If you have ever wondered why as South African fruit growers and exporters dealing with China, increasing sales to this market should be very high on your priority list, you should pay attention to what was reported from Asiafruit Congress in Hong Kong recently.
The migration of consumers into the middle classes in China will rapidly enhance the buying power in that country over the next 15 to 20 years and that should be good news for South African growers and exporters. The question is whether they will be able to take advantage of the opportunities?
Fruitnet.com reported that increasing affluence and a growing awareness of branded products are just two of the reasons why fresh produce suppliers have never had more potential to reach Chinese consumers. Youchi Kuo of the Boston Consulting Group is reported to have painted a healthy picture of the overall growth potential for the Chinese market, despite concerns about an economic slowdown in the People’s Republic.
This is because China was set to enter the era of the rising middle class, with the number of household in the upper middle class bracket (earning above RMB12,000 per month) set to triple from 50m in 2015 to 150m in 2030. That is a 500% increase and it is true to say that this rising middle class will want to eat a lot of fruit in future, include those that the South African fresh produce industry will grow.
“Consumers are upgrading or graduating to higher classes, meaning they have more spending power,” Kuo is reported as saying on Fruitnet.com.
Most importantly, the growing recognition and trust being placed in brands by “young generation” Chinese consumers, which is those born after 1980, will help growth of sales for those who are serious about building their brands.
Kuo is reported to saying that market research conducted by her company suggests this next generation of consumers recognised three times as many brands as the previous generation, and were huge advocates for brands they liked and trusted. “There’s huge potential to plant an image in these consumers’ minds,” Kuo said.
Where does this leave the South African growers and exporters? Well, the country is certainly expanding its production in the products that the Chinese consumers are keen to obtain. They will have to work very hard though on this because this is a very discerning market and not for the feint at heart.
As far as branding is concerned South Africa has a lot more to do. It is doubtful if we will be able to develop consumer brands without focussing on country of origin branding which will be visible at consumer level. Since deregulation ‘brand South Africa’ has disappeared with the two famous South African brands before regulation, CAPE and OUTSPAN, which were largely viewed as the ‘South African brands’, having largely disappeared in terms of visible and dominating presence.
There are also no signs that ‘brand South Africa’ will probably get its act together anytime soon. The government is certainly not showing much interest in this and it is also a fact that the industry will not provide the funding which is required to address these opportunities. We will be able to sell more fruit in China, but it is unlikely that we will have much more visibility beyond the trade level – at least not until country of origin branding that will take the product further to these new generation consumers become a reality.