China: strong con­sumer de­mand in a chang­ing land­scape

The ki­wifruit in­dus­try re­cently took the op­por­tu­nity to hear about the changes afoot for agribusi­ness in China from some high-pro­file ex­perts in this field, along with some of the op­por­tu­ni­ties ahead for New Zealand busi­nesses.

The Orchardist - - Con­tents -

Ze­spri and Ex­port NZ hosted an event in Mt Maun­ganui to share in­sights from Ze­spri’s China Ad­vi­sory Board, as well as Ze­spri’s China coun­try man­ager.

Suc­cess­ful agribusi­ness in­vestor and ex-World Bank econ­o­mist Dr An­ning Wei sketched out the frag­mented make-up of China’s agribusi­ness sec­tor.

“Who owns land in China? Legally the col­lec­tive owns the land with con­trac­tual rights for in­di­vid­ual house­holds to use the land for 30 years. Each house­hold farm can be as small as less than one acre, which can present chal­lenges when it comes to scal­ing up pro­duc­tion.”

Dr Wei cited an ex­am­ple of 16,000 acres across a plan­ta­tion re­gion with 7,000 farms and noted that over time, change is com­ing as the own­ers of the con­trac­tual rights to use the land can now sell th­ese rights to oth­ers and large com­mer­cial farms can be es­tab­lished. He also noted the emer­gence of lo­cal Chi­nese brands with great suc­cess, not­ing that Huawei phones now out­sell Sam­sung and Ap­ple across the coun­try.

He out­lined the trans­for­ma­tion un­der­way across China so­ci­ety with con­tin­u­ing ur­ban­i­sa­tion and a growing mid­dle class. “There is a 50/50 urban-rural split in China and urban dwellers have two to three times the in­come. They buy and con­sume very dif­fer­ently,” – a theme also picked up on David Ma­hon, who de­scribed a se­ries of in­ter­lock­ing mar­kets across China. Dr Wei went on to out­line the gen­er­a­tional dif­fer­ences in con­sump­tion pat­terns with his three daugh­ters shop­ping al­most en­tirely online while “older peo­ple still like to buy with cash and touch the goods”.

Sam Shih, for­mer chief ex­ec­u­tive of Pep­siCo China and re­cently-ap­pointed head of Asia Pulp & Pa­per noted China’s eco­nomic growth slow­ing from dou­ble dig­its to sin­gle dig­its and the so­ci­etal shifts which are chang­ing Chi­nese con­sumers’ spend­ing pat­terns. “As our pop­u­la­tion grows older and the one child pol­icy is re­laxed around the coun­try, the av­er­age Chi­nese con­sumer is getting older and wealth­ier and they’re will­ing to spend… they want qual­ity and food safety is firmly top of mind.”

Mr Shih also out­lined the im­por­tance of getting the right peo­ple on the ground in China to drive and grow busi­ness.

David Ma­hon is a Kiwi who has run com­pa­nies and in­vest­ment funds in China for nearly three decades and he re­as­sured the au­di­ence on the sta­bil­ity of the Chi­nese econ­omy and the ac­com­pa­ny­ing growing de­mand from con­sumers.

“To be suc­cess­ful in China, lead­er­ship on the ground need to be able to re­spond quickly to the chang­ing mar­ket. For ex­am­ple in my view, Ze­spri needs to con­tinue to in­te­grate the prin­ci­ples of Ze­spri here in Tau­ranga with Shang­hai. It must be­come a China com­pany: Chi­nese com­pa­nies now strive for in­ter­na­tional best prac­tice and Ze­spri in China must be both an in­ter­na­tional com­pany and Chi­nese com­pany.”

Ze­spri China & Hong Kong coun­try man­ager Lewis Pan up­dated the au­di­ence on Ze­spri’s strat­egy to grow sales, ex­pand dis­tri­bu­tion and re­turn value to grow­ers in this im­por­tant mar­ket. “While China’s share of Ze­spri’s mar­ket mix is set to re­main rel­a­tively stable at around 17– 19 per­cent of to­tal vol­ume, we have am­bi­tions to more than dou­ble over the next 10 years as vol­umes from New Zealand and our North­ern Hemi­sphere sup­ply increase.

“We’re growing our dis­tri­bu­tion foot­print across the coun­try fur­ther in­land and look­ing to strengthen our re­la­tion­ships with re­tail­ers over time. Chi­nese con­sumers have en­thu­si­as­ti­cally em­braced ecom­merce and now we sell one of ev­ery five trays of Ze­spri Ki­wifruit online, with this fig­ure set to grow,” says Mr Pan.

Mr Jager ex­plains Ze­spri is growing its off­shore pres­ence to de­liver in­creased sales around the world, of­fi­cially open­ing an of­fice in Dubai ear­lier this year to ser­vice the re­gions of the Mid­dle East, In­dia and Africa. “More than half of our 450+ staff are based off­shore now, with of­fices in 21 coun­tries de­liv­er­ing sales and mar­ket­ing pro­grammes in 59 coun­tries around the world this sea­son,” says Mr Jager.

A Maori cul­tural del­e­ga­tion of­fi­cially opened the new of­fice at an event with se­nior Ze­spri ex­ec­u­tives, Am­bas­sador Tim Groser and Mayor of New­port Beach Kevin Mul­doon, with karakia/prayers and wa­iata/songs to bless the new whakairo/carv­ing com­mis­sioned for the of­fice. Carver James Tapi­ata has made sev­eral other carv­ings for Ze­spri of­fices in New Zealand and around the world and he cre­ated this work Te Puawai­t­anga (The Flow­er­ing) for the new of­fice. Around 10 peo­ple will be based in the of­fice.

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