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Branding key to success of agricultural enterprises

By Shi Jing in Shanghai | China Daily | Updated: 2019-06-11 09:30
A visitor tastes kiwi fruit from New Zealand at an exhibition in Beijing. [Photo by Zhao Bing/For China Daily]

Establishing a recognizable brand name early on is important for companies hoping to succeed in the agriculture industry, said experts.

According to statistics from the Food and Beverage Innovation Forum 2019 held in Hangzhou, Zhejiang province, in late April, the value of the Chinese agricultural products market is now estimated at about 10 trillion yuan ($1.5 trillion). Meanwhile, data from the National Bureau of Statistics showed that the total retail value of grain, oil and food surged 10.2 percent year-on-year to top 1.4 trillion yuan in 2018.

But unfortunately, there are hardly any established agricultural product brands in China at present. Huang Hai, principal of Shanghai-based FreesFund, said the company's major investment target is food and beverage brands in the primary market.

"Although there should be plenty of opportunities for early investors and venture capitalists in the Chinese agriculture industry, there are few eminent agricultural brands in the country," he said.

Overseas highly celebrated agricultural product brands are tasting the sweetness of this lucrative market. New Zealand kiwi fruit brand Zespri tapped into the Chinese market in 1999. While China only contributed 2 percent of the company's global sales in the early days, it accounted for 20 percent of Zespri's global sales last year, making it the largest market for Zespri, said the company's chairman Bruce Cameron.

While more than 27 million TEUs (twenty-foot equivalent units) of Zespri kiwis were sold in China last year, Cameron said that the number will double in 2025, which means that China will account for 25 percent of Zespri's global sales by that time.

However, the story for Chinese brands is not so cheerful.

Hangzhou-based beverage conglomerate Nongfu Spring stepped into the agricultural industry in 2005 by planting orange trees in East China's Jiangxi province. After more than a decade, the company has now established its orange brand - 17.5 Degrees, which takes its name from the fruit's average sweetness.

But the process to establish and protect the brand name is painstaking, said Zhou Li, board secretary of Nongfu Spring. In the past three to five years, the company has worked hard to track down counterfeits in the market. The company filed more than 20 civil suits in Jiangxi last year.

"Nongfu has attached great importance to brand name protection since we rolled out the first nutrition products. But the protection by law of primary agricultural product brands in China is much less than that of imported food products," he said.

There are a great number of regional agricultural products in China, such as oranges from southern Jiangxi province and apples from Aksu prefecture in the Xinjiang Uygur autonomous region, said Zhou.

"Companies will only protect them when such regional brands become commercial. The process is hard, but it is a must. Otherwise it will be extremely difficult to attract continued investment to the agricultural industry," he said.

But Guo Qi, vice-president of e-commerce platform MissFresh, said there are still plenty of opportunities in the agricultural industry as Chinese consumers, especially the younger generation, are willing to pay more for quality and well-established brands. "When it comes to food, people are not that price sensitive these days. It is especially true with the younger generation. They are willing to pay a premium for branded products, which will be a major impetus for the agricultural industry," he said.

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