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Frozen durian and China's market

Translated by Soong Phui Jee
Sin Chew Daily

A former Plantation Industry and Commodities minister said that China has 1.3 billion people and if each of them consumes a tablespoon of palm oil a year, Malaysia would not have to worry about no market for palm oil.

Indeed, China has been for many years the greatest importer of Malaysian palm oil. In 2010 alone, China had imported 3.4 million tons of palm oil from Malaysia. However, are Malaysians contented with the export of crude products? How would Malaysian businessmen be contented when they have to compete with Chinese goods in local market while other countries are sharing the big cake of the Chinese market?

The bilateral talk between Chinese Premier Wen Jiabao and Malaysian Prime Minister Datuk Seri Najib Razak is fruitful. China agreed to stably import Malaysian palm oil and advantageous products, including frozen durian which was mentioned specifically. Why durian? Some people might be puzzled and wonder how much foreign exchange the fruit could earn. Why didn't they fight for the export of national car or steel?

China also manufactures cars and steel and Malaysia is still implementing protection policies on the industries. Therefore, it is not practical to expect China to open up its market to us. It is more practical for Malaysia to let its advantageous products lead the charge of finding a place in the highly competitive Chinese market.

Durian can become a brand of Malaysia. However, Malaysian durian is not particularly thriving in the Chinese market. Thailand has started exporting durian to China many years ago and in 2009, the total sales of Thai durian in two months reached 1,800 tons, which was also 20 times the sales of the year before.

Thai fruits and vegetables are exported to Mohan city of Xishuangbanna, Yunnan from Amphoe Chiang Khong, Chiang Rai with the total distance of 1,104km. China and Thailand signed an agreement to grant zero tariff for Thai fruits and vegetables on 1 October 2003.

The example is cited to show that other Asean countries have exploited the Chinese market many years ago and Malaysia is in fact lagging behind. Thus, Malaysian products are facing difficulties and fierce competition in China.

Take durian and tropical fruits as an example, Malaysia is unable to compete with Thailand. The agricultural technology in Thailand is more advanced compared to Malaysia. Even if Malaysian durian is more tasty than Thai durian, but who wants to eat frozen durian? Thai fruits are exported to China through the Kunming-Bangkok Highway, which has shortened the transport time by two to three days and extended the storage period. Malaysian fruits have lost the advantage.

It is a depressing fact. We have lesser and lesser advantageous products due to the lack of promotion, research and development over the years. It is difficult for Malaysia to share the big cake of the Chinese market. Even electrical and electronic products which have been our pride are unable to compete with cheap China-made products.

Therefore, Malaysia should come out with different strategies, such as joint-venture projects, to share the big pie.

The agricultural industry of Malaysia is lagging behind while agricultural products are not enough even for self-sufficiency. Therefore, joining venture with Chinese state-owned companies is a way out. Under the joint venture programme, agricultural products can meet domestic demand, being exported to China while avoiding direct competition with Thailand.

Malaysia and China have signed an agreement to expand and deepen economic and trade cooperation while several Malaysian infrastructure projects are opened to Chinese contractors. It is believed that the joint venture and technology transfer programmes will be a success and the cooperation between the two countries will be enhanced to a higher level.

MySinchew 2011.04.29


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