Gaining ground in China: Opportunities for Philippine agriculture exports

MANILA, Philippines –  With a huge potential market of 1.3 billion people and escalating economic influence, China could be an exporter’s paradise for those who know how to navigate the Chinese marketplace. China’s increasingly affluent middle class with rising disposable incomes and changing lifestyles that include a growing demand for imported foods have created plenty of opportunities for Philippine agricultural exporters. It is projected that in the next several years, China will be the world’s biggest importer of agriculture and agri-food products. It would thus do Philippine agricultural and agri-food companies well to take advantage of opportunities to supply this thriving economic frontier.

Due to its sheer geographical size and vast population (about 20 percent of the world’s population), China is a highly segmented market where consumers and their purchasing habits differ across regions and provinces. These factors could make doing business in China challenging, but factoring in the emerging trends in the Chinese market into one’s export strategy can definitely work to an exporter’s benefit.

Philippine Ambassador to China Francisco L. Benedicto said: “The time is ripe for Philippine agricultural exporters to take advantage of the flourishing Chinese market. There is no other time as now to position Philippine agricultural products in the thriving market in China.”

Export prospects

A growing number of the Chinese population is becoming more and more aware of the benefits of a healthy diet, so health, organics and natural food products are rising in popularity. The changing way of life of the Chinese, especially those of the young and upwardly mobile, are carving a niche for ready-to-eat or gourmet food.

Filipino delicacies such as crab paste and laing (taro leaves cooked in coconut milk), used as spread or toppings for biscuits, bread and pasta, have also piqued the Chinese palate. Banana chips and polvoron (shortbread cookies), and mango, calamansi and coconut juices, purees and concentrates are also fast becoming popular. The biggest buyers of banana chips are from Hong Kong which distributes the snack food in attractive packaging to thousands of outlets in mainland China.

One noticeable trend these days is toward exporting ethnic food, snacks. fruits and juices, with the Chinese upmarket showing greater interest in fresh and dried fruits, organic rice, rice wine, sundried tomato in olive oil, soya and mushroom coffee, arrowroot cookies and instant ginger tea and even Philippine products like mafunggay noodles and powder.

Market watchers also see bright prospects for Philippine farm and fishery exports such as tuna, shrimps, prawns, octopus and lobsters; fresh and chilled vegetables such as asparagus and okra; fresh guavas, bananas, papayas, mangoes, and papayas; coconut products like virgin coconut oil, coco vinegar, desiccated coconut, fresh young coconuts; aside from fruit and vegetable juices. Philippine bananas and mangoes are much favored overseas as they are known to be the sweetest of their kind.

Due diligence

How do we ensure that Philippine agricultural and agri-food products gain a foothold in China and enjoy robust growth in the booming Chinese marketplace?

Ambassador Benedicto reminds exporters of a vital first step in penetrating the Chinese market, “Doing due diligence is essential. Potential exporters must carefully examine the viability and marketability of their products in Chinese markets before exporting their goods to China.”

A key to success in the Chinese market is the development of a focused entrance strategy for a product. An exporter must thoroughly research the Chinese marketplace to determine how to introduce and integrate one’s products or services into the Chinese market. “As with most Asians, the Chinese place a high premium on relationships in their business dealings,” Ambassador Benedicto said, “so it is important to directly interface with Chinese buyers and build networks within the industry you’re looking at.”

Philippine missions and the Office of the Commercial Counselor in China

Ambassador Benedicto has issued statements in the past encouraging prospective exporters to China to contact the Philippine Embassy in Beijing or the Philippine Consulates General in Chongqing, Guangzhou, Hong Kong, Macau, Shanghai and Xiamen. The Ambassador said, “The Philippine Embassy is ready, willing and able to connect you with Chinese buyers, suppliers, partners, industry leaders and local governments: The Ambassador added that the Economic and Trade Section of the Embassy and the Office of the Commercial Counselor in Beijing under the Philippine Department of Trade and Industry liaises with relevant Chinese offices and individuals for Philippine exporters to attend trade agricultural missions, exhibitions, and conferences in China. Attendance in these events would help develop connections within industries in China that would be helpful in promoting products, in organizing promotional events and in ensuring media attention.

Packaging and marketing

To attract more consumers, local producers must pay closer attention to their packaging and product labels, as Chinese buyers note the strong need to greatly improve the packaging of these food products, particularly for the snack biscuits, calamansi juice and banana chips products sold in retail. Chinese buyers have suggested that calamansi juice come in tetra packs instead of cans, which could be bulky and difficult to open. For laing, they recommend a handier type of packaging than the canned variety.

Product labels, on the other hand, must be adapted to Chinese market conditions so these must be in Chinese characters and must ensure conformity with Chinese food safety and health standards.

Websites have become an almost indispensable tool of the trade, thus a website tailored to the specific needs of Chinese buyers and which contains up-to-date and pertinent information is important.

Taxes, duty and legal considerations

Potential exporters must also be aware of taxes, duty and legal concerns when exporting to China. Exporters must be aware of customs regulations and controls that govern imported goods. For instance, import duties depending on the kind of product being exported will have to be settled prior to the release of products from customs. One must also find out if there are any restrictions on the products intended to be sold in China. Determine if export licenses, product registrations or certificates for manufacturing standards or food safety are needed.

Another important matter is the protection of your company’s intellectual property rights (IPR). The handling of copyright, trademarks and patents differ from area to area in China, so it would be a wise move to engage the services of a local agent to manage one’s IPR protection.

Many successful exporters to China have an in-country business services provider to help them through the regulatory requirements that can be intricate especially for firsttime exporters and to help them get started in the Chinese marketplace. It would thus be a good idea to link up with a local business service provider as one of the initial steps.