MARKET

Karen Allan.

In the first in a series of articles about New Zealand’s major honey export markets, we take a look at China, including recent research from New Zealand Trade and Enterprise (NZTE) and New Zealand Story, and thoughts from an exporter on the ground.

In 2008, New Zealand became the first OECD country to sign a comprehensive Free Trade Agreement with China. Tariffs for all New Zealand honeys were removed on day one of the agreement and China quickly became one of our most important honey markets.

China is currently our second largest export market. In the year to October 2024, honey exports to China generated $55.6m. Mānuka honey accounts for 94% of this total ($52m), with 83% of this being monofloral mānuka.

CEO of The Mānuka Collective, Sean Goodwin, who attended the China International Import Expo (CIIE) in Shanghai in November, says there is a general increase in demand for New Zealand products.

Although it is a difficult market to enter for new players, he suggests that there is potential for innovative products, outside of the standard “honey in a jar” fare currently provided, to make inroads into the market.

A recent report commissioned by New Zealand Story,2024 China Market Perceptions, written by market research firm fiftyfive5, highlights the importance of understanding the market context and how perceptions of people’s view of their own country and exporting countries may impact consumer-related decisions (fiftyfive5, 2024.).

Sean says China is itself a very innovative and very fast-moving environment, particularly in the big cities.

“We talk about the speed of China. You can get anything done very quickly. It may not be perfect but it’ll be 95%.”

The incredible pace at which things can get done in China—such as building hospitals in just 10 days—is also a source of pride for locals according to the fiftyfive5 research.

The economic contraction after the COVID-19 pandemic and the collapse of the real estate market have created economic challenges for China.

And some of the large-scale construction projects are yet to pay off. A recent stimulus package from the central government has mostly gone towards repaying local government debt while brand-new high-rise buildings and housing developments sit empty in many parts of the country.

Youth unemployment recently hit 17%, not including university students (Textor, 2024) and an ageing population and declining birth rates are raising concerns for healthcare, dairy and baby care industries.

Those in the market for premium items such as mānuka honey are not as badly affected by these challenges, says Sean, with the middle to upper echelon of earners growing in size. He believes there is room for growth in this part of the market.

China is exhibiting a renewed emphasis on traditional Chinese culture and language. According to the fiftyfive5 report, the government is pushing for cultural revival and nationalism influences education, media and public discourse. Younger generations are embracing traditional clothing, dialects and the arts.

“While cultural heritage was once seen as a barrier to progress, it is now understood as key to China’s identity and growth.” (fiftyfive5, p. 11.)

Sean says Chinese consumers are now far more accepting of Chinese origin products. The government has been encouraging consumers to embrace Chinese products.

“Simply saying it’s from New Zealand is not enough. We have a great story. We need to tell people about why New Zealand honey is better,” says Sean.

Māori culture is a point of potential connection in China, the fiftyfive5report says. Despite limited understanding, the report suggests Māori culture can still bring value to Chinese consumers, who share similar concepts of harmony with nature and appreciate this kindred mindset.

Traditional Chinese medicine (TCM) is popular in China with many hospitals offering treatments that combine Western and Chinese medicine (see sidebar).

Sean says the younger generation is also respectful of traditional Chinese medicine. Health and wellbeing is important to this demographic as it affects how well they perform and their ability to support their families, whether that’s their parents or their own family and children.

Chinese perceptions of doing business with New Zealand

New Zealand is well-known for our primary industries and for producing quality goods. Our country is viewed as clean and safe with high standards of safety and production, benefiting from a smaller, well-regulated population of producers.

“Our pristine environments ensure high-quality produce, free from the shortcuts driven by exploitation or fierce economic competition, that can drive this behaviour in China.” (fiftyfive5, p. 17.)

The research indicated there is a medium awareness of honey that could be built on.

While the pace of Chinese advances may be fast, doing business there takes time, says Sean. The company Sean heads has the advantage of being well-established and has been doing business in China for more than 15 years.

Building trust with Chinese business partners is important, according to the fiftyfive5 research, and feedback suggested that New Zealand businesses are respected for their established expertise, safety and trust.

Market challenges—brand dominance

A preference for established, well-known brands presents challenges for new players trying to enter the Chinese market.

According to a 2022 NZTE survey, 60% of the mānuka category revenue that passes through China’s main e-commerce site Taobao is held by one brand, and 92% of sales are going to just five brands.

Premium supermarkets stock a low number of brands and are more likely to expand their product range, rather than their brand range, this report says.

