Heng Tai takes a fresh approach to trading fruit

Every day at 3am, fruit wholesalers at Yau Ma Tei Fruit Wholesale Market jostle each other as tattooed men unload from trucks cartons of apples, oranges and other fruit imported from the United States and elsewhere. As boxes are ripped open, the wholesalers race each other to secure the freshest fruit from a number of dealers, negotiate a good price and leave quickly in order to supply retailers as the sun comes up. Sweat flies thick and fast as they scramble in front of traders' stalls. Main board-listed Heng Tai Consumables Group, discontent with the chaotic, manual handling of fresh produce in the mainland, which is similar to the Yau Ma Tei experience, has built a $200 million world-class fresh produce trading, storage and exhibition complex in Zhongshan. Chief executive Chu Ki said the mainland's antiquated system of handling and distributing imported fruit and bright prospects of growth in the sector had prompted Heng Tai and two partners to come up with the Zhongshan project. 'What we see in Yau Ma Tei is how fruit and other fresh produce are being handled in China. It's poor,' he said. Up to 25 per cent of fresh produce in China is wasted due to a lack of standardised storage facilities, packaging and processing technologies. 'Our project will bring substantial improvements because we have a world-class complex which will serve as a one-stop service platform for mainland and international traders and growers,' he said. The high wastage was a big disincentive to foreign companies interested in entering China's imported fruit and fresh produce market, he said. The complex, which will come on stream in the first quarter of next year, will bring under one roof mainland and international traders and growers for the purposes of exhibition and storage of fresh produce and other products. The company decided two years ago to undertake the trading and distribution of imported fresh fruit and produce to transform itself into a provider with more value-added services, Mr Chu said. 'Everybody can act as a trader,' he said, referring to his firm's core business - sourcing more than 2,000 products from more than 16 countries and importing them into China. More than just a trader, Heng Tai also helped its foreign principals to market and establish their brand names in China through its network of offices and more than 300 staff, he said. 'Our clients, mostly from New Zealand which is a major source of organic food and fresh produce, are keen to enter China. But they found that handling of fresh produce in the mainland was not done properly,' Mr Chu said. The nation's largest imported fruit wholesale market, Li Shui Market near Guangzhou, operates far below international standards in terms of cold storage and logistics management. About 65 per cent, or US$540 million worth, of fruit imported by the mainland passed through Li Shui last year, before being distributed to Guangdong province, Shanghai and Beijing. 'Handling of fruit, vegetables and other fresh produce in Li Shui Market is primitive,' Mr Chu said. 'Our Zhongshan centre will change all this because it will provide a modern trading platform ... with advanced logistics hardware we can extend the shelf life of fresh produce and boost the profitability of wholesalers and growers.' Set on a 780,000 square foot site, the project houses a 107,640sqft exhibition centre and business complex, 200 offices for lease, a 64,584 sqft discharge and parking zone and a 21,528 sqft fresh produce cold centre. 'This complex was built not only for buying and selling activities but also to serve as a venue for marketing and promoting the Sino-foreign fruit trade,' Mr Chu said. He said numerous fresh produce exporters or growers from Australia, France, Italy, New Zealand, South Africa and the US had indicated an interest in taking space in the complex. 'Some countries are even thinking of setting up representative offices in our complex to promote their fresh fruit and fresh produce in China,' he said. Mr Chu expects to achieve an occupancy rate of 65 per cent in the first year of operation. 'The centre is targeted at the high-end market and offers a proper channel with an international standard platform,' he said. The project, which is 30 per cent held by Heng Tai, will be able to handle one million 10kg boxes a season. Heng Tai's partners are a private Hong Kong construction firm, with a 55 per cent stake, and a mainland party, which has a 15 per cent share. Mr Chu is confident the Zhongshan complex will have a dramatic effect on cold chain management in the mainland, which will in turn accelerate the expansion of the nation's fresh produce market.