China is New Zealand’s biggest kiwifruit market. Growth of this market has been spectacular with the Zespri-owned SunGold variety much-loved by Chinese consumers. The problem is that the Chinese are also growing at least 4000 hectares of SunGold without the permission of Zespri.
That compares to about 7000 hectares of SunGold grown in New Zealand.
The question now facing Zespri and the New Zealand kiwifruit industry is what to do about it. There are no easy solutions.
This issue is something I discussed with local folk in the kiwifruit-growing regions of China way back in the years between 2012 and 2015. It did not need an Einstein to work out that the SunGold budwood was already there. However, Zespri at that time had its mind on other issues. Also, they probably had no idea how popular the SunGold variety would become.
My impression at that time was that Zespri was a little too cocksure of themselves on most matters relating to China. They had a presence on the eastern seaboard of China, where they were in some trouble over Customs duty avoidance, but the kiwifruit growing regions were thousands of kilometres away in the west. They really did not know what was happening.
Given that Zespri has the plant variety rights which run through to 2036, they can now, in theory, demand that all of the SunGold orchards are cut down. However, the practicalities are daunting. China is a very big place and finding the orchards and identifying which ones are SunGold is scarcely practical.
One of my mates who knows a lot about both China and kiwifruit reckons there could be as many as 20,000 small-scale kiwifruit growers who have the SunGold variety. But none of us really knows how widespread the plantings have been. There will be a few big corporates, but much of the plantings will be on land owned by old-style small-scale farmers.
To put it bluntly, Zespri has been very slow to address the issue and there is a powerful argument that the horse – or in this case the SunGold budwood - has long since bolted. These are relatively poor people, even by Chinese standards. There is potential for Zespri to do considerable damage to its reputation in China.
Also, it is not a crime for these Chinese growers to have a SunGold crop. If Zespri wants to enforce its legal rights it will have to do this through the civil courts, not through the criminal system.
Most of the growers probably have no idea that Zespri owns the plant variety rights. What they do know is that kiwifruit are native to China and not New Zealand. They have their own varieties of green, gold and red kiwifruit for thousands of years, but they are very keen on this SunGold variety.
Chinese kiwifruit varieties, Shaanxi Province, Nov. 2012. Keith Woodford
If New Zealand does try to enforce its perceived rights there could be interesting questions in China as to where did New Zealand get its genetic material from? The answer of course is that it came from China, with New Zealand scientists then using this as the foundation for their breeding programmes.
At some stage, someone will also ask as to whether New Zealand paid the Chinese for rights to the original genetic material. The answer to that will be: ‘Actually, No, we just took it’.
The Chinese Government has acknowledged the current situation and there is at least implicit recognition that Zespri does have intellectual property rights. But it will be Zespri’s job to do the hard work. That is the way it would also be in New Zealand, where the Government stands back from civil intellectual property litigation cases.
Zespri has therefore come to the belated conclusion that it might be better to aim for a commercial resolution rather than a legal one. They now have a preliminary agreement to work with a large-scale corporate kiwifruit entity in Sichuan which just happens to be owned by the Sichuan Provincial Government. The stated aim is to create a win-win for all parties. The Chinese Government says it thinks that is a good idea.
Unfortunately, it is not quite as simple as that. Although Zespri is the monopoly marketer of New Zealand kiwifruit beyond New Zealand and Australian shores, it has to get sign-off for an agreement like this from Kiwifruit New Zealand (KNZ) which is a regulatory body. Right now, KNZ is saying they are not convinced this is in the interests of New Zealand kiwifruit growers.
At this stage, we do not know the details of the proposed agreement with the Chinese group. Once KNZ indicated its lack of enthusiasm, Zespri withdrew the draft agreement document they had reached with the Chinese company. They are now working on a revised agreement.
In all likelihood, a revised agreement will need to be approved by kiwifruit growers in a vote. The lobbying in relation to that vote is going to be very interesting.
KNZ has said that they are nervous that New Zealand expertise in the growing of kiwifruit will be given to the Chinese. This thinking is likely to be flawed. The Chinese already know how to grow kiwifruit. Their challenge is to spread the existing expertise throughout their industry.
The other big question, which KNZ may or may not have asked, is how effective will the agreement be? That is a big question.
The agreement seems to be based on the assumption that most of the SunGold is in Sichuan Province where the Sichuan Government has authority. However, not all of the SunGold is in Sichuan. Some will be in Shaanxi, some will be in Gansu, and some will be further afield. Almost certainly, none of us, including Zespri, are in a position to quantify the specifics of what we mean by ‘some’.
Even without an agreement, Zespri will be able to restrain large-scale marketing of Chinese SunGold to Europe, North America, or Japan. Any importer from those regions would be at risk of having their produce taken away by Zespri.
