Fruittrade 2024, held Oct. 23-24 in Santiago, Chile, brought together the Chilean fruit industry to discuss pressing local and global market issues.

One key focus was the South American country’s star product, cherries, which have started a historic season with a sustained increase in production.

A major consideration for Chilean cherries, however, is the economic status of their primary buyer: China. Chinese trade expert Gonzalo Matamala, general manager of Giddings Cerasus Asia, with more than 16 years in the region, presented insights into this vital market.

China’s Economic Situation

To explain China’s current scenario, Matamala noted that 70% of personal wealth in China is held in property.

“What happened in the pandemic was that the prices of these properties fell violently, so today the Chinese feel that their wealth has also fallen,” he explained.

This decline in property values has heavily impacted China’s economy, as construction historically accounted for more than 30% of its economic growth. Export activity represents a smaller slice of China’s economy, so post-pandemic, the country is experiencing a deceleration, which Matamala describes as “normal,” noting that endless growth was never realistic.

China’s Market Trends

Despite slower economic growth, per capita income is rising, indicating a more financially stable middle class.

“We have to understand that China is no longer a poor country, therefore, and as all trade unions show, they are increasingly consuming more fruits and fresh food,” Matamala said.

One emerging trend in China is a drop in retail sales due to consumers’ perceived reduction in disposable income. However, Chinese exports remain strong thanks to massive production capacity and infrastructure that, according to Matamala, “no country in the region can compete with right now.”

Sales and Employment

The dip in sales is partly due to rising rental costs, leading retailers to explore new sales channels, such as online platforms. Urban unemployment remains around 4-5%, but it has increased significantly among younger generations.

“This is what should concern mainly those of us who sell fruit because this segment is where we capture more consumers,” Matamala noted. “Young people are the ones who buy cherries, and if they face high unemployment, it reduces their purchasing power long-term,” he added.

Cherry Market Forecast

Matamala emphasized that the cherry market is consistently unpredictable but shared valuable insights.

“At Giddings Cerasus, we produce and import a lot of U.S. cherries in Asia, which had an exceptional season, so the category is in a good moment,” he said, adding that a drop in volume had supported higher prices.

For Chile, a high volume of cherries is expected this season, so “we must be very responsible as companies in terms of quality, because if we have a lot of volume with low quality, re-buying does not occur, and the price continues to fall,” Matamala warned.

He noted that Chinese importers, upon receiving a container, have to sell immediately as they don’t hold stock. “This is a business of volume and speed,” he said. “If the quality is not good, the price will drop quickly.”

Matamala also suggested focusing less on cherry size. “If the quality is there, the market adapts to the size, and re-buying continues,” he said.

He recommended exporting some volume to other markets to relieve pressure, especially for smaller-sized fruit. “It’s time to start looking for other markets because concentrating 90% of our volume (in China) increases pressure significantly,” he said.

Port Congestion in China

One of Matamala’s main concerns was port congestion in southern China, which can cause delays in container unloading, truck shortages, and customs backlogs.

“The maritime industry has been opening new ports, and we must explore them, as port concentration can work against us,” he said.

At the Port of Shenzhen, for instance, fruit is handled manually and inspected both in Hong Kong and by a customs official, often creating congestion.

“With fewer trucks available, transport costs and times may rise, affecting returns,” he added.

Additionally, with 30% of Chilean fruit subject to cold treatment this season, customs will face added strain, requiring extra organization. “We expect close to 6,000 containers needing customs inspection, which may challenge customs officials’ capacity,” he said.

Matamala concluded by advising exporters to monitor Chinese retailers’ price cuts, aimed at increasing accessibility, as they could impact the overall price of fruit during the season.