Hong Kong – emerging trends

Following a trip to Asiafruit Congress, APAL’s Annie Farrow shares her insights into Hong Kong’s fruit imports.

Author: Annie Farrow Industry Services Manager, APAL 03 9329 3511 afarrow@apal.org.au

Annie Farrow
Industry Services Manager, APAL
03 9329 3511

Wet markets continue to dominate fresh produce sales in Hong Kong though supermarkets are beginning to improve their market share according to Melinda Meador, an agricultural trade officer with the United States Department of Agriculture (USDA). Speaking at Asiafruit Congress, Meador said that about 60 per cent of retail fruit sales were currently made at the wet markets but this will decline as consumers shift to modern shopping channels.

“Two emerging trends are online shopping and specialist fruit boutiques, which are driving the demand for premium quality and organic produce,” Meador said. “The number of fruit juice stands, which also offer cut fruit, is increasing and the produce sector is benefiting from government promotion of healthy eating through fruit and vegetable consumption. Increased awareness of food safety is also boosting high quality and imported product demand.”

According to the 2015 Asiafruit Statistics Handbook, Hong Kong imported 127,000 tonnes of apples, up 10.9 per cent, while pear imports rose by 7.2 per cent to 67,800 tonnes.

Australian apple exports to Hong Kong were 46 tonnes between June 2014 and June 2015. Analysis of the same period undertaken by Wayne Prowse for APAL based on Australian Bureau of Statistics data suggests that Australian apples fetched a slightly higher free on board (FOB) price of $3.39/kg in Hong Kong than many other export markets, where the average across all markets was $2.78/kg.

Shipments of Australian pears to Hong Kong have risen substantially in the first half of this year to 347 tonnes, which is up from just 9 tonnes for the same period last year. This is despite an apparent drop in the FOB price. Pears fetched $1.60/kg in the 12 months to June 2015, sitting just below the average price obtained across all export markets.

Hong Kong is not a protocol market and there are no tariffs, so Australian exporters face strong competition from a multitude of suppliers. China dominates the imported apple market with a 46 per cent share, followed by the US (28%), New Zealand (9%) and Chile (6%).

Meador said that imported fruit consumption would continue to increase as a result of Hong Kong’s steadily rising economic indicators and few trade barriers. However, Hong Kong remains a major platform for on-shipment with re-exports accounting for 58 per cent of inbound trade.

“About 90 per cent of the re-exported fruit is destined for China with the remainder split between Macau and Taiwan,” said Meador.

The Asiafruit analysis suggests that re-exports of apples are considerably less significant than the overall picture of all fruits painted by Meador. Data based on Hong Kong export data indicates that Hong Kong re-exported 37,000 tonnes of apples in 2014, about 29 per cent of the total import volume. This is down 7.4 per cent on the previous year, which may reflect the US regaining access to China. Apple re-exports are also lower than for other fruits due to the high volume of domestic apple production and cold storage in China. This leaves Hong Kong with 90,000 tonnes of net imports of apples or 12.5kg per capita consumption.

“Hong Kong importers believe they will continue to play an ongoing role with mainland China because of Hong Kong’s infrastructure, especially airfreight,” Meador reported. “The high speed rail (scheduled to be completed by 2020) between Hong Kong and Shenzhen (which is already connected through to Beijing) will strengthen that. Nevertheless, China will improve its own infrastructure with port facility expansions and the capacity for larger ships. E-commerce trading will also change the dynamics.

“Suppliers are now beginning to develop direct relationships with supermarkets, though the capacity of retailers to access smaller scale volumes can present a challenge. Direct relationships between locally based suppliers and customers through e-commerce is small but emerging. Nevertheless, importers remain a dominant source of fruit produce to wholesalers, retailers and the hospitality sectors.

“Imported fruit is used in the snacking, gifting, bakery, dessert and juice sectors in Hong Kong, though gifting is on the decline. Strong cultural inclusion of fruit into the native cuisine, strong links with China, an affluent economy and the government promotion of fruit for health reasons is likely to continue to provide good opportunities for imported fruit in Hong Kong,” she concluded.

By |September 28th, 2015|Exporting, Market access|

About the Author:

Industry Services Manager at Apple and Pear Australia Ltd (2009-2016).
For information regarding Industry Services contact APAL at ea@apal.org.au or on 03 9329 3511.