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«In-market Research to Identify Prime Target for Future Market Development under the auspices of Australia – Pakistan Agriculture Sector Linkages ...»

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Market Development Research in China

September 02 – 12, 2007

In-market Research to Identify Prime Target for Future Market Development under

the auspices of Australia – Pakistan Agriculture Sector Linkages Program (ASLP)

Compiled By

Muhammad Sohail Mazhar

Reviewed By

Dr. Aman Ullah Malik

Dr. Timothy Sun


Sosheel Solomon Godfrey

Babar Ehsan Bajwa

Muhammad Iqbal

Waheed Ahmed

Australian Center of International Agricultural Research (ACIAR)

Table of Contents

1. Introduction 02

2. Market Potential of China 02

3. New Market Development Research in China 03

3.1 Project Research Team for New Market Development Research in China 03

3.2 Getting Chinese Visa 04

3.3 Preparation of Consignment 04

3.4 Travel to China 05

3.5 Custom Clearance in China 05

3.6 Visit to Urumqi Yuqi Biological Science and Technology and Development. 06

3.7 Visit to Plant Quarantine Office, AQSIQ, Urumqi, China 08

3.8 Visit to Superstores/markets, Urumqi 09

3.9 Meeting with the Management of Xinjing New Cooperation, Jiajiale Supermarket Co., Ltd. (NCS) 10

3.10 Visit of Fruit & Vegetable Wholesale Market, Urumqi 11

3.11 Meeting with Freight Forwarder: Railways Department, Urumqi 13

3.12 Running the Focus Group 1, Urumqi 13

3.13 Visit to Golden Wing Mau (GWM) Agricultural Produce Co. Ltd, Shenzhen 14

3.14 Visit to WalMart, Shenzhen 15

3.15 Running the Focus Group 2, Shenzhen 16

3.16 Meeting with General Manager, Shenzhen Agriculture Products Logistics Co. Ltd., Shenzhen 17

3.17 Visit of Shenzhen Agricultural Wholesale market 18

3.18 Visit to Guangzhou Jiangnan Fruit and Vegetable Wholesale Market Development Co., Ltd. 19

4. Consumer’s Section

–  –  –

Mango is the fifth largest fruit being produced in the world in terms of production and Pakistan stands 5th among eminent mango producing countries. The total mango production of the world is 27.96 million tonnes and the Pakistan’s share is around 5.97 % in it. Pakistan has got a wide range of cultivated mango varieties in its two provinces, Sindh and Punjab, and thus its mango remains available in the market from May to September. Although Pakistan is the 4th largest mango exporter in the world, yet its export volume is very low (10% of total production) and the average price earned by mangoes from its existing importers is also far less (US$ 307.48/ton) than earned by many other mango exporting countries (FAO, 2005).

Owing to the immense potential of Pakistani mangoes for increase in export quantity and to improve the unit price of mango, Australian Center for International Agricultural Research (ACIAR), in collaboration with Pakistani collaborators has initiated the ASLP Mango Supply Chain Management Project in Pakistan on “Optimising Mango Supply Chains for More Profitable Horticultural Agri-enterprises in Pakistan and Australia”. The aim of this ASLP project is to address key constraints currently limiting the competitiveness of supply chains for Pakistan and Australian mangoes. The specific

objectives of this project are:

1. To improve and maintain mango quality from harvest to consumption.

2. To identify present market needs and likely future opportunities for Pakistan mangoes, using this information to inform the analysis of existing supply chains and the development of improved supply chain management systems and practices.

3. To work with selected mango supply chains so that they can demonstrate to the rest of the industry the impact of improved supply chain management on competitiveness.

4. To build capacity in Pakistan mango R,D&E institutions to conduct supply chain analysis and implement improved supply chain management practices.

The current activity of market development research in China was conducted to explore the future opportunities for Pakistan mangoes.

2. Market Potential of China China is the thickest populated area of the world (Fact sheet of China is provided as Annex 1). Although China is the second largest world mango producer with an annual production of 2561.5 thousand Mt, with its mango season prevailing from March to September, even then it imports mangoes from Australia, Philippines, Thailand, Taiwan and Brazil round the year. Annual import of mango in China is around 28.23 thousand Mt, valued about $28.98 million (FAO, 2005).

