A crackdown on Chinese bureaucrats spending public money on luxury items is having some impact on pre-Chinese New Year (CNY) demand for fresh fruit, according to industry sources.
China’s civil servants have been banned from using government funds to purchase luxury goods, part of Communist Party leader Xi Jinping’s anti-corruption drive, which has also prohibited displays of extravagance at party and army functions.
The central government’s continued drive to curb expenses centres on the so-called “three publics”, referring to cars, banquets and foreign travel, but it also appears to have affected the pre-Chinese New Year gift market for fresh fruits.
“With the stronger controls and discipline of Xi Jingping, less public money is being spent on buying fruit [for gifting],” Kurt Huang of Shanghai Huizhan Fruit and Vegetable Wholesale Market told Asiafruit. “”It has had some effect on the business; there are fewer bigger orders.”
Many of the luxury goods sold in China are intended for gifting from officials to other officials or to business, and Huang pointed to the impact of the crackdown in sales of high-end alcohol
“One good example is the best Chinese spirit Maotai, which used to sell for over RMB2,000 (US$330) per bottle and was difficult to acquire,” he said. “Now it’s readily available and only half the price.”
Jason Bosch of Shanghai-based fruit importer Origin Direct Asia told Asiafruit he had not noticed any real impact on pre-Chinese New Year demand, though he admitted that the public spending crackdown might be felt by those whose business was heavily focused on gift packs. “I’ve heard that high-end restaurants have taken a big hit as lavish banquets have been stopped for government officials, so it’s possible this will also filter down to fruit,” he said.
Netting new consumers online
Erin Zhanghui of Chinese online fruit retailer Fruitday, which caters to the luxury gift market, agreed that corporate fruit purchasing for the Spring Festival was “greatly reduced” as a result of the new national policies. But she added that a large proportion of the retailer’s clientele were private consumers, and that their spending was continuing on a rapid growth trend. “As a result, Fruitday’s sales during the Spring Festival have not been seriously affected.'
Indeed, the online retailer has conducted a raft of promotional activities in the approach to Chinese New Year to capitalise on burgeoning consumer demand, according to Zhanghui.
Chilean cherries have spearheaded the campaign, and Fruitday expects its sales of the fruit to reach RMB6m (US$1m) through various channels in the December/January period.
“On 8 January, we invited the Chilean Ambassador to China to come on OCJ, Shanghai’s largest TV infomercial, to see Chilean cherries selling live. Around RMB1m (US$165,000) worth of cherries were sold during the programme,” she said. “Then on 10 January in Beijing, we held a dinner event with the Ambassador of Chile aimed at further driving sales.”
Mobile shopping
Fruitday has enhanced its online sales with the launch of mobile shopping using the Weixin (WeChat) mobile app, with Chilean cherries featured in the ‘Selected Products’ section. “Fruitday is the first brand of fresh fruit on the platform,” she added.
Chilean Cherries and New Zealand-grown Zespri kiwifruit are the two key products that Fruitday is promoting on the platform with a Chinese New Year theme. “We have a ‘full of gifts’ promotion, where if the consumer orders a fixed quantity of fruits, they get a gift fruit,” Zhanghui said. “We also have a 199-1 promotion: the price of a 2kg carton of cherries is RMB199 and if you pay one more RMB you get a gift of another item of fruit.'
In addition to its TV and online sales, Fruitday is using traditional media channels and radio broadcasts to promote its Chinese New Year theme, she said.
Huang confirmed that online sales of fresh fruit continue to grow strongly in China as it becomes easier for consumers to shop via such channels. “Now you can find so many choices to shop online, and it’s so easy to compare the prices,” he said.
Bosch agreed that online sales would continue to grow rapidly as people have less free time to go shopping and because of the convenience e-commerce offers, but he cautioned that this channel remains difficult in terms of logistics.
