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In China the question isn’t whether you sell online but how. In the fruit trade it pays to understand the nuances of various e-commerce platforms, so much so that Frutacloud CEO George Liu believes ‘e-retail’ is a better term for the phenomenon which is sweeping its way towards 20% penetration in the fresh produce market.

“If you do business in China you have to use WeChat,” said Liu early on in his presentation at the Global Cherry Summit in Chile last week. 

For the experienced China hands Liu was merely stating the obvious but for others his comment was likely a wake-up call to get accounts with the service, which is like Facebook meets Whatsapp with a digital payment element as well.

And in modern China digital payments have become the norm. Liu highlighted there were now 731 million Chinese citizens on the internet, which is more than the United States and India combined. Of these people, 70% make regular payments online.

“And with many of these Chinese internet users, they first went online through their mobile phones,” Liu said.

“A lot of these people don’t have email accounts. So we call these people mobile digital natives – they conduct their daily lives through mobile apps.

“It is very common in China that the small merchant will only accept digital payments.”

He said this evolution meant shopping habits could be tracked, analyzed and charted.

“This gives a huge advantage to those people who hold the data. Here’s another thing for consideration – the national disposable income growth has been increasing every year,” he said.

“Some of you may have heard that GDP growth is slowing down in China, but I think this [disposable income growth] is a better indication of the overall growth in China.”

Liu pointed to a 9% growth rate in the national resident disposable income level last year, up from 8.4% growth in 2016.

“Such high growth of income is what you would call the consumption upgrade,” he said.

“Consumption upgrade means that Chinese people with money now want to buy better food, they want to buy imported product instead of domestic, and they want to buy fresh fruit instead of mass-produced junk food.

“This is wonderful for the Chilean cherry industry.”

The disposable income growth measure also helps for understanding opportunities in the interior. It is now common knowledge that fruit exporters need to break through the first tier cities, but Liu made a deeper argument than the sheer business case.

“The disposable income here is rising faster compared to the first tier cities, and the housing cost is more affordable so people have more money to spend on other items,” he said.

“In the past one of the obstacles in developing market share was the lack of cold chain logistics, but now many players including us are investing heavily in the distribution network.

And while in the first tier cities of Beijing, Tianjin, Shanghai, Guangzhou and Shenzhen there are around 78 million people, Liu emphasized the population in second tier cities was around 236 million.

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