New Zealand exporter Zespri expects to send close to 10 million trays of kiwifruit to China this season, representing a growth rate of around 10% on last year. For the company's general manager for China, Simon Limmer, the country's strong demand for Zespri-branded kiwifruit shows continued reputational strength despite the legal problems of the past. He tells www.freshfruitportal.com about plans to put down deep roots in China, in order to gain a better understanding of the market and build long-term opportunities.

Zespri is hitting the ground running in China this year as kiwifruit harvests begin almost 6,000 miles away in the key growing region of the Bay of Plenty this week. New Zealand-educated Lewis Pan started as the marketer's new country manager last week, and the company appears on the cusp of signing on its fourth importer in the Middle Kingdom.

"We’re in discussions with Yidu from Dalian...we're pretty well advanced with them, so it’s expected that we’ll conclude those conversations positively," Limmer says.

"We went through a transition last year. We were just looking to consolidate the business following the issues that we'd had the previous year with the importer [Neuhof Trading].

"We were really fortunate that we had a good partner in Golden Wing Mau who was able to do a really fantastic job for us through the 2013 season, and they sold the bulk of the fruit."

But Limmer says the intention has always been to introduce new importers to ensure a diversified distribution strategy in China.

"Having four importers will give us a better regional spread and of course they all have a bit of a focus on the retail market as well; we're seeing the retail market emerging, as in most markets around the world."

However, wholesale still makes up approximately 70% of Zespri's business in China, where Limmer points to the rapidly-moving development of new facilities in various import hubs.

"It's interesting to see the progression in the distribution and the supply chain infrastructure is moving quickly. It's good to see some top class facilities emerging in China, and that's only going to make our jobs easier in getting the fruit to the consumers in good quality and condition."

He says Zespri's approach to China is broken into three "simplistic" regions - north, east and south - but Limmer recognizes the existence of "markets within markets", and therefore the business model has a heavy reliance on importers to manage the finer details of distribution in different parts of the country.

"About 10% of New Zealand fruit goes into China, but there is scope for a lot more growth as our production starts to come through and as the gold production recovers out of New Zealand, we’ll be looking to develop the Chinese market more significantly and have a greater share of that market overall," he says.

Sales and promotional goals

Limmer plans a targeted approach to promoting Zespri kiwifruit in China this year, heavily investing in the brand to reinforce what is "probably one of the strongest brands we believe in the fruit industry".

"Online sales is something that’s growing incredibly quickly as well and we’re talking with a number of really pretty modern and sophisticated businesses which are developing those channels," he says.

Zespri's general manager for China, Simon Limmer.

"A lot of the trade support we offer is really important to us, just making sure that as we bring in the new range of products and varieties that we have in our portfolio, that they [Chinese clients] understand what that means and how to manage it, and how to present it to their customers.

"Of course, point of sale support is important to us in a market like China as well as we’re educating consumers about the attributes of the product; the health and nutrition attributes in particular."

He highlights the success of online platform Fruitday.com and TV shopping network OCJ.

"Fruitday is a really good example of a company that is growing really quickly in this [online] area. They have a very sophisticated business model, and I'd probably say China’s leading the way in this area in many respects," he says.

"They’ve grown exponentially over the last three years; we’ve been observing them and see them as a really positive partner for us going forward.

"They’re really focused on developing the Zespri brands, both through their online channels and the TV shopping channels as well - OCJ TV shopping," Limmer says, adding that the amount of product that can move in a short space of time through TV shopping is "quite phenomenal".

Limmer says Zespri has charter vessels going into China for the first time in a few years, which illustrates the confidence it has in the market and the company's distribution network through its importers.

"We want to be there early, we want to get the market off to a good start. We'd like to be there for the end of April so that we can kick into that selling season in the first week of May – we know that’s an important time for the Chinese consumers."

Getting over the "problems of the past"

Limmer expresses optimism for the company when asked whether the chapter is closed in terms of the smuggling issues with importer Liu Xiongjie from Neuhof Trading.

"Yes, from our perspective that’s a few years ago now. We’ve gone through a complete review of our business in China, and that's for our own structures internally," Limmer says.

"We're we’re reinforcing the team up there, we have a new country manager who’s begun with us, we have other new staff who have joined us in China and we’re really looking to ensure that we are working very closely with our importers, with our distributors and with our customers right the way through.

"We believe that the Zespri brand, through the problems of the past, has remained very strong and we don’t see any issues with our reputation in China. There’s still a very strong perception of Zespri in China."

He says the company has also strengthened its relationships with Chinese authorities.

"I think those relationships are going to put is in good stead going forward and we’re investing very heavily to ensure we’re complying with everything, and understanding as China continues to evolve positively.

"We’re seeking to put down really deep roots in China and understand the commercial environments, the regulatory environment.

"We hadn’t gathered the really deep understanding in the past that we want to have going forward."

In response to collaborative marketing proposals revealed last week to establish a new kiwifruit marketing structure with an extra company, Limmer believes it is growers who will decide whether this is in their interests.

"I think by far the majority of New Zealand growers are satisfied with the system they have at the moment," he says.

"I don’t believe that we have any issues going in China going forward, and I think that’s already been borne out from the results of the 2013 season, and the demand for our fruit in 2014.

"At the end of the day, growers will make their own decision about the structure they want for the marketing of their product."

Limmer also handles government and grower relations for the company, and the Hong Kong market under his China portfolio where Zespri's three key importers are Wellcome, Park n Shop and Sunharvest.

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