarantine and inspection procedures before signing the trade contract or agreement.
  • Overseas enterprises shall get the License for Entry Animal and Plant Quarantine of the PRC issued by GAC(hereinafter referred to as “Quarantine License”) before exporting fruit to China, and also the Quarantine License and the Phytosanitary Quarantine Certificate issued by the inspection authority in exporting countries/areas.
Requirements for this certificate issued by exporting countries

  1. the content and format of this Plant Quarantine Certificate shall be pursuant to ISPM No.12 Guidelines for Phytosanitary Certificates[19].
  2. The phytosanitary quarantine certificate shall clearly state the container number if fruits are shipped by containers.
  3. The phytosanitary quarantine certificate shall also meet the demands specified in bilateral protocols, agreements, etc.

Stage 2: During the quarantine and inspection process

  • Quarantine and Inspection requirements 

         (Article 9, Administrative Measures on Import Fruit Quarantine and Inspection[23])
         Imported fruit shall comply with following quarantine and inspection requirements:

  1. No mixed loading of any other fruit off the list in the phytosanitary quarantine certificate is allowed
  2. The container box shall be labeled with the following information in Chinese or English: product name, place of origin, packaging plant's name or code
  3. Harmful organisms, soil and plant debris like leaves, branches subject to quarantine, are forbidden to enter the territory of the PRC
  4. The amount of poisonous and harmful substances detected shall not exceed the relevant standards on safety and hygiene in the PRC
  5. If the exporting country or region has reached an agreement or protocol with the PRC, the requirements as stipulated in the agreement or protocol shall be conformed to as well. Here’s an example from GAC Notice.
  • Law basis
  • Name of this allowed product
  • Allowed place of origin
  • Allowed orchard and packaging plant
  • List of quarantine pests
  • Requirements before the importation
  1. Requirements for orchards
  2. Requirements for packaging plant
  3. Requirements for packages
  4. Requirements for quarantine and inspection
  5. Requirements for phytosanitary quarantine certificate
  • Measures on quarantine and inspection
  • Others
Addendum 1: Cold treatment operation rules on Uzbek cherries exported to China 
(note: some fruits need to undergo hot treatment process as regulated in specific bilateral protocols) 

Addendum 2: Fumigation requirements for Uzbek cherries exported to China

 

  • Materials which require submission during the quarantine and inspection process:
(Article 19, China’s Regulations for the Implementation of the Law of the People's Republic of China on the Entry and Exit Animal and Plant Quarantine[25])
When applying to the port animal and plant quarantine office for quarantine inspection, 
  1. the application form shall be filled out
  2. documents such as the quarantine certificate issued by the competent authority in exporting country/region, certificate of origin, trade contract, letter of credit and invoices shall be submitted
  3. import permits shall be submitted if requires
  4. if enterprises failed to submit the quarantine certificate or import permits, the port animal and plant quarantine office may return or destroy them in the light of specific circumstances.

Moreover, fruits shall be shipped to designated supervision sites in line with GAC notice[26] and the package shall conform to the requirements in SN/T 1886-2007 Guide for prepackaging for export and import fruit and vegetable. Besides, it’s forbidden to carry fruits into China by person or via mail.

At last, here attached the quarantine and inspection regulations related to fruits:    

GB 2763-2014 National Food Safety Standard Maximum Residue Limits for Pesticides in Food
GB 2762-2012 National Food Safety Standard Maximum Levels of Contaminants in Foods
GB 2761-2017 National Food Safety Standard Maximum Levels of Mycotoxins in Foods
GB 29921-2013 National Food Safety Standard Maximum Levels of Pathogenic Bacteria in Foods
GB 23200.19-2016 Determination of abamectin residue in fruits and vegetables Liquid chromatography
GB 23200.29-2016 Determination of fenpyroximate residue in fruits and vegetables Liquid chromatography
SN/T 2806-2011 Determination of fluroxypyr residue in vegetables, fruits, cereals for import and export
SN/T 0148-2011 Determination of organophosphorus residues in fruits and vegetables for import and export GC-FPD and GC-MS methods
GB 23200.25-2016 Determination of oxadiazon residue in fruits 
GB 23200.27-2016 Determination of 4,6-dinitro-cresol residue in fruits Gas chromatography – mass spectrometry
GB 5009.185-2016 Determination of patulin in food
SN/T 1976-2007 Determination of azoxystrobin residues in fruit and vegetable for import and export – GC method
SN/T1884.1-2007 Hygienic specifications of storage and transportation for export and import fruit — Part 1: Storage
SN/T 1884.2-2007 Hygienic specifications of storage and transportation for export and import fruit — Part 2: Transportation

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ABOUT THE AUTHOR

Lennie Tao

ChemLinked editor, having expertise in food regulations.