Download Study on Agriculture Export Enterprises in China under Challenge of

Study on Agriculture Export Enterprises in China under Challenge of
Green Trade Barriers
XU Haiqing
School of Business, Inner Mongolia Finance and Economics College, Huhhot, 010051, China
[email protected]
Abstract: Agricultural product export has always been an important component of China’s foreign trade,
which plays a significant role in the country’s economic development. However, during the
internationalization process of China’s agricultural products, green trade barriers such as strict standards
for pesticides residue limits, sanitary and phytosanitary measures, packaging and labeling requirements
have become the major barriers for exporting. In the era when the international community is getting
increasingly conscious of environmental protection and food security, the adoption of green marketing
has become the very strategy which can help China’s agricultural product export enterprises overcome
such green barriers. This research paper pinpoints specifically the marketing strategies available to these
enterprises.
Keywords: green marketing, agricultural products, export, green trade barriers
1 Introduction
For a long time, Agricultural product export plays a significant role in the country’s agricultural
development, including increasing rural employment and peasants' income, optimizing agricultural
structure, improving the international competitiveness of China’s agricultural products and promoting
the development of related industries. Since China’s entry into the WTO, China’s agricultural product
exports have increased substantially, and become an important component of the country’s foreign trade.
In the meantime, China’s agricultural product trade occupies a significant place in the world APT pattern,
ranking the 4th in terms of the world’s APT country and the 5th in terms of agricultural products' total
export.
However, in the process of internationalization, China’s agricultural product trade is also faced with
severe challenges. While the pressure for import increases, trade barriers are also identified by China’s
exporters. At present, green trade barriers adopted by import countries in the name of protecting the
rights of domestic consumers and the domestic ecological environment are the main barriers for China’s
agricultural product exporters. The strict standards enforced in some developed countries in terms of
pesticides residue limit standard, sanitary and phytosanitary measures, packaging and labeling
requirements severely limit the trade actions of China’s agricultural product exporters. What’s more, the
range of agricultural products subject to these green barriers has increased (such as seafood, vegetables
and fruits), resulting in significant decreases in both export volume and market share. Japan, the EU and
U.S.A. are the major markets of China’s agricultural product export, where 50% of China’s agricultural
product exports are consumed. However, the green trade barriers in these three regions are the most
severe and complicated. Japan’s Positive List System, EU’s Neo Food Sanitation Law, as well as the
comprehensive quality and safety system of agricultural products in the U.S.A, all have a direct bearing
on China’s agricultural product export. Faced with such barriers, China’s agricultural product export
enterprises should follow the trend by resorting to green marketing strategies.
2 Green marketing --- the only way for China’s agricultural product export
enterprises to overcome green trade barriers
Green marketing is a marketing concept centering on green consumption highlighting enterprises’
awareness of environmental protection. It requires enterprises to take into account its own profits,
interest of consumers and environmental protection when doing business including product design,
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pricing, distribution and promotion. The philosophy lying behind green marketing is to protect
environment, reduce the consumption of materials, prevent the deterioration of ecological environment,
and ensure product safety so that sustainable economic development is achievable.
In 1992, The 21st Century Agenda was passed at United Nations Conference on Environment and
Development, which signified that the international community had moved into the “green era”
characterized by the emphasis on environmental protection, the respect for nature and promotion of
sustainable economic development. The emergence and popularity of green marketing has a far-reaching
impact on the production and consumption patterns internationally. When competing in a time period
when many countries especially the advanced economies attach great importance to the safety of
imported agricultural products and environmental protection, it is only by resorting to green marketing
that can Chinese agricultural product exporters overcome the green trade barriers detailed above and
improve their international competitiveness.
2.1 Green marketing as a result of the increasing popularity of agricultural products’ green
consumption
Consumption demand is among the driving forces of marketing innovation and adjustment of
marketing activities. Since 1990s, the concept of green marketing began to emerge, emphasizing the
benefits for both human health and the environment from consumers’ pre-consumption choice to their
consumption process to post-consumption activities. According to related research, 80% of Germans are
concerned about environmental protection when shopping, 77% of Americans admit that their
consumption preferences are influenced by corporate image especially in terms of environmental
protection, and 66% of Britons are willing to pay a higher price for green products. All these statistics
show that consumers in developed countries are highly environmental protection-conscious. In addition,
with stable income and high living standard, consumers in these countries are more aware of importance
of protecting consumer rights, showing concern for product quality and choice, and the residues of
harmful substances in food, which, in turn, results in the popularity of green products among consumers,
especially in their purchase of animal products, vegetables and fruits.
2.2 The increasing criterion of pesticides residue limit standards for imported agricultural
products in developed countries
With consumers showing increasing concern for food safety internationally, especially with the
emergence of various crises concerning bovine spongiform encephalopathy (BSE), foot-and-mouth
disease (FMD), dioxin and bird flu, governments in many advanced economies strengthened their
inspection of agricultural products and began to enforce stricter pesticides residue limit standards. For
instance, China is known to be a big honey exporter, whose main market is Europe. Beginning from
2002, the EU advocated that the chloromycetin residual quantity in honey should be no more than
0.1ppb, which means that the quantity of chloramphenicol in 100,000 tons of honey should not exceed 1
gram. This new policy is 100 times higher than the previous one, and because Chinese honey exporters
fail to fulfill this criterion, the EU has ceased to import honey from China. According to statistics
provided by Dalian Customs, from January to May 2005, the amount of honey returned form the
European market via Dalian Port amounted to more than 80 tons (worth over $700,000).
