IMPACT on Trade
China as horticultural competitor
by Dr. Thomas Wahl, Fumiko Yamazaki & Mechel Paggi
Share of Chinese Horticultural Exports to Major countries, 2004
China is a market and a competitor for U.S. horticultural products. While its market potential is based upon continued economic and population growth, China's role as a competitor to the U.S. fruit industry is based upon increasing its exports.
China exported nearly $22.5 billion worth of agricultural products to over 200 countries around the world in 2004, a significant increase from $12.8 billion in 1999. China's primary export market for agricultural products is Japan at 32 percent, followed by Hong Kong at 12 percent, the U.S. at 10 percent, and South Korea at 9 percent.
The largest share of Chinese agricultural exports was fish, with over 18 percent in 2004, followed by fish and meat preparations, 15 percent, processed vegetables and fruits, 11 percent, and vegetables, 11 percent.
Over $93 billion of horticultural products were traded in the global market in 2004. The world's largest exporter was Spain, with over 12 percent of traded value, followed by the United States with over 10 percent. China increased its share of the world market for horticultural products from 4 percent in 1999 to 6 percent in 2004, to become the world's fourth largest exporter, with over $6 billion in horticultural exports in 2004.
Japan imported over $2 billion of horticultural products from China in 2004, which is 34 percent of Chinese horticultural exports, followed by the United States with 11 percent and South Korea, 5 percent. These three countries account for nearly 50 percent and top 20 countries about 90 percent of the Chinese exports of horticultural products.
Of the top ten Chinese horticultural exports for 2004, fresh garlic was the largest with exports of over $419 million, accounting for 16 percent of the country's vegetable exports, followed by dry mixed vegetables of over $333 million, at 13 percent. Close to 30 percent of China's fruit exports were fresh apples accounting for over $274 million. The largest commodity in the processed products category is prepared/preserved vegetables with $430 million, over a 16 percent share, followed by apple juice, over $324 million, a 12 percent share.
Increases in exports of fruit are moderate for most of the products in this category; except for dramatic increases in the export of fresh apples from the period of 2001 to 2004.
China's exports of processed products also increased significantly from 1999 to 2004. During this period, processed meat and fish exports nearly tripled from $1,385 million in 1999 to $3,488 million in 2004, and processed vegetables and fruits more than doubled from $1,127 million to $2,578 million.
Overall, horticultural exports from China of prepared/preserved vegetables and fresh garlic account for about 7 percent of the value of exports, followed by dry vegetables and apple juice at around 5 percent. The quantity of fresh apple exports has increased steadily through the period of 1999 to 2004, increasing from 219 thousand tons to almost 774 thousand tons.
Japan has been an increasingly important market for Chinese horticultural exports, increasing from $1,466 million in 1999 to almost $2,039 million in 2004. The largest product is the prepared/preserved vegetables of over $308 million in 2004. This is over 70 percent of Chinese exports of this product, followed by dried vegetables of over $141 million, importing over 42 percent of Chinese exports of this product.
China has been expanding its exports to Japan relative to the United States. In 1999, China and the United States each held about 29 percent of the Japanese market for horticultural products. However, by 2004, China's share had increased to over 33 percent while the U.S. share decreased to less than 23 percent.
Historically, Japan has been one of the largest U.S. markets for agricultural products. China has increased its share of the Japanese market, as well as Hong Kong and South Korea, relative to the United States.
While China is becoming an important market for U.S. products, and holds great potential for many horticultural products, China is increasingly becoming a larger competitor in many important U.S. Asian markets for some products. China has doubled exports of many products but exports of others, notably fruits with the exception of apples, have remained relatively stable.
Will Chinese exports continue to increase in the future, and will China continue to be a competitor in many of our Asian markets? The answer lies in China's economic growth and increasing demand for more and better quality food relative to its ability to meet those demands. It is likely that China will continue to export products that it has a comparative advantage in producing. Apples and apple juice may be a good example of this.
China's demand for quality will also put a strain on its production system due to chemical residues from overuse of agricultural inputs and industrial pollution. At some point, China's growing demand will meet its ability to supply for many agricultural products. China will find that it is less expensive to go to the world market to meet those demands.
What does all this mean in plain English? China will likely continue to be an exporter of some products, such as apples and some processed food products, but will become a net importer of other products. Chinese trade in corn is a good example.
Historically, China has been a net exporter of corn in most years, but is now a large net importer as demand for livestock feed outstripped supply. How does this translate for U.S. fruit exporters? The answer depends upon building a market for high quality products, developing a trusting relationship with buyers and consumers, and understanding what consumers want, both domestically and internationally.