Add to this the fact that 41% of survey respondents selected “known brand” as the most important feature when selecting their Mānuka honey, and it makes it a challenging market for new entrants.

“With significant dominance from major players, new brands may struggle to attract customers on Taobao. New entrants will need to ensure their brand offering is unique and appealing,” says the NZTE report.

Unique Mānuka Honey Factor Association Chief Executive Tony Wright says, “China is a huge market with ample opportunity, but success there takes a lot of hard work, investment, and excellent in-market partners.”

Priorities for Chinese consumers

So, what influences Chinese consumers’ purchasing decisions?

When giving their reasons for buying mānuka honey in the 2022 NZTE research, health came out as a top priority. “A supplement to maintain health” was given as the primary purpose for purchase by 42% of respondents.

This was closely followed by packaging (40%). The 2024 study found that gift packaging for premium honeys was valued by customers.

Product safety is also of paramount importance to Chinese consumers with respondents to NZTE’s three-year consumer food and beverage research rating this as the number one reason they’d be willing to pay more for honey.

Telling the story

Sharing the story of mānuka honey and its benefits with more potential consumers is the best way to grow the market, says Sean, and he believes digital commerce is becoming more important in this space.

There has been a move away from bricks and mortar points of sale in recent years, he says. Most store sales happen in the larger tier one and two cities (Beijing, Shanghai, Wuhan), but relatively untapped markets are growing in tier three (population 150,000–3 million) and tier four cities (developing cities with fewer than 150,000 people).

The use of technology, such as Douyin (Chinese version of TikTok) and live streaming, is one possible way to reach these smaller, less physically accessible cities.

Non-mānuka honeys

Although Sean notes the potential market for non-mānuka honey in China, other markets might be easier to enter, such as. For example, Europe, where different varietals of honey are more popular, and the recent EU–NZ Free Trade Agreement has seen the removal of tariffs. It will become much more cost-effective for non-mānuka honey exporters to enter the market. The recent media around fake honeys also presents New Zealand brands with an opportunity to highlight the quality of New Zealand honeys, says Sean. (See the Autumn edition of The New Zealand BeeKeeper for more on the European market.)

References

fiftyfive5 (2024, December 4). 2024 China Market Perceptions: Insight Report. Commissioned by New Zealand Story. Retrieved December 18, 2024, from https://toolkit.nzstory.govt.nz/credits/12575-fiftyfive5?asset_id=692210.

New Zealand Trade and Enterprise. (2022). Mānuka Honey in China: Section 6 of Mānuka honey market landscape.

Textor, C. (2024, December 19). Monthly surveyed urban unemployment rate of people aged 16 to 24 in China from November 2021 to November 2024. Retrieved December 18, 2024, from https://www.statista.com/statistics/1244339/surveyed-monthly-youth-unemployment-rate-in-china/#:~:text=China%20resumed%20the%20release%20of,17.1%20percent%20in%20October%202024.

Apothecary mixing traditional Chinese medicine at Jiangsu Chinese Medical Hospital in Nanjing, China. Photo: Kristoffer Trolle, Creative Commons.

Traditional Chinese medicine

Traditional Chinese medicine (TCM) is an ancient medical system that has evolved over thousands of years.

In the 1950s, the Chinese government sought to revive traditional medicine (including legalising previously banned practices) and sponsored the integration of TCM and Western medicine, and in the Cultural Revolution of the 1960s, promoted TCM as inexpensive and popular.

China is the only country where both Western medicine and TCM are practiced alongside each other in hospitals and primary care facilities. TCM has its own department at the Ministry of Health and at provincial and county bureaus of health, as well as its own medical schools, hospitals, and research institutes.

TCM practices include the use of medicinal herbs, moxibustion (burning a plant material called ‘moxa’ on or near the skin to stimulate an acupuncture point or affected area), acupuncture, dietary therapy, massage, and therapeutic mind/body practices.

The use of complementary and alternative medicine (CAM), which includes TCM, is also increasing in popularity in the USA and Europe, with related exports from China to European countries increasing by 10% per year (Shi et al., 2020).

Reference:

Shi, X., Zhu, D., Nicholas, S., Hong, B., Man, X., & He, P. (2020). Is Traditional Chinese Medicine “mainstream” in China? Trends in Traditional Chinese Medicine health resources and their utilization in Traditional Chinese Medicine hospitals from 2004 to 2016. Evidence-based complementary and alternative medicine: eCAM, 2020, 9313491. Retrieved December 18, 2024, from https://doi.org/10.1155/2020/9313491

Traditional Chinese medicine – Wikipedia Retrieved 18 December 2024.