Chinese imports of Ecuadorian bananas surged by 541% in the first five months of this year, and the supplier continues to gain momentum in the wake of typhoons that have hit the key southern growing regions. Domestic prices have shot up, leading to favorable conditions for the South American fruit. At www.freshfruitportal.com, we speak with Xia Zuxiang, the former deputy director of Chiquita's China Office, who discussed the "banana-mania" that has gripped his country.

Xia says local banana prices have been spiking since March, as a result of adverse weather conditions and lower production in Hainan and Yunnan, two of China's major growing regions. In addition, Philippine banana production has also been hit by typhoons.

All these factors have contributed to the rise in banana imports from Ecuador.

Explaining the decrease in Philippine banana imports, Xia says another factor is the fact that most Chinese importers of Philippine bananas are private importers.

"The Philippines exports a stable amount of bananas to Korea, Japan and the Middle East annually. This is because importers in these countries have all signed long-term agreements with Philippine exporters.

"However, this is not the case with Chinese private importers, who have only signed short-term agreements.  So there's a degree of volatility with Sino-Philippine banana trade."

Xia further explains that short-term agreements create more risk for private importers.

"As soon as the bananas arrive at your shore, they can only stay in cold storage for a maximum of a month. So the ordering and pricing of Philippine bananas in China are done on a weekly basis, which further introduces fluctuations into the market.

According to Xia, although it takes 30 to 40 days to ship bananas from Ecuador to China, the Ecuadorian bananas' competitive pricing versus Philippine bananas has led many importers to make the switch.

He further adds that South American bananas in general are of great quality and most of them have obtained import permission from Chinese authorities. But only Ecuadorian bananas and to some extent Costa Rican bananas maintain a visible presence in China.

Xia anticipates a price drop in both domestic and imported bananas when the new season starts in October, when local bananas from Guangdong and Hainan hit the market.

"At the end of the day, the produce market is still a game of supply and demand."

The changing face of China's banana import market

A seasoned veteran with nearly 20 years of experience dealing with imported bananas, Xia says the dynamics of who sells the fruit have changed substantially over time.

He says that in earlier days, the Chinese banana imports market was dominated by three major importers - Chiquita, Dole and Del Monte. There was almost no room for small players.

"Every deal we made, it was over 200,000 cartons," he says, but adds Chiquita and Del Monte have withdrawn their presence in recent years.

In 2010, Chiquita decided to exit Chinese market, mainly as a result of the volatility in imported banana pricing and a lack of established market rules.

"The pricing of imported bananas depended on domestic bananas, which means it could be anywhere between CNY0.5 (US$0.08)per kilo (2.2 pounds) and CNY1.5 (US$0.24) per kilo.  As private importers have swarmed into this small market segment, pricing competition has become extremely intense."

Del Monte was the first international brand to enter the imported banana business in China in early 1990s, starting by selling bananas to China Fruit Company until deciding to handle the entire business on its own five years later.

The company was known to Chinese consumers as the 'Red Lantern' due to the form of its logo.

Chiquita joined the game in 1997, followed by Dole in 1999, and this fundamentally changed the once enclosed banana market in China.

Dole：introducing ripening techniques to China

For Xia, the significance of international giant Dole's entry into China went beyond the changes in market structure, as the company brought ripening techniques with it.

"Del Monte and Chiquita were traders, which is to say they were only responsible for sending the unripened bananas to China and played no role in the later processing stage," Xia says.

"Dole was different in that it was also closely engaged in the ripening of the bananas and their distribution to various end portals.

"They first built a ripening room near Shanghai Port in Waigaoqiao, then several more in Xiamen and other port cities. And this is exactly why Dole is still in the game even today."

While Dole leads with the largest market share, Sumitomo Group from Japan ranks the second. With its China office based in Nanjing, Sumitomo Group owns the banana brand Gracio and its own large-scale banana plantation in the Philippines.

At the moment, nearly all banana imports into China go through either Dalian or Shanghai.

"Dalian is a trade portal, which means that green unripened bananas are shipped to Dalian before being distributed to various processing centers across North-eastern China," Xia says.

"Shanghai is quite different in this respect, being a considerable banana consumer market itself."

He concludes that China's production zones have tended to focus around a few regions, while some locations were proven to be "mismatches".

"Regions frequented by typhoons are definitely not desirable locations for banana plantations,  yet some developers choose them nonetheless. We see a lack of careful planning here.

"Apart from this, there's still much room for progress with research and product promotion. We need to invest more in building up research capacity."

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