Since the 1970s, China’s apple industry has been developing rapidly and has been greatly enhanced in terms of cultivation area and quality. The current export volume of apples in China has increased more than 15 times compared with the 1970s, which has an important impact on the world apple trade.
However, we need to face the fact that there are certain problems and shortcomings in the apple trade in China. The specific manifestations are excess production, lower quality, and insufficient profits. Moreover, in recent years, apples from New Zealand, the United States and other countries have also entered our market, forming an impact on domestic apple supply and demand. Therefore, how to further improve the problems in the development of China’s apple industry and enhance the comprehensive competitiveness of its foreign trade is of great significance to the long-term healthy development of China’s apple industry.
The current situation of China’s apple foreign trade
1.Import and export scale
Apple imports. According to China Customs data, from 2015 to 2020, the annual import quantities of apples in China are 8.75, 6.71, 6.88, 6.45, 12.51 and 75,700 tons respectively. The source countries of imports are mainly concentrated in New Zealand, Chile and the United States, accounting for more than eighty percent of the total number of apples imported into China.
Apple exports. According to Chinese customs data, from 2015 to 2020, the annual export volume of apples in China was 83.34, 135.06, 1.3348, 111.84, 97.12 and 1.058 million tons, respectively. 2016 apple foreign trade exports were the highest in recent years, both in terms of export volume and export value, hitting a record high. The data show that in 2018, the export volume of apples took a sharp turn for the worse, mainly due to the impact of natural disasters in the country that year, which led to a massive reduction in apple production in Shaanxi and other regions, and the suspension of apple trade with the Indian peninsula region.
According to the export data, since the beginning of the 21st century, China’s apples have been sold all over the world. The number of specific countries and regions is 43, of which Russia is the number one country in terms of imports. The number of apples imported into China accounted for 20.18% of the annual export volume in 2001. And, for eleven years after that, Russia was the largest exporter of apples in China’s foreign trade.
And starting from 2014, the total import volume of Bangladesh began to jump to the first place and lasted until 2019. Currently, according to the 2020 China Apple Supply and Demand Analysis Report, China’s main export destination for apples to the outside world is concentrated in the Asian region. This specifically includes countries in Southeast Asia, such as Bangladesh, the Philippines, Indonesia, etc. The TOP5 countries in foreign trade are Bangladesh, the Philippines, Vietnam, Thailand and Vietnam, accounting for 74% of the overall share. Vietnam and Myanmar have gradually become the new growth point of China’s apple foreign trade.
Problems of China’s apple export
1.The export value decreases year by year, and the price factor has an obvious influence
China’s apple export volume was growing continuously from 2001 to 2009, but it was in a turbulent situation after 2010. And, despite the large export volume, the proportion of China’s total apple production is very low, and the proportion of China’s apple export volume to total production has only increased by about 1% during the 10 years.
At the same time, the export quantity and value have been declining since 2016, before picking up in 2020. The reason for this is that in recent years, China’s apple exports have been affected by its own production on the one hand, but more problems are mainly concentrated in the area of price. China’s apple exports rely more on price advantage, through lower prices to squeeze more foreign trade markets.
However, in recent years, the apple planting industry in various countries has achieved significant development, which has improved the quality of apples while reducing planting costs. In contrast, apple production in China is still in the stage of mainly fragmented retail households, and it is difficult to promote mechanized and large-scale production and operation, coupled with the fact that the average age of farmers is increasing year by year and the production efficiency is decreasing, which leads to an increase in the cost of apple production in China year by year and an overall decrease in the index of dominant comparative advantage, and it is difficult to sustain the way of obtaining the market by suppressing prices.
2.Export markets are relatively concentrated, and it is difficult to expand abroad
Through the export data in recent years, it can be seen that China’s current apple export market is extremely concentrated, specifically in terms of the number of exporting countries and the export value of the main exporting countries.
First of all, the number of export countries, China’s exports in 2019 to 76, and ranked third in the export volume of Italy, the number of export countries and regions than we 12 more; the main export countries in terms of the export value of the ratio, China’s exports of the top ten countries accounted for 88.2% of the total exports. And most of them are located in Southeast Asia. And Italy’s export concentration is only 72.73%; and in recent years, Bangladesh, the main exporter of apples in China, once accounted for more than 70% of our export volume of imported apples.
In contrast, China’s current export market is extremely concentrated, and shows a trend of low-end. The over-concentrated market will lead to the possibility that China’s foreign trade in apples will be exposed to external risks, and when individual countries or regions are unstable, it will greatly affect China’s apple export trade. The main reason for the concentration of the market is the lack of high-end products in China’s apples, the overall quality is low. In addition, some countries impose technical trade barriers on China’s apple exports through technical regulations and standards, making it difficult for China’s apple exports to Europe and the United States and other regions.
