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Monday, 3 december 2018 | Redacción CEU
Last week was marked by the visit to Spain of the Chinese President, Xi Jiping. This was the first state visit of a Chinese president to the country since the one by Hu Jintao in 2005, in which the agreement of preferential relationship between the two countries was signed. Thirteen years later, this meeting has been turned into a strong commitment to openness and the fight against protectionism. A series of commercial, institutional and cultural agreements have emerged from this official encounter. But if something stands out of this meeting is the signing of two protocols that will enable the opening of the Chinese market to table grapes and the expansion of the export of pork to the country. Today, at The CEU IAM Business School, we analyze what opportunities these agreements offer and what their keys are.
Until now, the current regulation did not enable the exportation of meat products with less than 313 days of curing, with bone or that were not frozen. In other words, the legislation prevented the export of products like loin, spicy sausages, shoulder ham and the emblematic and distinctive ham legs. So, Spain exported frozen meat and offal to China, although it must be said that they did not have legal coverage. Regarding the processed products, Spain exported ham, but it was always boneless. Therefore, this fact was detrimental to their greatest added values, its cutting and tasting. Both are very important for the optimal consumption of this product.
The visit of Xi Jiping has marked a turning point in the commercialization of pork in China. Last Wednesday, both countries signed several trade agreements. As could not be otherwise, among them stood out the export protocol for pork. Its ratification has not only opened the doors to a wide range of products that were previously banned, it has also meant the entry of one of the flagship products in Spain: Iberian ham. It should be noted that by 2007, China had already accepted the import of pork products, but the restrictions on pork were numerous and strict, and this fact was a considerable trade barrier.
Table grapes to Chinese tables
This meeting has also been key to another Spanish product, table grapes. China and Spain have also reached an agreement to set the phytosanitary requirements which are necessary for the export of this fruit. Thanks to this new protocol, the Asian country will open the doors to the importation of Spanish table grapes with a tariff of 13% and a VAT of 11%. Until now, Spain only exported to China citrus (according to an agreement which was signed in 2005) and peaches and plums (thanks to another protocol which was signed in 2016).
It is important to mention that China leads the world ranking of fruit and green vegetable producers. However, this country also reaches record figures in their consumption. Its imports of fruit keep increasing year after year. These products usually come from nearby countries, like the ones from Southeast Asia. However, the high demand for fruit has had an impact on the country's increasing bet on markets which are further away. All these data suggest that the imports of table grapes and other fruits will increase in the country and that the current consumption trend will not decrease.
A second reading of this agreement
The People's Republic of China is the second largest economy in the world and has a market of 1.4 billion people. This accounts for 18% of the world's population. It is also the largest market for pig products. Approximately half of the total that is currently produced in the world is consumed there. On the other hand, Spain is the leading exporter of pork to China, and the fourth exporter of offal. Therefore, the figures are very favorable for Spain a priori.
However, there are also small aspects that generate friction. For example, the general secretary of the Business Federation for the Spanish Meat Industry (FECIC by its initials in Spanish), Josep Collado, valued the protocol positively, but he also called for agility in the authorization of companies. Collado requests that some companies which have a strong dimension and that are not authorized to enter China yet be reconsidered for a future list. Even so, the FECIC affirms that this agreement brings very good news for the pig sector.
In respect of table grapes, Murcia will be one of the most favored regions. This is one of the communities that leading the production and commercialization of this fruit, accounting for 80% of the national total. For its part, the Spanish Federation of Associations of Producers Exporters of Fruits and Vegetables (FEPEX by its initials in Spanish) has also pronounced on this deal. The sectoral organization considers that signing this protocol is a unique opportunity and can contribute to diversify markets significantly. In this case, the challenge is that companies that bet on the Chinese market are able to find the right means to take the fruit on time and in good condition to a country that is so far.
At The CEU IAM Business School we offer an Agrifood Sector Management Development Program that enables its students to dig deeply into the knowledge about the sector globally and understand the keys to the challenges which are faced by each of the links in the food chain of the 21st century. Discover the new trends in the sector, deepen into the social and economic environment and boost your career in this field thanks to this unique training that we teach both with a blended and an online method.