Research Reports
Development of Chinese Horticultural Industry and its Implications
-
AuthorEor, Myongkeun
-
Publication Date2007.12.01
-
Original
China has been playing an important role in the world agricultural production; China feeds 22% of the world population with its territory covering 7% of the world's land area. The cultivation area and production of Chinese vegetables and fruit have rapidly grown since the late 1970s and vegetables overtook livestock products in export amount after the country's entry into the WTO. The increase in the production of vegetables and fruit was caused mainly by productivity growth with the development of new varieties and production technologies rather than by an increase in cultivation area. Low wages and rents accelerated the development of the vegetable and fruit industry.
The average quality level of vegetables and fruit produced in China, however, is still low. For example, some 90% of total fruit produced in China are mostly low quality and are consumed within China. The per capita consumption of fruit is also much lower than that of developed countries while the consumption per person has increased over time.
The Chinese flower industry has also grown rapidly. The growth of the cut flower industry of Yunnan Province is remarkable. Yunnan Province produces about 70% of total cut flowers in China even though 15 years have not passed since the cut flower industry was introduced in Yunnan Province. However, the cut flower industry faces some challenges not only because farm sizes are relatively small but also because farmers do not have the perception of intellectual property rights.
One of the features of the Chinese vegetable and fruit industry is that the industry is most affected by the government. For example, the "Green Basket Policy," which was initiated in 1988, well exemplifies the government-driven policies to solve the problems in the vegetable industry. The other example can be found in the fruit industry. To improve the quality of fruit, the Chinese government initiated a reallocation program for apples and oranges in 2004. The program was designed to concentrate the production of apples and oranges on specific regions to enhance competitiveness.
Despite many advantages, the Chinese vegetable and fruit industry faces new challenges; wages and rents spiraled up, and some vegetables experienced low production because of consecutive cultivation. Furthermore, consumers, particularly the residents in coastal provinces, tend to purchase higher quality products and more diverse food, so it is not easy for the Chinese farmers to meet the needs of high income consumers.
To see the price competitiveness, the MCA indices are calculated. The indices indicate that 63 items of Chinese vegetables and fruit have competitiveness in the Korean market while only 3 items of Korean products have competitiveness in the Chinese market. This result shows that the Korean products are not price-competitive against the Chinese products, which implies that the Korean growers should not compete with the Chinese growers in terms of price but quality. It is generally recognized that the Korean products are still competitive in terms of quality against the Chinese products. However, it is also a fact that the Chinese products have caught up with the quality of the Korean products. As a result, the distinction in quality between the two products is not large.
To compete with the Chinese products in the Korea market, the Korean growers should produce safer and higher quality products than the Chinese products. Additionally, producers should reduce costs by enforcing efficiencies in marketing. If the Korean growers can produce safer and higher quality products and reduce marketing costs, the Chinese market may offer good opportunities for the Korean products because the demand for safe and high quality products in China is very promising.
Researchers: Myong-Keun Eor, Yean-Jung Kim, Yun-Shik Kim, Hyoung-Jin Jeon, Jing-Hu Li
E-Mail address: myongeor@krei.re.kr
- Next
- The way to balance the supply and demand for rice
- Prev
- A Study on Changing Structure and Functions of Periodic Markets in Korea