Accordingly, the likelihood is that most of the Chinese production will stay within China. Recently, I caught up with an old China-hand who first went to China some fifteen years ago to organise the sale of Chinese horticulture products to Europe. Instead, he found the internal prospects were so good that he has spent the last fifteen years growing and marketing fruit (but not kiwifruit) within China itself.
The growing seasons for New Zealand and Chinese kiwifruit are complementary. That is why, right now, those of us addicted to kiwifruit are having to eat Northern Hemisphere product from Italy. The shelf life with current technology is only around seven to eight months.
Accordingly, it is not hard to envisage how working with a local Chinese group could be of benefit in marketing New Zealand kiwifruit across the vast lands of China. Across those lands there are more than 150 cities, each one having more than one million people, most of which Zespri will not get to by itself.
Given the above realities, it makes sense for Zespri and the New Zealand industry to try and find a win-win solution from which everyone benefits. Eastern cultures tend to favour such approaches but it is not deeply wired into New Zealand business DNA. So, the New Zealand grower discussions are going to be very interesting. Whatever the outcome, not everyone is going to be happy.
*Keith Woodford was Professor of Farm Management and Agribusiness at Lincoln University for 15 years through to 2015. He is now Principal Consultant at AgriFood Systems Ltd. His articles are archived at http://keithwoodford.wordpress.com. You can contact him directly here.
52 Comments
never a fan of gooseberry 猕猴桃. make my tongue itchy.
back to the issues, sharing especially food sharing is regarded as one of the fundamentals of a true friendship.
Recommend Zesperi to use this opportunity to be a part of the China Poverty Alleviation Plan, albeit by accident.
this is much much more valuable for Zesperi than any sorts of allegations.
If hypothetically someone in NZ stole a variety expensively developed by a Chinese company and then grew and sold it on a large scale what do you expect would happen? The large country has bigger leverage than the small one. Isn't that the basis of anti-chinese sentiment for the last 150 years - I've never heard of anti-asian sentiment when discussing countries with small populations (eg Nepal).
Wrong on both counts. My family is not caucasian (white).
Small countries worry about countries with large populations or exceptionally wealthy countries. It is just the same as the small boy in the school playground worrying about the gangs and also the big bully. Conclusion: the NZ govt has to be very careful to avoid upsetting China but Chinese govt officials will have little concern that some policy might upset us Kiwis.
My logic? Galloleous sums it up well. The original gooseberry bears no relation to the current Zespri variety which took huge sums of money to develop. It is theft, plain, pure and simple. May I suggest you re-evaluate your considerable pro CCP bias? Its clouding your thinking.
I think you are on a hiding to nothing here. For how many thousands of years did Chinese farmers hybridise the varieties that eventually made it to New Zealand. Are we going to pay them for that? If not, aren't we stealing their thousands of years of IP? I think in any international court, we would be struggling to justify why we aren't paying them for the original variety... let alone a hybridised version of it.
In this case we unfortunately need to suck it up and work with China. I think you can get a good outcome for both, but it will require a good relationship. Sour it with litigation and they will definitely push back and have very solid footing to do so.
"For how many thousands of years did Chinese farmers hybridise the varieties... I think in any international court, we would be struggling to justify why we aren't paying them for the original variety"
Say what?
Pretty sure they didnt patent it?
Are you saying we are going to have to payoff Moses for the sheep they bred?
"I think you can get a good outcome for both"
Tui ad
“ Kiwifruit is native to central and eastern China. The first recorded description of the kiwifruit dates to the 12th century during the Song dynasty. In the early 20th century, cultivation of kiwifruit spread from China to New Zealand, where the first commercial plantings occurred.” - Wikipedia
How reliable is this fact.
True friendship? - then after the FTA upgrade with China, do you heard any NZ formal officials announcing keen to have the Sinovac vaccine?
C'mon braw, read the recent article in stuff. Unlike in OZ? NZ doesn't care about it's third largest ethnicity/Asian, leave all of them to become a landlords.
As a meaningful professional life works/study etc? - were all directed towards Maori & Pasifica now, the only thing to do in NZ? is just that buy RE, inflated the price & sold the service to local.
A chinese national who bought an existing sungold G3 orchard near Edgecumbe was pinpointed by Zespri as illegally smuggling budwood from his NZ orchard to China and selling it to prospective growers in China. Probably not the only one. In the past Chinese visitors and scientists have been stopped at the NZ border attempting to smuggle budwood for unique apple varieties developed in NZ back to China. Any NZ industry with IP rights should expect to be targeted - the chinese appear not to discriminate when it comes to IP theft. I wonder what our NZ free trade agreement with China says about such things, particularly given the CCP technically owns all the land in China.
Chinese may not have smuggling on their own but they are certainly rather unique. Decidedly and dangerously so too. Just a few episodes of TV’s border control from Australia, exposes a huge array of peculiar cuisine items, fungi,insects,rodents & other feral animals etc etc being carried by Chinese visitors. Another example, 27 January 2020, after Wuhan and surrounds had been sealed off, a Chinese national was intercepted at Washington DC airport with a poly bag of dead birds concealed in his luggage. In the future how are we to know if incomers from China, where they have been and what they have eaten and/or handled prior to boarding the aircraft. In other words the odds of infectious carriers from this country would seem to be higher than anywhere else.
