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Hong Kong’s Fruit Market Ripe for Expansion
by Caroline Yuen
Hong Kong has long been known for its sophisticated consumers who appreciate fashionable, upscale foods--and fruits are no exception.
Hong Kong’s fruit market resembles that of other developed countries--mature and largely saturated. With zero tariff rates and virtually no plant quarantine restrictions, Hong Kong has perhaps the world’s most open, diverse fruit market. If you can’t find it in Hong Kong, it either doesn’t exist or isn’t exported.
Consumers’ seemingly insatiable appetite for fruits sustains the market, and re-exports (mainly to China but also to other Asian nations) continue to rise, climbing from 52,700 metric tons in 1991 to 161,300 metric tons in 1995.
China’s Appetite Raises Exports
Local trade sources estimate that 50-60 percent of fruit imports wind up being re-exported to China. Popular U.S. items include table grapes, oranges, apples and pears.
China prohibits importation of most fruits for direct consumption, but import permits may be issued if the fruits are processed and re-exported. Buyers sometimes resell fresh fruit imports for immediate consumption and substitute domestic produce in processed products.
Trade sources note that import permits are not essential for fruit shipments going to southern China, since much of it is unofficially re-exported through Hong Kong. Chinese import licenses require that tariff duties be paid on official shipments, making them much more costly than unofficial shipments.
Hong Kong Channels Trade Flow
Hong Kong fruit importers place orders with exporters abroad. Most wholesalers operate on a commission (consignment) basis with importers and distribute fruits to retailers, also on commission. To meet rising demand in Hong Kong, China and other Asian countries, some wholesalers have begun importing directly from foreign packing houses.
Chinese enterprises in Hong Kong deliver most of the fruits re-exported to China. They can apparently obtain clearance for produce through several cities in southern China and deliver it along with all required documentation. In return, they receive importer handling and transportation fees, which run about HK $50,000, U.S. $6,468 -- per container. They provide "insurance" to Hong Kong traders: if the merchandise is intercepted or confiscated, they will pay an insured amount of HK $300,000, U.S. $38,810 -- per container to the Hong Kong trader, according to local sources.
Packing Priorities and Retail Outlets
Exporters must ensure that their fruit packaging provides adequate protection over lengthy journeys. Importers usually request that fruits be packed in strong corrugated cartons to prevent bruising and other types of transport damage.
To better protect produce in each container and assure that consignments arrive in marketable shape, some importers also ask that tall cartons be used to allow more space between layers of fruits.
To curb transportation costs, importers also may ask that exporters increase the number of cartons per container. To accommodate such requests, the number of apples packed into a container has risen from 850 a few years ago to 1,260 today.
In Hong Kong and other Chinese cultures throughout Asia, consumers still purchase most fruits and other fresh foods from "wet" markets--traditional street markets. However, an increasing number of supermarkets buy fresh fruits from importers.
With its own prosperous population and access to China’s growing but often difficult and fluid market, Hong Kong offers U.S. fruit exporters some promising opportunities.
The author is an agricultural specialist with FAS’ at FAS’ Hong Kong Agricultural Trade Office. Tel.: (011 852) 2841-2350; Fax.: (011 852) 2845-0943.
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