2 China has been identified as a major export market for Pakistani mangoes owing to its large potential of mango consumption. The two governments (China and Pakistan) have signed a protocol of phytosanitary requirements for exporting mangoes from Islamic Republic of Pakistan to the People’s Republic of China (Annex 2) in a meeting of General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), China and Ministry of Food, Agriculture & Livestock (MINFAL), Pakistan in Beijing on 3rd November, 2003. Also a free trade agreement (FTA) has been signed by the two governments at Islamabad on 24th November, 2006 to promote the trade between the two countries (available on www.minfal.gov.pk).

3. New Market Development Research in China

3.1 Project Research Team for New Market Development Research in China The ASLP mango supply chain management project research team for market research in China was comprised of following four persons, one being from Australia three from Pakistan.

1. Dr. Timothy Sun (Project Research Officer ASLP, University of Queensland, Australia)

2. Mr. Muhammad Sohail Mazhar (Project Development Officer, ASLP, Pakistan)

3. Mr. Babar Ehsan Bajwa (Manager Technical, Pakistan Horticulture Development and Export Board)

4. Mr. Sosheel Solomon Godfrey (Programme Officer, ASLP, Australian High Commission, Pakistan) Market Development Research Team ASLP mango supply chain management project team conducted the “New Market Development Research in China” between September 02 to 12, 2007 (Annex 3) in three cities (Urumqi, Shenzhen and Guangzhou) identified as potential markets for Pakistani mangoes.

–  –  –

The research methodology, planned for the activity, included;

Individual interviews from people including importers, wholesalers, retailers and • consumers, Custom and Quarantine officers, freight forwarders and transport companies Two Focus group discussions • Market observation: whole sale and retail markets •

3.2 Getting the Chinese Visa The team applied for a Chinese business visa. To apply for such type of visa, one needs to get an official invitation from an authorized company or local government official in China. The process should start at least two months prior to the planned visit.

For official tours, it is easier to come formally through Ministry of Commerce or Ministry of Food, Agriculture and Livestock (MINFAL) to Ministry of Foreign Affairs thus getting Note Verbale for the visa.

3.3 Preparation of Mango Consignment The consignment, comprising of 30 kg mangoes of cv. White Chaunsa, was to be taken to China with the project team to exhibit at different places. The consignment was prepared by a research fellow, Muhammad Amin, working on sapburn management at postharvest research laboratory, University of Agriculture, Faisalabad.

The fruit was sourced from the orchard of Mr. Saleem Khan Alizai, in Multan, where they were harvested along with up to six inches pedicles. Desapping was performed within the field using 1% solution of commercial grade lime followed by washing of the fruit. The fruit was brought to Iftikhar Ahmed & Co. (IAC), Karachi (IAC is one of the three approved HWT plants by AQSIQ, China. The two others are Durrani Associates, Karachi and Questpak, Karachi) for hot water treatment (HWT). HWT (48° C for 60

–  –  –

3.4 Travel to China:

Urmuqi is 1720 km away from Islamabad & it is two and half hour flight. Urumqi, with a population of three million people, is the capital of Xinjiang province, which is one sixth of the total land mass of China.

The China Southern airline flies thrice a week from Islamabad to Urumqi. The famous Karakuram Highway or silk road also connects Islamabad to Urumqi via Gilgit, Khunjrab and Kashgar.

3.5 Custom Clearance in China:

The project team carried a consignment of 30 kg mangoes with them, which was brought with an aim to have an idea of consumer tastes & preferences as well as to show the

–  –  –

Although the project team had got the necessary documents to fulfill the quarantine requirements of AQSIQ, but still the mangoes were held by the quarantine officer at airport till getting a confirmation from Beijing office of AQSIQ, China.

Dr. Timothy Sun was present at the airport to receive the Pakistani delegates, and the team traveled together to the accommodation in Urumqi.

3.6 Visit to Urumqi Yuqi Biological Science and Technology and Development Ltd.

The project team conducted a meeting with Ms Lee Chang See, the General Manager of the company (Annex 4.1). The company deals in fresh fruit import, distribution & export.

