Durians in SE Asia: A Whiff of Economic Diplomacy

Via The Economist, a report on growing demand for durian:

Eric chan has long sold durians, a pungent fruit, to South-East Asians. Now he is eyeing a bigger prize. The Musang King variety that he cultivates in Malaysia is beloved by Chinese consumers. But at the moment his country only has permission to export frozen durians to China, where many want them fresh. In total, Chinese foodies gobbled up $6.7bn-worth of imported fresh durians last year, up from $4bn in 2022 and $1.6bn in 2019, the year durians overtook cherries as China’s largest fresh-fruit import by value.

Apart from a love of the fruit, two shifts help to explain China’s increasing appetite for durians. The first is the growth of the country’s middle class. More and more Chinese are able to afford durians, which are not cheap. An average one from Thailand, the supplier of much of China’s stock, can sell for around 150 yuan ($20). The Musang King variety can fetch up to 500 yuan each. (A durian is often big enough to be shared by two people.)

The high price puts some buyers off. For others, though, it adds to the appeal. Durians have become a status symbol, like a “fine wine”, says Mr Chan. Fans of the Musang King variety call it the “Hermès of durians”. The fruit is sometimes given as a gift at birthdays or weddings.

The second change is that in recent years China has opened up its market. Until 2022 it only let in fresh durians from Thailand (though it bought frozen ones from other countries). Since then fresh-durian sellers from Vietnam and the Philippines have gained access, having agreed to China’s phytosanitary requirements (which prevent the spread of pests and diseases). Malaysia is hoping to be next.

China’s moves are in part a response to the increasing demand of its citizens. But some observers also see them as strategic. “Durian diplomacy” is one of several ways China tries to foster goodwill in South-East Asia. It has funded big infrastructure projects in the region under its Belt and Road Initiative, including some that bring durians to its doorstep. And it is a signatory, along with most South-East Asian countries, to the Regional Comprehensive Economic Partnership, a free-trade deal that came into force in 2022.

These thicker economic ties also provide China with a source of leverage if its neighbours upset it. Like the durian, Chinese officials can be prickly. In the past they have restricted banana imports from the Philippines, blaming issues with pests. But this coincided with disputes over territory in the South China Sea. Some Vietnamese durian sellers fear similar treatment. “They know China can also use trade as a penalty,” says Nguyen Thanh Trung of Fulbright University Vietnam.

Meanwhile, Chinese farmers are looking to cash in on the action. The first durian trees in China were planted in 1958, say state media. They produced little fruit. Farmers in Hainan have been giving it another try. The island province is one of the few places in China with the right climate for durian cultivation. The farmers’ output is increasing, to perhaps 200 tonnes this year, according to reports. But self-reliance is a long way off. China imported 1.4m tonnes of durians last year.



This entry was posted on Friday, June 14th, 2024 at 5:43 am and is filed under China, Malaysia.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

Comments are closed.


ABOUT
WILDCATS AND BLACK SHEEP
Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.