Zespri says China future bright despite conviction

ANDREA FOX
Last updated 14:39 24/07/2013

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Dominant kiwifruit exporter Zespri received no financial benefit from its importers in China underpaying customs duties there, chairman Peter McBride has told the annual meeting in Tauranga.

Last week Zespri lost its appeal against smuggling charges in China - a conviction that wiped nearly $6 million off its net profit for the year after paying fines.

At a packed meeting of more than 350 growers today, McBride played down the damage from the China conviction, which has come as a double whammy for growers on top of the devastating Psa-V disease that has swept through the country's gold kiwifruit orchards.

McBride said China again delivered record returns, with volumes up 9 per cent to 10 million trays. Market revenue was up 19 per cent to almost $140m.

He warned that while China had the potential to become Zespri's biggest market by 2018, the country was also set to become a major export competitor.

McBride said Zespri was committed to developing its long-term strategy to unlock the huge potential of the Chinese market.

In the meantime it had to work through the "historic" customs issue in a considered manner.

"We cannot fast-track this process," he said. "We must be respectful of China's system and continue to co-operate with the relevant authorities in a humble and open manner until the matter is resolved."

McBride said the customs issues were "historic" and would have no impact on Zespri's future in China.

Zespri's reputation and brand remained "very strong", and its future in China was bright, he said.

Chief executive Lain Jager said the board had commissioned an independent review of the China events for the import period 2007 to 2011.

Most of the report remained "necessarily privileged", but it identified several issues that meant Zespri's oversight of the actions of its former importer "was not sufficiently robust", Jager said.

McBride highlighted Zespri's achievement of the highest green-fruit returns since 2003, record gold-fruit returns and the highest organic returns since 2008.

The short-supply "vintage-taste" season ensured strong demand across all markets, with customers putting the pressure on for more fruit.

The board had signed off a strong July forecast range with green fruit at $4.50 to $4.80 a tray, gold at $11 to $11.60 and organic at $6 to $6.30.

McBride acknowledged that the returns from this year masked the impact of Psa on growers and increased costs of managing orchards.

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- Waikato Times

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