The Chinese fresh fruit import market is growing and rapidly evolving. The coming five years will see shifts in supply and distribution channels. International and domestic retailers will play more important roles, taking larger shares of the market, and direct sourcing is to become more popular.
Retailers to become more influential
“Traditionally, the Chinese fruit import market is ruled by wholesale markets. At the start, foreign retailers, like supermarkets, faced fierce competition from local stores and supermarkets. In some areas, foreign supermarkets had no foot on the ground at all. Originally, Chinese retailers were one or two steps behind international standards. As such, they they often did not make use of direct purchasing plans, or were able to buy from foreign growers. Wholesalers have been bridging this gap by assisting foreign growers in China and supplying local and international retailers,” according to Gonzalo Matamala, GM of GESEX China. GESEX is an international initiative of Chilean growers and exporters, active since 1998.
Direct sourcing to grow
“The market situation is starting to change. Influenced by a low Yuan and more competition, profit margins are starting to shrink. When profit margins are becoming thinner, retailers are more inclined to take out the middle-man, and start working with growers directly. This is a trend we will see more of in the following years. International retailers will be the first to make this change. These players are more aware of international markets, have stronger international networks and are often, through branches in other countries, already in touch with growers. GESEX, for example, has grown into a global supplier that works with supermarkets across continents.”
“Domestic Chinese supermarkets are currently still behind, but will move forwards fast. Both international and local supermarkets are supported by growing demand for imported fruit. In China, another kind of retailer has been developing. These are chain specialty stores that sell quality fruit and veg. Stores like this, such Pagoda, have become important players on the market. Both domestic retailers and chain-stores are doing better and better, and have the ability to adopt direct sourcing.”
Knowing the demand will prove key
“Wholesalers have the problem that they sometimes struggle with having huge quantities of overseas items they need to move quickly. Retailers are better equipped to know and meet demand and can avoid these kind of situations. Retailers can monitor and understand the situation; by day, by week, by product. They are better equipped to plan in advance and make smart purchasing decisions, such as in the weeks before Chinese New Year. In the coming five years, I expect retailers to increase their hold on the fruit industry. Walmart and other internationals players are penetrating China, investing in cold storage facilities and opening new stores. They will meet fiercer competition from local supermarkets such as Olé and Vanguard, who are stepping up their game and are becoming increasingly professional. The wholesalers segment will also move forward. Smaller wholesalers will have smaller chances to survive. Having a national presence, across different wholesale markets in the country, will become necessary to understand and meet demand, and being able to move larger quantities at speed. I predict there will be fewer wholesalers, but stronger ones with an integrated presence in Greater China.”
Gonzalo Matamala is the GM of GESEX China. He was responsible for the launch of GESEX China and now works from Shanghai. GESEX grows and exports Chilean grapes, kiwifruit, plums and cherries. GESEX China supplies both retailers and wholesale markets.
