Quality and distribution stand in way of export opportunities

China can expect a surge in agricultural imports after it joins the World Trade Organisation, but mainland farmers are also eyeing opportunities in overseas markets - particularly Hong Kong and developing countries. However, Chinese agricultural producers face some formidable hurdles if they are to succeed in developing their export markets. The first is quality. The mainland's agricultural sector is already free to export but the shelves of Hong Kong supermarkets are stuffed with expensive fruit and vegetables from Japan, the United States, Australia and the Netherlands.

The SAR gets most of its low-end cheap produce such as green vegetables from southern China. However, the mainland cannot compete in the market for higher-quality, more expensive produce. Anticipating the arrival of more-efficient foreign competitors after it joins the WTO, Beijing aims to raise domestic agricultural productivity and upgrade quality, which it hopes will also help boost internal demand. The second problem is logistics. Even if farmers can raise the quality of their output, China's under-developed distribution networks may preclude profitable transport. It is cheaper to transport agricultural goods from Paris to Hong Kong than from the Ningxia autonomous region in China's northwest, according to Annie Wu, vice-chairman of the China Association of Enterprises with Foreign Investment. The association recently helped organise a trade fair in Hong Kong to showcase Ningxia's agricultural products, which include wolfberries, grapes and wine.

Rong Jian, deputy secretary-general of Ningxia Hui Autonomous Region, said the region seldom exported produce but now hoped to attract interest from other countries in the face of looming foreign competition. Organic produce could be a promising avenue for future development. Ningxia's climate, irrigation systems and unpolluted agricultural environment are suitable for growing organic produce. Soul Lam, business development director of Jusco (Hong Kong), said it was too early to say whether high-end Chinese agricultural products would replace Western ones in SAR supermarkets. Mr Lam, who attended the Ningxia exhibition, said Jusco would not consider importing from the region unless its logistic problems were resolved.