This company imports mangoes mainly from Thailand & Philippines, repacks & reexports mangoes to Singapore and others. In near future the company is planning to enter the central Asian countries as well. The GM of the company expedited that they carried out the market promotion of Pakistani mangoes three years back in Shenzhen, China. The experience was not good because the appearance and the packing of the fruit were very poor; however the taste of mango was not bad. The company showed willingness to support import of Pakistani mangoes but with the involvement of such an agency which should ensure the quality of the produce.

–  –  –

The quality characteristics as desired by the company are given as under:Blemish and scratch free surface, physical appearance and uniformity in size.

2. Weight of fruit ranging from 500 – 750 g.

3. Effective pre-cooling and transport in reefer container to maintain the fruit quality.

4. The fruit should have yellow color with blush (20%).

5. The preference of the importer was to have stickers on the Pakistani mangoes.

6Further, Ms Lee provided the following information to the project team;

The cost of freight from Urumqi to Guangzhou or Shanghai is 550Yuan per ton • and each container carries 25-30 tons.

Travel time between Urumqi to Shenzhen by road is 6 to 8 days.

• Air freight charges from Islamabad to Urumqi are 8.5 Yuan (Rs. 68) per kg.

• Cost of packing is 1 Yuan per box & the cost of 8-9 kg box is 4.5 to 6 Yuan (the • price varies as per quality of packing).

The project team visited the vineyard of Ms Lee Chang See, where the harvesting, grading and packing of fruit for domestic as well as export market was being practiced.

–  –  –

Ms Lee requested the support of Pakistani partners to establish an export market of these grapes in Pakistan.

Also the project team visited the under construction cold storages of the Urumqi Yuqi Biological Science and Technology and Development Ltd., which has a blast chiller of 60 tonnes capacity along with nine cold rooms of 60 tonnes each having the facility of adjustable temperature and humidity at different levels.

The postharvest handling flow chart of the Red Globe grapes is as follows

–  –  –

3.7 Visit to Plant Quarantine Office, AQSIQ, Urumqi, China Mr. Yimit Rosol, Plant Quarantine Officer (Annex 4.2), gave a briefing to the project team on behalf of AQSIQ. He defined the following requirements for the export/import of Mango and Citrus in China;

1. The Chinese importer has to apply for the import permit with AQSIQ at least one month prior to the import of consignment from Pakistan.

2. The phytosanitary certificate from MINFAL and a hot water treatment (HWT) certificate from one of the approved HWT plants by AQSIQ must come with other documents of the consignment.

3. The phytosanitary certificate should have written the statement given in the letter of AQSIQ to the project team (Annex 5).

–  –  –

3.8 Visit to the Superstores/markets, Urumqi The project team visited the major superstores of Urumqi to explore the opportunities and to evaluate the potential competitors of Pakistani mangoes in the retail market of Urumqi.

They also observed the comparative prices of mangoes available on display in different superstore chains. Following is the feedback taken from different superstores.

–  –  –

3.9 Meeting with the Management of Xinjing New Cooperation, Jiajiale Supermarket Co., Ltd. (NCS) The superstore chain had many outlets throughout the country and the one visited by the project team had a total area of 184,000 square meters & 32,000 items were displayed for selling on the shelves. The management told the team that they already have initiated a partnership in Pakistan and is going to open its outlets in Islamabad and Lahore on 10th of March 2008.

10 The General Manager of the company, Mr. Chia Ze Yan (Annex 4.3), and his team welcomed the project team in their office. After introduction of the two groups, Dr.

Timothy Sun (Project Research Officer) explained the purpose of the visit of project team to China. Mr. Muhammad Sohail Mazhar (Project Development Officer) gave a presentation on the mango varieties of Pakistan and their characteristics. The General Manager of NCS opined that the selling of fresh Pakistani mangoes in the Chinese market will be a difficult task as compared to value added form due to the availability of indigenous mango varieties for extended duration. The small mangoes start coming to the market in March-April, with retail price 8 to 10 Yuan per Kg. However, they appreciated the features of late mango varieties (End of August-Sept) of Pakistan and added that these can make a pace in the Chinese market. Further they mentioned that their super markets cater and target the high income category, therefore require the premium quality. It was also advised to target the same consumers for introducing the Pakistani mangoes.

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