3 Main green marketing strategies for China’s agricultural product export
enterprises
3.1 The adoption of the concept of green marketing
The farming activities in China are traditionally scattered among individual households headed by
undereducated peasants. Due to their background, they have only a faint awareness of food safety and
sanitation, therefore, many faults can be found in their products, for example, an overuse of pesticides
and the use of pigments and additives in products. Consequently, China’s agricultural products can
hardly meet the criteria set by developed counties in the respects of technical standards, packaging and
labeling. To remove the obstacles caused by these green trade barriers, China’s agricultural product
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producers and export enterprises should first strive to enhance their awareness of food quality and safety,
and then work on the following aspects including: to show concern for environmental protection, to
adopt green marketing concept, and to provide consumers with products that are green, safe and
resource-saving.
3.2 The collection of green information
An important reason for the severe impact of green trade barriers on China’s agricultural products
is that Chinese enterprises are not updated about the latest related information. There is no information
collection mechanism in place where information is collected concerning the latest green trade barriers,
the requirements for imported goods or consumer tendencies in other countries. Since the impact of
green barriers is getting increasingly serious, it is highly suggested that these enterprises widen their
information collection channels so that timely adjustment can be made based on information collected
and analyzed in terms of pesticides residue limit standards and sanitary and phytosanitary measures.
3.3 The production of green food and organic products
With consumers getting more and more health- and safety-conscious, green food and organic
agricultural products become increasingly popular worldwide. Green food is safe, nutritional,
pollution-free food of high quality. It is produced according to the principles of sustainable development
and certain ways of production and accredited by special institutions to use the brand of green food. In
the production of organic agricultural products, the GM technology and substances such as pesticides,
fertilizers and hormones are not allowed to use. According to The Food and Agriculture Organization of
the United Nations (FAO), by 2010, the international market for organic food will have exceeded 100
billion dollars. For the Chinese enterprises, they need to work on the following two things
simultaneously. On the one hand, they need to speed up their production and processing of green food;
on the other hand, emphasis should placed on the resolution of technical difficulties regarding organic
agricultural production, and the development of organic products with stronger disease resistance and
improved competitiveness such as Kiwi fruit and tea.
3.4 The promotion of international certification of Chinese agricultural products
Some import countries request that agricultural products need to get related certification before
imported. For the Chinese producers, due to the lack of mutual recognition between Chinese CA and
international authoritative certification bodies, the certifications they gained domestically are not
approved by their overseas counterparts, which means their products are still subject to the obstacles set
by the green trade barriers. Therefore, to gain market entry, Chinese agricultural product export
enterprises should make efforts to acquire international certification. In this process, they should identify
properly their export market and choose the certification systems that suit them. For example, the EU
makes it clear that they accept only the products from countries with the same organic agricultural
standards, which makes Europe a very difficult market for foreign organic food producers to enter even
though they are also producing organic food.
3.5 The identification of the right pricing policy
Chinese green agricultural products should be priced properly according to the national conditions
of the overseas market. For example, in the developed countries, the green consciousness of the
consumers has already been cultivated, therefore, the export enterprises can initiate a high-pricing policy
since the consumers who are interested in organic or green food are usually more concerned about
environmental protection and consumption safety and most probably, have stronger purchasing power. It
can be safely assumed that these consumers can and will afford higher prices. However, the same
high-pricing policy is not realistic in developing countries where purchasing powers are weaker though
consumers’ “green consciousness” is on the increase. To sum up, enterprises should be more flexible in
pricing and adopt a differentiated pricing policy. They should try to increase the price by improving
packaging or their corporate image, thereby increasing their overall competitiveness while banishing
low-pricing policy.
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3.6 The use of green promotion
For one thing, participating in different kinds of activities such as international conferences can
help enterprises get well-informed of the latest development of food quality and safety, for example, the
training information regarding food safety which may be crucial in their future business.
For another, activities such as trade fair and negotiation conferences can also help the
participants achieve better communication and mutual understanding, thereby promoting the
bilateral agricultural products trade.
3.7 The employment of suitable distribution channels
To ensure the quality and safety of agricultural products, enterprises should minimize the number
of distributors and pinpoint distributors that are keenly aware of the importance of environmental
protection. In this respect, China’s agricultural product export enterprises should try to corporate with
big-name supermarkets like Wal-mart and Carrefour, whose reputation and customer case can help to
promote their products internationally; second, the enterprises should ensure that their products can
fulfill the requirements of the export countries so that they can win contracts from the powerful
centralized purchasers and then establish long-term business relationships with these clients; third, the
enterprises can enter overseas markets by establishing their own distribution network on the Internet,
which is at once convenient and cost-effective.
4 Conclusion
With the whole world getting more and more concerned over environmental protection and the
safety of agricultural products, the green trade barriers are unavoidable for Chinese agricultural product
exporters. When the advanced economies enforce stricter standards for pesticides residue limits, as well
as sanitary and phytosanitary measures, the consumers likewise attach more importance to the green
image of enterprises and prefer green agricultural products. In light of these facts, to “go green” and
adopt green marketing has become the only way for enterprises to overcome the barriers, enlarge their
exports and improve their competitiveness. In applying the green marketing strategies, enterprises
should place the concept of green marketing at the center of their operation and form policies around
this concept with regard to product, pricing, promotion and distribution.
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