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THE COMPETITION IN 1997
U.S. and
Competitor Expenditures on Export Promotion and
Export Subsidies for Agricultural, Forestry and Fishery Products
China
China's exports of agricultural, forestry, and fishery products are an important component of overall trade. China does support the production and processing of major agricultural products directly and through support for investment projects, but does not have coordinated, focused, or centrally directed market development programs to expand exports of these commodities. Government export and promotion activities do occur at the county and provincial level (where most Chinese government expenditure takes place). However, no estimates of national or local funding for market promotion are available.
Various government organizations are often involved in China's export promotion efforts. The China Council for the Promotion of International Trade (CCPIT), its sub-councils at the national level (including one for agriculture), and the provincial and municipal branches of these sub-councils sponsor trade fairs in China and in foreign countries in order to attract investment and to promote exports, including agricultural and food items. CCPIT receives funding from the central government for its activities, and the agriculture sub-council is part of the Ministry of Agriculture.
At the provincial and municipal level, foreign trade commissions may be involved with export promotion activities. Nominally part of the Ministry of Foreign Trade and Economic Cooperation, these commissions serve the interests of local governments. Local trade fairs and occasional trade missions to other countries are typical activities. The Canton (Guangzhou) Trade (Export) Fair, a twice-yearly event, is one such venue for China's exporters of agricultural, food, fish and wood products to promote their items. The state group that exports China's walnuts completes a significant portion of their yearly sales at this fair. Modeling the success of this export fair, other provinces in China are also establishing trade fairs for the sole purpose of exporting a wide variety of products, including agricultural, food and forestry products.
Despite the recent reforms that have contributed to a more open market environment, state trading enterprises still dominate the agricultural, food and fiber sectors. China's exports of bulk commodities and traditional products like tea and silk are handled by state trading corporations. The principal state trading corporation in the agriculture sector is the China National Cereals, Oils and Foodstuffs Import and Export Corporation (COFCO), formerly known as CEROIL. No expenditure information on promotions by these organizations is available. The Agricultural Trade Officer in Korea reported the presence of a grain marketing office run by COFCO. Staff in this office provide trade services and market information to Korean buyers of China’s grain.
Developing export markets for Chinese products also is the goal of investment projects designed to increase the quality of agricultural and food commodities. These are most often local initiatives that target a specific industry or potential market. Zhejiang Province, for example, earned $400 million from exports of agricultural products following the introduction of improved seed strains, advanced technology, and the establishment of high-quality production zones. Many of these projects involve foreign investment and are set up explicitly for export, often using the foreign partner as the conduit. If market promotion activities are conducted, they will likely be handled by the foreign partner or other private entities.
Competitor Activity:
China is a major importer as well as an exporter of agricultural, food and wood products. Foreign competitors have stepped up their market promotion activities over the past few years in the Chinese provinces of Guangdong, Jiangsu, Hebei and others, including the cities of Beijing, Tianjin and Shanghai. This is most evident by the increased presence of EU, Australian, New Zealand, Canadian, and Asian companies and government trade promotion agencies at food and beverage shows and timber expositions. High profile national pavilions at such shows often are government-assisted. Competitors are also stepping technical and training programs in China or in their home countries aimed at encouraging Chinese purchases of their products.
Canada is a major supplier of wheat to China. The Canadian Wheat Board (CWB) works in conjunction with Canada’s International Grains Institute (CIGI) and the Canadian grains industry to promote Canadian grains and grain products in China. The CWB conducts seminars in China and in Canada for Chinese end-users of wheat and barley to familiarize them with, and hopefully establish a preference for, Canadian grains. The CWB maintains an office in the new COFCO office building in Beijing with a staff of two local Chinese. Canada has also put considerable effort into opening the Chinese market to Canadian livestock and meats. Protocols have been signed to permit imports of cattle and swine, as well as beef and pork, and work has begun to get approval for Canadian poultry. Recently, an agreement was announced that will reportedly result in the export of 10,000 head of Canadian beef cows to Inner Mongolia over the next several years. Promotion activities for beef and pork have been increased in 1997 with the Canadian Beef Export Federation spending about $50,000 on trade shows, advertisements in trade journals and in-store promotions. Canadian pork producers spent about $15,000. Canada recently set up an office in Shanghai to promote agricultural products in that region, similar to the USDA ATO office.
The Australian Wheat Board (AWB) and other Australian producer boards also are active in China. The AWB maintains its interests in the Chinese market through a combination of investments, market promotion and a long-term agreement. It conducts many of the same types of activities as the Canadian Wheat Board, but it also has substantial investments in Chinese grain processing. More than $5 million was invested in two Chinese mills during 1996.
The AWB has been central in bringing together a consortium of Australian companies to bid for major projects to upgrade China's grain handling and storage infrastructure. The World Bank is providing almost $500 million in financing over a period of five years towards $1 billion worth of projects. A total of 28 project tenders will be called. In 1996, the consortium won a $7.6 million contract to build a grain terminal at Fang Cheng in China’s Guangzi region. While the AWB is aiming for an immediate financial benefit from successful tendering, it is also seeking marketing opportunities in China in the longer term. With the likely deregulation of the grain industry in China, the AWB sees it necessary to develop alliances at the provincial level, where grain import decision will be made in future.
Australia has also been aggressive in gaining access for and promoting its meat exports. 1997 marketing expenditures are estimated to be around $80,000. The Australian government export promotion agency, Austrade, has an office with two Australians and several local staff in the Australian Embassy in Beijing. This office provides assistance to Australian companies doing business in China and assists them in promoting a wide range of products, including meat, seafood, dairy products, processed grocery products, fruits, juices, beer and wine. Promotion activities include participation in trade shows and Australian food promotions, including in-store demonstrations and public relations.
France considers China to be a "priority" country for trade promotion. The French Cereal Board maintains an office with two local employees in Beijing and conducts activities similar to those of the Canadian and Australian Wheat Boards. French seed companies have worked with their counterparts in China to promote joint projects to encourage sales of French planting seeds. In addition, the French cognac industry is reported to spend up to $20 million annually for promotions in Guangdong province. (These are not included in Table 1 because they represent the efforts of individual corporations.)
Argentina has also worked to attain access to the Chinese market for its meats. A veterinary agreement was signed this year and promotional activities have been conducted, including trade fair participation and trade servicing trips to China by Argentine exporters. Total Argentine expenditures on beef promotion for 1997 are estimated to be $50,000.
Norway is very active in China, conducting promotion activities for salmon at trade shows, hotels, and other similar venues.
Several countries provide bilateral development assistance to China, mainly through the Ministry of Agriculture, but sometimes through provincial governments. There are currently thirteen foreign investment and assistance projects in the agricultural sector with total expenditures for 1996 of $8.6 billion. Most of these are aimed at expanding production for domestic consumption, often using imported inputs, such as animal genetics, from the sponsoring country. Several of these are run by the Netherlands or the EU for dairy, buffalo and horticultural production. These European projects account for more the 80 percent of the foreign expenditures in this sector. The biggest single project is the EU Milk Industry Development Project. Australia and Canada also operate a number of projects for the dairy and horticultural sectors and Israel operates a demonstration farm.
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