The Chinese have been buying Murcian lemons and oranges for a while. Within a few months, in all likelihood, they will also succumb to the taste of Cieza peaches or Jumilla pears. Spain's trade relations with China are moving forward and new bilateral protocols for the export of horticultural products are expected to be signed soon. For now, the current agreements are limited to citrus, but a new protocol that would allow the entry of stonefruit to the People's Republic, which would be a great business opportunity for food companies in the region, may be around the corner.
Murcia is one of the Spanish provinces selling the most fruit and vegetables to the Asian giant. According to España Exportación e Inversiones (ICEX), last year a total of 138 domestic companies sold horticultural products to China, 19 of which are based in Murcia. This is more than double than in 2013, when only 9 Murcian firms were shipping to this destination. Nowadays, 4.8% of the Spanish fruit and vegetable products sold in China are of Murcian origin. In 2014, the value of Murcian sales to China reached 771,000 Euro, 195,000 Euro of which corresponded to citrus.
Given this situation, an increasingly greater number of food companies in the region, currently in a race towards internationalization, are putting their sights on China. Because of this, the Instituto de Fomento (Info) organised a conference last week on the business opportunities for the horticultural and processing sector in China. The event was attended by representatives of sixteen companies and industry associations. Hand in hand with professionals of the China in Crowd, the Spanish consulting and business development firm showed participants the key aspect to take into account before entering the Chinese market.
They noted that the most interesting markets are not the overcrowded megacities of Beijing or Shanghai, but the so-called "second and third line cities," where competition is not as fierce and the purchasing power of their inhabitants is going through the roof. The list includes places like Chengdu, Chongqing, Kunming and Guiyang.
Healthy and "eco" consumers
Since 2014, China outranks the United States as the largest economy in terms of Gross Domestic Product (GDP) at purchasing power parity, according to the International Monetary Fund (IMF). As China's economy has boomed in recent decades, so have the income and living standards of the population. It is estimated that the middle class has now reached 300 million people, a group that is radically changing the traditional consumption patterns.
China's economic boom has given rise to a greater consumer demand for foreign products to meet their changing needs. In this sense, as in the West, there is a growing interest in healthy, environmentally-friendly food, produced under the highest safety protocols. In this sense, Murcian products perfectly fit the bill.
"For the Chinese, imported fruits are synonymous with safety and quality vegetables, which makes them willing to pay more for them. Furthermore, Spanish products are becoming known and appreciated for their excellent value for money," stated the experts during the conference. It was also reported that, when selling the product, the brand or packaging must not be neglected, as they are key to capture the attention of the Chinese consumer.
The changes in China are not limited to the consumer, but also to the points of sale. Hypermarkets are gaining ground with the expansion of large national chains, mainly Lianhua, but also foreign, such as the French Carrefour or the American Walmart. In these stores, fresh products, such as prepared salads or fruits and packaged vegetables, already account for 60% of sales. Also, new gourmet and convenience stores are opening every day. On-line trade has also become attractive, with the appearance of portals such as Fruit Day.com, devoted to the sale of imported fresh fruit, with about 70 million Euro worth of sales in 2014 and serving over 300 cities.
But access to the Chinese market is not easy. The procedures for the import of food products into China require the signing of bilateral protocols, and the transactions needed tend to be really time-consuming. Currently, Spain has signed agreements for the sale of meat, cured pork and citrus fruit. Negotiations for the protocol that will open the door to stonefruit have been on-going for two years and could soon finish, and this is something that Murcian growers have been eagerly anticipating.
Alternative to Russian market after the veto
This summer, the Association of Producers and Exporters of Fruits of Murcia (Apoexpa) reported that the region exported over 400,000 tonnes of stonefruit, mainly peaches, plums, apricots, nectarines and flat peaches. 80% goes to countries of the European Union (EU), mainly Germany, the UK and France. The other 20% used to have Russia as a destination before it closed its borders. The Chinese market, therefore, would be the great alternative for Murcian producers looking to sell their fruit overseas.
"There are great opportunities in China, provided you show a serious commitment to this country, a willingness to invest and you are able to be very patient. Having staff who know the language is a must, as is to adequately study customer trends and the market. In this sense, Murcia will be well represented at the fair iFresh, which will be held next month in the city of Shanghai.
Info Murcia knocking on the door of 35 international business destinations
The recent Business Opportunities Day for horticulture in China was held in the framework of the Trade Promotion Plan of the Instituto de Fomento (INFO), which has the support of the regional chambers of commerce. During the second half of the year, the plan is allocating 1.7 million Euro in aid to promote the internationalization of companies in the Region, with actions being organised in 35 destinations on four continents.