3.Mainly low-end products, lack of brand value
Although in recent years, our government has increased the support for domestic apple enterprises’ foreign exports. For example, since 2018, the export tax rebate has been increased from 5% to 10%, but the overall core competitiveness of China’s apple industry is still low. The specific performance is lower prices, lack of high-end products and well-known brands, and poor branding.
The reasons for this boil down to two points.
On the one hand, there are many apple export enterprises in China, and there were as many as 853 of them when they were located at the peak in 2016. However, there is a lack of differentiation among enterprises, and there is no obvious comparative advantage in products. Therefore, they can only seize the market and obtain more customer orders by playing price wars. The price war will inevitably squeeze the profit margin of enterprises, leading to a decline in the overall profit of the industry, which further affects the innovation and re-production capacity of enterprises, ultimately forming a vicious circle, making the entire apple industry at a disadvantage in the international market.
On the other hand, the brand of agricultural products is an important means to give life to agricultural products, which can make them more special and different, and at the same time produce a certain attraction to consumers, and is a symbol of the quality and service of agricultural products, which is an important means to realize the brand premium. The current domestic apple export enterprises have many related brands, but they are mixed but not bright. Lack of production and management of high-end products, the concept and awareness of the brand does not play a good role in the function and value of the brand.
4.Sloppy operation limits the international competitiveness of apples
China’s current apple planting is still dominated by small-scale farmers in a rough operation. Take Shaanxi, the main apple producing region in China, as an example, the average age of apple farmers in Shaanxi is over 50 years old. Due to physical strength, personal ability and cognitive factors, the overall production and management efficiency of apple growers is low; moreover, the proportion of small-scale farmers is low, so there is a lack of mechanization and modernization, which leads to a lack of technological assistance in apple production and makes it difficult to guarantee the overall quality and yield.
The impact of natural disasters is more obvious, and when extreme weather is encountered, there will be a large area of yield reduction and apple quality damage.
Third, apple growing areas are mostly highland mountainous areas, inconvenient transportation, as a kind of cash crop, apple growing production and operation costs are affected by fertilizers, pesticides and other factors of production, but also face more labor costs, and poor planting environment is bound to further increase the cost of transporting production materials and the use of labor.
Therefore, in a comprehensive view, in recent years, China’s apple planting as a whole has the problem of increased costs, reduced efficiency and slow advancement of scale and modernization. This has led to a continuous decline in the competitiveness of China’s apple foreign trade. Along with the current increasingly fierce competition in the apple foreign trade market, a variety of challenges have come one after another. The export volume of Japanese apples has fallen to zero, the import volume of Russia, the main importing country, has been declining for years, and the export of New Zealand apples has risen to the top of the list, indicating that the overall production capacity of China’s apples needs to be improved.
5.Green trade barriers hinder apple exports
Affected by the epidemic and the international economic environment and other factors, the international agricultural trade environment is always under the state of fluctuation and change. This also has a greater impact on China’s apple exports and challenges, making the uncertainty and risk of exports increased year by year.
In recent years, China’s apple exports to developed countries and regions are frequently affected by various non-tariff barriers to trade. The main reason is that the most important fruit output of the EU is apples, therefore, European countries pay attention to protecting local suppliers and protecting their agricultural enterprises through market protection mechanisms. Therefore, more restrictive measures and standards are set up for suppliers outside the EU, which can be divided into limited import procedures, further regulations on the management of production and processing processes, setting requirements for controlling harmful substances, setting safety and health limits and implementing on-site inspection and quarantine. For example, the number of pesticide residue testing items for apple imports in the EU is as high as 472, and measures such as the “EU Pesticide Re-registration Decree” have been enacted. These measures have greatly increased the standards and barriers for China’s apples to enter the European market.
Policy Suggestions for Improving the Current Situation of Apple Exports
1.Improve the core competitiveness of apple industry
At present, China’s apples have problems such as rough operation, decentralized operation, high cost, low income, low quality and poor risk resistance. Therefore, we should gradually increase the investment in manpower and science and technology in the apple industry.
At the same time, we should strengthen the application of science and technology, improve the conversion rate of science and technology, and realize the transformation of apple foreign trade from low-price competition to quality competition. Specifically, it can be divided into the following aspects.
First of all, at the level of micro-major, we should further increase the capital investment in the apple industry, strengthen the planting skills of front-line farmers, optimize their planting concepts, and effectively improve their comprehensive quality capabilities. As the main body of the current apple production, the only way to fundamentally improve the efficiency of apple farming and its ability to resist natural risks is to achieve changes in apple farmers.
