Market and Trade Data
Shanghai’s Logistics Infrastructure Paves Access
By Cindy Marks and
China’s accession to the WTO (World Trade Organization)
in 2001, Shanghai has gained ground on Hong Kong as
China’s entry port of choice. With $88 million worth of
fruit and vegetable imports in calendar 2004, Shanghai
is becoming the primary marketplace in China for many
suppliers, including the United States.
States sold $12.8 million worth of frozen vegetables
(mostly sweet corn) and a large amount of fresh fruit to
Shanghai in 2004, but few fresh vegetables.
the world’s largest fruit and vegetable producer,
accounting for half of the world’s vegetables and
melons. Despite this, the country’s fragmented logistics
infrastructure severely limits distribution within the
Consequently, the quality and consistency of domestic
produce available to many urban areas lags that of
imported U.S. products.
Infrastructure, High Incomes
Shanghai—with its 20 million people—is at the heart of
the Yangtze River Delta, a massive economic development
zone with an urban population in excess of 200 million.
Taking in the neighboring provinces of Zhejiang, Jiangsu,
and Anhui, this region accounts for over one-third of
China’s GDP (gross domestic product).
incomes in Shanghai are high for China, averaging $2,085
per capita in 2004, as compared to the national urban
average of $1,225.
owes its position as a key entry point to China to its
superior logistics infrastructure: the whole region is
crisscrossed with bridges, rail lines, superhighways,
and port facilities. In 2004, the port of Shanghai
became the world’s second largest, behind only
Singapore. With the opening of the Yangshan deepwater
facility in late 2005, it is likely to become number one
within the next few years. Construction continues at a
breakneck pace, with new bridges and tunnels opening on
a monthly basis, an important consideration for shipment
of fresh produce.
Hangzhou Voted Best
Place To Do Business in China
Hangzhou, the ancient capital of the Zhejiang
province, was rated as having the best business
environment in China by Forbes magazine in
2004 and 2005.
Benefiting from Shanghai’s logistics and
distribution infrastructure, this southernmost
city in the prosperous Yangtze River Delta area
had a GDP of $31 billion in 2004, up 15 percent
from 2003. Hangzhou’s 6.5 million residents
averaged a comparatively affluent per capita
income of $1,700.
city has been a trade center for centuries. Marco
Polo’s Silk Road originated here and ancient
Hangzhou was the southern terminus of the Beijing-Hanghzou
Grand Canal, supplying North China with rice and
vegetables. Silk and tea are still important
products today, along with rice, sugar, pork, and
aquaculture. Hangzhou’s consumers are especially
fond of crab.
prospects for U.S. suppliers to the Hangzhou
market include beef (after restrictions tied to
concerns about bovine spongiform encephalopathy
are lifted), fresh fruit, poultry, potato
products, salmon, cod, frozen fruits, jams and
preserves, sweet corn, dairy, wine, baking
ingredients, dried fruit, and nuts.
logistics network reaches out to cities well outside the
delta region. Most interior cities now claim luxury
hotels, as well as international retailers, with
appetites for upscale products. Hotel expansion, in
particular, is important for increasing demand for fresh
produce imports, as hoteliers place a premium on
consistently high quality products. Many source their
imports through Shanghai.
Calendar 2004 brought increased sales of U.S. fresh
fruits, helped along by strong marketing campaigns and
improved cold chain networks, combined with China’s
increasingly affluent consumers and international
But it was
China’s accession to the WTO and the consequent removal
of many technical barriers that pushed open the door to
trade. Direct exports of fresh produce from the United
States to mainland China jumped from $5.5 million in
1999 to $80 million by 2005. Ports closer to consumer
markets in East and North China, such as Shanghai,
gained the most from increased access.
accession, direct exports of most types of fresh
producer were illegal, and cargoes had to transit
through Hong Kong to Guangzhou to enter country.
Middlemen in these transactions charged substantial
fees, and products were frequently subjected to
adulteration or counterfeiting before entering markets
ATO Shanghai, the FAS Agricultural Trade Office in
Shanghai, in cooperation with U.S. private sector
cooperators, conducts and sponsors seminars that help
Chinese importers, distributors, and consumers learn
about purchasing, handling, and preparation of imported
that the lack of a cold chain network is a key obstacle
to distribution of U.S. produce, the ATO has worked with
FAS’ Emerging Markets Office to build a China cold chain
program that helps Chinese logistics providers improve
their capability to handle temperature-sensitive
imports. The ATO also uses this network of contacts to
identify distributors with the capability to handle U.S.
produce, and link them with Chinese buyers and U.S.
exporters. The ATO has taken these efforts inland--in
one instance, working with local distributors in Chengdu
to buy direct from importers in Shanghai, rather than
through a long chain of sub-distributors.
For urban consumers, quality and price are traditionally
the top concerns in buying imported produce. Food
safety, however, has recently become a major concern as
well. Wealthy urban consumers are willing to pay more to
ensure that their food meets the highest safety
good news for U.S. producers. U.S. products enjoy an
excellent reputation for quality and safety in China.
Suppliers need to keep in mind, however, that as the
quality of China’s homegrown produce improves, they will
need to continue to differentiate their products through
high quality and uniqueness.
With a taste for fine foods and a willingness to spend
more for imported goods, consumers in Shanghai and
throughout China are also buying more fresh and frozen
vegetables and fruits from the United States.
exporters looking to expand their overseas markets,
these products are in demand:
dominate U.S. fresh fruit exports to China, having
passed oranges for first place. Grape imports jumped
350 percent from 2003 to 2004, then doubled again in
2005, to reach a total of $46.6 million.
Though China is a major apple producer and exporter,
it still imports U.S. apples, sales of which
nearly doubled in 2004, then doubled again in 2005 to
reach $13.3 million.
cherry imports are becoming increasingly
popular, although the statistics disagree on the
quantity (numbers for 2004 range from $366,000 to $1.5
million; transshipment through Hong Kong adds to the
confusion). Cherries are a favorite for the Chinese
New Year holiday, which works against the U.S. harvest
season, but enterprising importers have found nice
markets for U.S. June and July harvests.
citrus was one of the first beneficiaries of
China’s entry into the WTO. One-half of all U.S.
grapefruit entered China through Shanghai during 2004,
at a sales value of $195,000.
Shanghai’s consumers are becoming aware of the
attributes of organic produce, making it a good
sector for growth. The city’s first specialty store
for imported organics opened in 2005.
Imports of U.S. frozen blackberries and
raspberries in Shanghai passed $450,000 in 2005,
and are used mainly as ingredients in food processing.
There is also interest by supermarkets in importing
frozen and pureed apricots, blueberries, cherries, and
Shanghai was China’s largest importer of U.S.
frozen vegetables in 2005 accounting for nearly
$3.9 million worth of product out of a national total
of nearly $14 million.
and Bryan Stewart are market researchers, and Ralph Bean
is the deputy director, in the FAS Agricultural Trade
Office in Shanghai, China. E-mail: