OPINIO
Trade4go
Jul 10th, 2024
Original content
China is the second largest banana importer in the world, following the United States (US), importing around USD 1.08 billion worth of bananas in 2023. This makes China one of the most attractive export destinations for bananas. The top three suppliers to China are the Philippines, Vietnam, and Cambodia.
In recent years, Vietnam’s banana exports to China have surged after the signing of fresh banana protocols in 2022. In the first two months of 2024, Vietnam surpassed the Philippines as the largest banana exporter to the Chinese market, exporting around 173,500 metric tons (mt). This accounted for 51.5% of the total banana volume exported to China, an increase of 21% in volumes and 1.4% in value compared to the same period last year.
While Southeast Asia's proximity to China gives the Philippines, Cambodia, and Vietnam the advantage in one of the largest banana markets, Ecuador, the world's leading banana producer and exporter, is expected to level the playing field. The highly anticipated free trade agreement (FTA) between Ecuador and China has finally been passed and has been in effect since May-24. The FTA is part of Ecuador’s goal to increase its presence in the Asian market, which accounts for 6% of total banana exports and 16% of total banana exports.
According to the executive director of the Ecuadorian Banana Exporters Association (AEBE), exports to China are expected to double with the FTA. Based on 2023 data published by the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce, and Animal Byproducts (CFNA), this would mean that Ecuador's banana export volume would increase from 266,000 mt to 572,000 mt, which would rival Vietnam's export volume of 506,000 mt.
To better understand the banana trading landscape, Tridge interviewed its in-house trading team, the Fruit and Vegetable Fulfillment staff who are banana trading experts
When asked about Ecuadorian Bananas' competitiveness, Tridge's fulfillment team explained the three main reasons for their undeniable presence in the global banana trading landscape: the high volume of bananas produced, their long history of exporting bananas, and their low prices. These reasons make them a trendsetter and the region's leading exporter. For example, because bananas are available year-round, the Ecuadorian government establishes banana prices at the beginning of the year. Then, neighboring countries like Costa Rica and Guatemala will observe Ecuador's price setting and adjust their prices accordingly.
The team further elaborated by sharing a well-known industry story about Ecuador packing and labeling its banana packaging as 13 kilograms (kg), when in reality, they are packed 14 kg. This practice allows Ecuador to sell their bananas at a lower price than its competitors, appealing to buyers and making it harder for other countries to compete.
Regarding Vietnam, a relatively minor global banana exporter, Vietnamese bananas can be divided into highland and lowland. The higher the altitude, the sweeter the bananas. South Korea, Japan, and China are some of the main importers of Vietnamese bananas. Both lowland and highland bananas are exported to China due to its huge market size and diverse niches. On the other hand, South Korea has a higher demand and preference for the sweeter highland bananas. In addition, the Chinese market prefers bigger hands (the size of bananas), while South Korea and Japan prefer smaller hands.
On a business trip to highland banana plantations in Vietnam, a few members asked the suppliers about their banana export trends and strategies. Based on their discussion, many Vietnamese suppliers were focused on the Chinese market three to four years ago. However, due to the tendency of Chinese buyers to rarely make annual contracts and instead set prices almost weekly, the price fluctuations are quite high. For example, when the Chinese market prices were high from March to May last year, buyers had to purchase bananas at USD 15 per box at free-on-board (FOB) prices. Therefore, many suppliers started shifting their strategies to achieve more stable sales by signing annual contracts with South Korea and Japan, especially for their mid to small-size bananas.
Highland Bananas in Vietnam
Source: Tridge
In addition, South Korea and Japan are competitively sourcing Vietnamese bananas. Tridge's Fulfillment team explained, "Compared to the same period last year, the volume of banana exports into the South Korean market has doubled."
Although many anticipate that Ecuadorian bananas will flood the Chinese market, the FTA agreement between China and Ecuador means that the 10% tariff imposed on Ecuadorian bananas will be eliminated by 1% annually over the next ten years. This will give Vietnam and other Asian countries time to strengthen their ties with China and expand their trading portfolios to neighboring countries. In addition, based on the interview with the Tridge Fulfillment Team, the demand for Vietnamese Bananas is increasing and ample opportunities exist to diversify their trading portfolios.
Tridge is also actively working with Vietnamese suppliers and 15 South Korean buyers, bringing 12 containers of bananas into the South Korean market weekly. Tridge is also the first company in the country to source bananas from Cambodia, assisting in stabilizing the nation's high fruit prices. Tridge has also launched its brand, Tamnana, sourcing and re-packaging finger bananas to be sold domestically through e-commerce platforms.
Tridge’s Tamnana Banana
Source: Tridge
To learn more, please visit the Tridge website to submit your RFQ or visit Tridge’s Fruits and Vegetables Catalog.
Read more relevant content
Trade4goApr 4th, 2025Recommended suppliers for you
What to read next
