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1. Compare European and Chinese Apple grower markets from VBC company
perspective. What are key differences? Key benefits and downsides of different
markets?
1. China:
Location: VBC’s parent company was based in Japan, it was no stranger to Asian
markets
Demand: Several VBC’s products were already being marketed in China. VBC
already had received request to distribute ReTain in China.
Production: Production was highly fragmented, with many smaller orchards that
averaged 1 /10 of a hectare
Methods: Only about 10 percent of the orchards used high production technology
methods
Labour: China has cheap labour
Maturity: Some popular varieties (e.g., Fuji) produced less ethylene close to harvest,
which meant the need to delay maturity was lower and the responsiveness to ReTain
would also be less.
Europe:
2. China. Since VBC’s parent company was based in Japan, it was no stranger to Asian
markets. Further, several VBC’s products were being marketed in China, and VBC had
received requests to distribute ReTain in China. But there were significant differences
between the Chinese and U.S. apple industry. Production was highly fragmented, with many
smaller orchards that averaged 1 /10 of a hectare.5 Even large orchards in China were smaller
than their U.S. counterparts. Only about 10 percent of the orchards used high production
technology methods. Unless orchards were managed for high yields, they didn’t produce
enough fruit per acre to justify the cost of ReTain. In addition, numerous examples existed of
the misapplication of agriculture chemicals in the developing world, as growers reasoned “if
a little is good, more is better.” While the over-application of ReTain was not likely to harm
the crop or the environment, over-application would drive up costs and lead to producers
rejecting ReTain as too expensive. While labour was the highest cost for U.S. orchards, it was
not for Chinese orchards. Further, the popularity of the apple varieties grown in China
differed from those grown in the U.S. (see Table 2). Some popular varieties (e.g., Fuji)
produced less ethylene close to harvest, which meant the need to delay maturity was lower
and the responsiveness to ReTain would also be less. In addition to apples, China was also a
major producer of pineapples, walnuts, and peaches. Despite the overall size of the Chinese
market, Johan was concerned that it might be too different from the U.S. market for ReTain
to be successful.