Growing problem for Zespri of unlawful plantings of top-rated gold kiwifruit in China
Unlawful growing of Zespri-owned gold kiwifruit in China has spread by 1500 hectares in a year to now involve at least 5500ha, making it highly risky for the global marketer to do nothing, says chief executive Dan Mathieson.
The rogue growing of Zespri’s top selling SunGold fruit follows plants being smuggled out of New Zealand, and Mathieson said it would continue to spread.
This was why the company would in June seek a vote from its grower-owners supporting a tightlycontrolled commercial trial with Chinese growers.
China is the biggest producer of kiwifruit in the world and is Zespri’s biggest export market alongside Japan. SunGold is now New Zealand’s biggest kiwifruit seller. The unlawfully grown fruit, for which Zespri owns the IP, is already being sold in China.
Zespri is among the top fruit consumer brands in China. Zespri is proposing a one season trial starting later this year contracting about 20 Chinese growers to supply up to 200,000 trays of SunGold, or G3 variety as it’s known in the sector. The fruit would be contractually procured and quality would be monitored in the orchards and a post-harvest facility, with Zespri marketing and selling in China fruit that met its quality standards.
Mathieson has been working on the proposal in China with growers and local and central Chinese government.
If the trial was successful, Zespri would go back to its 2500-plus New Zealand growers to ask to start a second trial in March next year. The upshot could be commercial growing of Zespri-branded kiwifruit in China.
Mathieson said the trial is seen as the best way to try to protect the interests of New Zealand growers.
“The risk of doing nothing is quite significant. If we get this right it means premium quality fruit coming out of New Zealand and China, protecting our shelf space for 12 months of the year.
“It would help us build a strong political relationship which would help protect our IP and bolster our legal options in China as well.
“We need to look at [producing] a 12-month supply as part of the overall
strategy and ambitions for all our markets. We have a strong production base out of Italy and a growing base in Greece for our European business.
“Looking to where we can grow the counter-seasonal supply out of Asia, we currently grow out of [South] Korea and Japan, though the volumes are very small.”
The three big risks were IP leakage, reputational damage and relationships in China.
“Those are the risks we’ve had to face anyway in China for the past 20 years, and also the same risks all foreign companies doing business in China face. As long as we put strong mitigations in place and engage pragmatically in China there are solutions and the business can continue to grow really well. We believe we have to get in and make it work.”
Mathieson said the focus of the Chinese government, local and central, is to bring people out of poverty and improve the lives of rural dwellers. “A lot of kiwifruit is grown in these sort of communities.”
Legal action would continue to be taken by Zespri against brand counterfeiting.
The first trial, if approved, would cost Zespri about $7m in people resources in Chengdu, Sichuan province, to manage, monitor and police quality standards.
Chinese growers would provide their own land.
Mathieson said if the trial continued to the next phases, provincial government would be looking to support the venture with labour and had expressed an interest in post harvest investing.