Taxbreak,
It is unlikely there would be anything in the FTA relating to plant variety rights. . However, China is a signatory to the international agreements on plant variety rights. My understanding is that Zespri's PVR rights are registered in China. Those rights are therefore likely to be honoured by the courts in China. However, there are huge practical difficulties for Zespri to apply those rules across the vast lands of China dominated by small growers, and in an environment where plant variety rights is an unknown concept. In reality, Zespri would need a Chinese partner to act on their behalf on the ground. It will require a partner, not just an agent, and it will need to be in the context of an agreement with that partner as to how the JV will develop the SunGold brand in China.
KeithW
WOW this is a strong statement Keith.....
"My impression at that time was that Zespri was a little too cocksure of themselves.......in the years between 2012 and 2015."
A you sure your not talking in general terms here and having a bit of a dig???
"Former Zespri chairman and director John Loughlin was last year required to attend a SFO interview as part of the investigation into Zespri, which began in 2013."
https://www.stuff.co.nz/business/96852099/serious-fraud-offices-zespri-…
Do you know some folks who had cash burnt at Hanover Finance or share value destroyed at ALF..(Allied Farmers Ltd)...???
stevell
I am simply communicating an impression that I gained at the time from my visits to China, where, among other things, I was taking an interest in kiwifruit spanning from local producers (which included NZ citizens developing kiwifruit orchards there) through to high-end retail. My impression was that Zespri over-rated its understanding of how things would develop in the local industry. However, I do acknowledge that Zespri has been very successful with their own marketing of SunGold within China in the years since then. I also assume that Zespri will now try and put aside any political rhetoric and focus on how it can maximise its economic footprint in China.
The challenge may well be that the NZ growers that Zespri has to answer to will have strong emotional opinions based on their own perspectives that may not align with Zespri's strategic analysis. But let there be no doubt, it is too late to come up with a perfect solution.
KeithW
This is an excellent and balanced article - thanks Keith! As you say, it would be a little different if the original budwood wasn't from China but given it was... But Zespri better keep an eye on South America to make sure that the budwood isn't sent there as a way for China to get access to cheaper out-of-season production.
Policing of PVR rights s much easier for fruit that is shipped across borders because shipments are typically of large size. So I think that Chile or any other country would have challenges beyond their own shores. Same with China. But internally within China with a myriad of growers and marketers it is a different story. PVRs weren't really designed for those situations that exist in China. And there lies the challenge for Zespri. It would not matter if China were not such a good market for Zespri. I have seen other Chilean fruit in China but I do not recall seeing kiwifruit. If it is there, it would be a green variety
Ouh dear, if not mistaken it was originally from China, NZ develop the market? then it was China which going to cream it. Remember the wool? - we just smirked when the local wool producer, showing the China made synthetic socks, but can legally carry the NZ marketing logo, emblem, insignia, photo etc. China will always deal to achieve upper hands in the long run, the short run is by flooding the local ruling elites everywhere first with cheaper money, feel good, addicted.. then the magic weapon works, .. firstly, by buying lands for the base, the rest is history. This MO can be observed anywhere worldwide, the only stunted result? check out for any countries that restricting/ban the purchase of their land/region to foreigner. Surprise? duuh.
It does make you wonder whether it's a sensible strategy to spend so much time, effort and money developing "trademarked" versions of food products. It's not as if we don't have enough varieties of crops as it is, it's just that we don't use them all. According to the article below we get 75% of our food from 12 crops and 5 animals... https://www.bbc.com/future/bespoke/follow-the-food/the-forgotten-plants…
The Zespri trademark is enforced in China.
There have been various fake Zespri attempts in the past - and I have some photos thereof.
But Zespri has gone after these with some success.
PVR is a separate issue.
The Zespri brand encapsulates QA systems as well as PVR.
KeithW
LOL, some people arguing with Xingmo... nowadays bringing out sinophobic to derail a good article and some decent conversations doesn't require a big bait. I feel sorry for Keith somehow.
What is the plan? Sending Royal NZ navy ship to China's shore like what Brits did in the 1840s? .Xingmo made you guys sound like a bunch of whingers. She/he must be LMAO now.
Keith your article smacks of a CCP media release.
Let's be blunt, to grow this variety the chinese stole the budwood. To grow a 4,000ha industry in ten years there was coordinated, mass propagation of the stolen stock.
This has nothing to do with 'poor Chinese farmers', it has to do with big brother CCP not wanting to pay for something they like.
If we stole this level of IP from them the NZ govt would go on a witch-hunt. I hear deafening silence in their response to this outrage...
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