Southern Africa is confronted with a host of opportunities to meet a growing consumption demand for fresh produce in China. A broader understanding of the markets in China is necessary to make informed decisions and ensure successful entry.
Founder and CEO of Fruitacloud, Mr George Liu, shares some valuable insights about how to gain access to China’s market.
With a population of 1,4 billion people and an urbanization figure of 59,4%, China is brimming with opportunities for the fresh produce industry. According to Liu, exporters should also tap into the popular e-commerce market in the country.
Many of the Chinese population first got online via mobile, making them “Digital Natives”. To get a basic idea of the consumer dynamics in the digital era in China, it is necessary to look at some statistics. As of the first half of 2016, the netizens population in China has reached 730 million. Internet penetration has been over 53% by the end of 2016 and mobile internet penetration rates is at 95,1%.
According to Liu, approximately 64,6% of the consumers who are used to purchase fresh food online were born in 1982-1993. They have become the main consumer of fresh food in China.
The decision whether to sell your produce to either the wholesale or retail markets, is a critical one, because different rules apply. The wholesale industry further distinguishes between Tiered 1 (T1) and Tiered 2 (T2) cities because different rules or preferences apply to the respective levels. T1-cities are highly populated cities like Beijing, Shanghai, Guangzhou and Shenzen. T2-cities incorporate 24 cities with a population of between 5-15 million people.
Liu explains that wholesale markets in China prefer to deal with products they know or that are popular. The appearance of products is also important.
Generally, wholesale markets prefer regular varieties of fresh fruits like table grapes because they are steady. Usually distances are long from T1 wholesale markets to the end consumer which means the fruit must be strong enough to endure the transit.
Online and offline retailers
China boasts many types of fruit retail stores like the traditional supermarket, fruit speciality stores, comprehensive e-commerce, vertical fresh e-commerce stores and the so-called “New Retail supermarket.”
The comprehensive e-commerce “store” is the earliest online selling mode in the Chinese market and sells different kinds of products, including fresh fruits.
Based on the great numbers of retail stores covering the whole country, the fruit speciality store, O2O, developed online.
The focus of the New Retail supermarket is on fresh and experience and their operations are based on a unified inventory and delivery system.
The need for speciality fruit
In contrast to the wholesale industry, retail stores prefer special varieties of fresh fruits, because they need to attract customers frequently with new products. Appearance, size, packaging and marketing should be kept in mind when exporters want to market to retailers in China.
Kiwiberry, similar to kiwifruit, with its smooth and hairless edible skins and Jumbo blueberries are popular with retailers. The ordinary size of a blueberry is around 12mm. However, Driscoll’s launched an extraordinary blueberry with a jumbo size which is over 16mm.
Sunkist® went out of the ways to design innovative decorative cartons of the Chinese Zodiac for navel oranges in anticipation of every Chinese New Year.
Fruit are given special names for marketing purposes. Sonnet Cherries refers to a love poem to make and are marketed as a gift about love.
“An effective marketing programme is key to help retailers to achieve higher return on investments. Chinese consumers are willing to purchase more for a brand with good image,” says Liu. In 2017, a company invested 5 million dollars to roll-out a Cherry Marketing Campaign to improve awareness of Chilean cherries in China.
**Fruitacloud is a professional importer and supply chain and marketing service provider in China. The supply chain service arm of Fruitacloud is responsible for direct sourcing, category management, logistics and custom clearance as well as repacking, fresh cut and ripening services. The company also has distribution centres in 10 countries.
This article comes from a presentation given by Mr George Liu at PMA’s Fresh Connections: Southern Africa Conference and Trade Show on 16 August 2018 in Pretoria, South Africa.