China Fresh at A Glance

Domestic production is growing at a slower rate;

Needs for improving the yield and production quality
on the limited arable land;

Fruit and vegetable processing industry is on
transforming;

Disposable income is the main factor driving the
demand rising rapidly;

Cold Chain Logistics upgrade is required, on both
software and hardware;

Increasing demands on high quality of imported fresh
produce will generate more chances and competition
as the same time;

Huge gap of the fresh produces exports and imports
between the Netherlands and China;

E-commerce and FTZs are facilitating the fresh
produce import;
China is the world NO.1 of fruit and vegetable plantation acreage and production since two
decades ago. In 2013, fruits production of China was nearly 251 MMT, comprised 13% of
the global total fruits production of the year; vegetable production over 735 MMT, more
than one eighth of the world’s outputs. The plantation acreage and production curves are
both inclining, but the growth rates are slightly decreasing. As a major country of
production, China is also a country with rich varieties of fruits and vegetables.
000MT
800.000
000Ha
25.000
700.000
735.120
708.831
679.297
650.994
600.000
618.238
583.255
500.000
18.217
592.403
564.520
17.329
17.876
20.353
20.899
20.000
19.639
18.999
18.390
15.000
400.000
10.000
300.000
200.000
5.000
100.000
-
2006
2007
2008
2009
2010
aerage
2011
Output
2012
2013
(Sown area and output of vegetables in China)
From 2006 to 2012, the Chinese market for fruit and vegetables, and the processed
products has been expanding by 24% annually. The rapid economic growth combined with
increasing disposable income allowed Chinese consumers to spend more on fruit and
vegetable products, and formulated the stronger demand for high quality processed food.
The increased awareness of a healthy diet and the public concerns of food safety in general
are also the key reasons to enhance the market growth in China. The fruit and vegetable
processing industry in China is improving gradually and transforming towards a centralized
layout and industrial agglomeration. And the consumption of processed fruit and vegetable
products is increasing tremendously along with the urbanization in China. Currently there
are still some critical issues exist in this industry, such as lack of dedicated varieties for
processing, low processing efficiency and utilization of raw materials, low level of processing
with advanced equipment, etc., which restrain the further development of the industry.
The overall cold chain logistics system in China is still under development, while the fruit
and vegetable industry is growing continuously. The supply of cold chain services has not
kept up with demand. The need for well-managed cold chain logistics and capable thirdparty logistics services providers (3PLs) in China are acute. Every year, cold chain logistical
problems in China result in massive product losses, accounting for about 25% to 30% of
total production. The cold storage capacity in China covers only about 25% of total output,
compared to 70% to 80% in developed countries. China's cold supply chain is overseen by a
complex mix of authorities. The structure of the trucking industry is another major difficulty
to the further development. Although the draft standards now exist that can be referenced
in cases of improper handling, China lacks a sound self-enforcing mechanism and the
manpower to monitor cold chain transactions at a meaningful level.
(a delivery truck in Hong Kong)
China as one of the largest production bases of vegetables and fruits, also exports large
volumes of vegetables and fruits as well as the processed products to other counties and
regions. Shangdong and Hebei province are the two largest production and export bases for
fruit and vegetables. In contrast to overall local production, a greater proportion of Chinese
fruit and vegetables sold to international market, consisted of frozen and dried fruits and
vegetables. However, according to the International Agricultural Trade statistics of MoA, the
export growth rate of vegetables and fruits in recent years witnessed a remarkable decline.
The growth rate of import vegetables and fruits is noticeably larger than export.
Food quality and safety are still a major issue in China, although the Central government
has invested lots of efforts to improve the food safety on the whole supply chain.
Additionally, food safety is becoming a greater factor of lifting the demands for high quality
import fresh produces, as well as food ingredients and manufactured foods. 2014 witnessed
a significant growth in China's imported fruit market, with an ever-growing number of
countries and products gaining market access. In the five years through 2020, imports of
fruits and vegetables are expected to increase at an annualized rate of 9.9% in this period.
The number of fruits granted Chinese import approval has been steadily increasing, with
roughly 50 fruits from 35 different countries having gained market access thus far. 104
applications from 40 countries covering more than 30 fruits are still awaiting approval for
access to the Chinese market. After five years of bilateral consultations and negotiations, at
the end of 2014, the Dutch conference pear finally got the marketing access to the fruit
market in China. There was total more than 1 million kg of Dutch conference pears exported
to China during the first season of entering into the Chinese market. There is still a large
potential of the exports of the fresh produces from the Netherlands to China in the future.
However, the increasing international competition and the influence from the government
policies and regulations cannot be ignored.
2014
2013
NL->CN
2012
CN->NL
2011
2010
0
50.000 100.000 150.000 200.000 250.000 300.000
(Trade of fresh produce between China and NL)
Chinese internet users number broke through 600 million by the end of 2013, and ecommerce revenue growth (from 2009 to 2012) topping 70% compounded annually, China
is on pace to pass over the US and become to the largest e-commerce market in the world.
Alibaba is China’s undisputed market share leader of B2C and C2C e-commerce. Taobao,
Tmall are the major e-commerce platforms run by Alibaba. E-commerce created vast
development possibilities and opportunities to fresh produce business in China, which is still
in the early development stage. O2O (Online-to-Offline) is a new term and business model
of E-commerce in recent years, which is implemented widely in the food especially the fresh
produce online retail sector. Micro-commerce is based on Wechat mobile app, has grown
quickly. The “micro” merchants are so large that they can purchase fruits directly from
abroad, and even surpass the scale of traditional fruit e-commerce retailers. FTZs (Free
Trade Zones) contain the potential to change wholesale and e-commerce trade and to cause
direct sourcing, which is gaining popularity among fresh produce retailers and distributors,
to become easier and more accessible.
(Value of e-commerce transactions in the US and China)
(Online sales of imported food products in China)
China is on the transition from an investment-heavy growth model, towards a more
consumption-driven model. The economy is facing greater difficulty in the future, likely an
end to the era of rapid growth. Although the overall economic growth doesn't seem to end,
it is clear that these factors will have a substantial moderating effect on China’s future
development, and will likely affect the entire food industry including the fresh produces.