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China Charges Ahead in Apples

China's recent impact on the world apple market has been spectacular. The new evidence in this report suggests that the Chinese apple industry will continue to expand for the next few years.

No segment of the apple industry, anywhere in the world, will be immune from the Chinese challenge. This includes growers, packers, marketers, processors, traders, suppliers, industry associations, investors, governments and many others. Every sector of the world apple industry will need to assess how it will be affected by China and how it can best respond. This report examines the strengths and weaknesses of the Chinese apple charge using much current, previously unpublished data. It discusses the major options of blocking, beating or joining the Chinese apple charge. Highlights include:

How the Chinese apple industry adjusted to the end of the 1980-1995 boom period by extending its domestic season, increasing fresh exports and expanding its concentrated apple juice (CAJ) industry.

Zooming exports of Chinese fresh apples and CAJ have impacted competitors in world markets thru 2004. Effectiveness of efforts to block or beat Chinese exports has been modest. Forecasts suggest further rapid growth in exports.

Sample survey of Chinese fresh apple packers showed both large and small firms are adding storage and introducing price incentives to growers. Major problems uncovered include excessive dependence on one variety, Fuji, lack of funds for expansion, and difficulty in coordinating so many small growers to meet the more demanding standards of modern retailers and processors.

Analysis of survey and other data indicated that a few large, expansion-minded firms will increasingly dominate the Chinese CAJ industry. Despite efforts to diversify products and markets, Chinese processors remain heavily dependent for growth and profitability on export markets for CAJ.

Competitors can find many fresh market niches where they can compete effectively against Chinese fresh apples. Competition in CAJ will remain difficult.

For the foreseeable future, China will supply more than one third of the world's apples. Major firms or consortia need to explore profitable opportunities to participate directly in the Chinese apple industry through alliances or partnerships.

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