Secondly, at the macro level, the optimization and reform of the entire apple industry should be realized. It is necessary to gradually promote the transformation and strategic upgrading of the domestic apple industry, to realize the transformation of the overall industry from quantity-based to quality-based, high-cost crude to high-efficiency intensive, and to enhance the sense of market competition and crisis awareness. Starting from the industry standard, scientific layout and R&D investment, we will refine the planting and export standards of the whole apple industry, make a new scientific planning for the dominant apple planting areas in China, and develop differentiated production and operation plans according to the different planting areas, business varieties and ripening systems.
In addition, we should increase cooperation between schools, research institutions and agricultural enterprises, and promote the research and development of high-quality varieties that meet the standards of taste and quality, so as to narrow the gap with the apple industry in Europe and the United States, steadily improve our core competitive advantages, change our low-price strategy, and make China truly realize the transition from a “big apple country” to a “strong apple country. To transform from a “big apple country” to a “strong apple country”.
2.Promote apple export market expansion and optimize international layout
The current export market concentration of China’s apples is high, which is extremely unfavorable to China’s apple exports and greatly increases the risk of foreign trade. Therefore, China’s apple foreign trade industry should increase market development efforts, and actively move to new countries and regions. Fundamentally, we should implement a diversified development strategy and optimize the international layout of apple exports.
On the one hand, it is necessary to continue to maintain and consolidate the apple trade with ASEAN and Southeast Asian countries, giving full play to the advantages of geographic location and bilateral trade liberalization and facilitation. Southeast Asia, as the main concentration of China’s apple exports, has a very important position in China’s overall apple foreign trade. Only a good stabilization of the Southeast Asian market, in order to lay a solid foundation for the development of the European market.
On the other hand, according to the current weak point of China’s apple industry exports, in line with the trend of the world’s apple foreign trade development, according to different export countries and regions, the development of targeted and accurate export strategy, relying on the Belt and Road and other advantages of the environment to develop new markets for apple exports. The specific performance can be: first of all, strengthen the understanding of the market rules of the EU and other countries and regions. A professional information collection and analysis organization should be set up to collect relevant apple export regulations and standards through health and food safety authorities and the European Food Safety Authority.
It should also communicate and verify with relevant departments in a timely manner to ensure timely control of market, product and customs information, and establish a relevant information sharing system to reduce the asymmetry of export information. Second, actively use the advantages along the Belt and Road to carry out international expositions and exhibitions of apples and other promotional meetings to enhance the external visibility of China’s apples, so that more apple exporters can build up confidence in foreign trade. Establish overseas trade and operation centers, apply the Internet + model to the foreign trade of apples, and create new channels for cross-border e-commerce.
3.Create an advantageous brand of apples and enhance export visibility
At present, China’s foreign trade in apples has the problem of low brand value and low visibility. In the face of this dilemma, we should enhance the export competitiveness of domestic apples from both internal and external perspectives. In the internal field, in response to the problem of the large number of apple export enterprises in China at present
On the one hand, it should be regulated from a macro perspective. Government departments can make reasonable planning and control according to the different products and export structure of each region. Focus on supporting the apple industry in the advantageous regions, and vigorously cultivate and support large multinational foreign trade leading enterprises with apple export as the main business target. And for the smaller scale and lower operating strength of the apple foreign trade enterprises can realize the concentration of advantageous resources by means of joint or acquisition and merger.
On the other hand, the current form of domestic apple planting will remain in the short term with the model of scattered planting by small farmers. Therefore, in order to improve the quality and standardization of domestic apples from the source, we should coordinate and coordinate the scattered apple growers, improve the organization of fruit farmers in key areas by means of cooperatives, strengthen the exchange of information including planting techniques and channels, and improve the overall planting quality. Then combine with domestic leading enterprises, integrate advantageous resources, and build a brand of Chinese apple products with international competitiveness and influence; brand building needs to enhance internal strength and reduce unnecessary price war losses on the one hand, and enhance their brand awareness externally on the other. Chinese apple exporters can implement a differentiated branding strategy in line with regional characteristics, starting from the characteristics of the products themselves and according to the environment and customer demand preferences of different export locations. And through a combination of online marketing and offline promotion, brand promotion can reflect the reliable quality and healthy taste of Chinese apples, dispel consumer concerns and establish a brand image.
4.Improve the quality of apples to cope with international trade barriers
In the face of the adverse impact of international trade barriers on China’s apple exports in recent years, China’s apple exporters can improve their coping ability from two aspects: product supply and logistics system construction and strengthening international cooperation. Products