This week, our source was Southern Weekly, where we came across this mind bending look into the use of ecommerce platforms to sell fruits and produce, and all the ways around it.

From Southern Weekend’s Gao Yizhen

Linyi county is one of the biggest fruit producing regions in China. In April 2018, it was dubbed a “slow-selling” zone online. On the screen, mountains of apples piled up, tree branches were savagely cut to the ground, and fruit farmers were in tears.

Pulling the “pity sales” card succeeded in emptying Linyi’s warehouses. But it cost the village a lot of future profit. The emotion-driven campaign also succeeded in depleting whatever stock of compassion was there at the start.

According to China’s Workers Daily newspaper, from 2013 to the first half of 2017, the number of unsellable agricultural products reached 1,612 cases nationwide. This slow-moving logistical disaster has been taking place across 31 provinces and has spread to 314 local cities.

The Yuncheng Basin, where the Linyi county is located, is in southwestern Shanxi Province, at an elevation of around 400-600 meters. With ample light and warmth, early-maturing apple varieties have a unique advantage. Of 550 natural villages in the county, 70% of cultivated land is planted with fruit trees, 70% of farmers are engaged in fruit industry, and 70% of farmers’ income comes from fruit.

In Shijie, a village in the area, most of the 333 households and 1,333 villagers work in fruit production, and with an income that averages RMB 10,000 a year, the cost of growing apples is counted out on the fingers. RMB 180 to tend to the trees, 8 fen to bag each apple against worms and birds and 8 fen to take the bag off again. With all the watering, fertilizing, bagging and tree trimming, the cost per kilo of apples easily rises to RMB 2.

Among the merchants and farmers of Shijie village, no one knows where “pity sales” protagonist Wang Haixia has disappeared. But while marketing on misery has got a bad reputation outside the area, it hasn’t yet shaken the small center.

As director of Linyi County Fruit Development Office, Wang was responsible for authorizing sales certificates. Having given out one particular e-commerce sales certificate, she became a player in the 2018 “pity sales” marketing scandal.

According to officials, the Shijie village e-commerce platform falsely used a charity certificate – with which to indicate oversupply – which was reported to the media. When the real situation was found to differ so much from reality, everything came crashing down for Wang.

Market price fluctuations, affected by variety and quality, mean that apples can cost RMB 1.4 to 1.7 per kilo, while others can earn 3.6 to 4.4. In the end, most farmers earn just a few cents per kilo.

Apples have long storage times and a sales period lasting for months. Every year from September to November, apples are harvested, and new products flood the market. Prices are relatively low. From December to February, demand increases and prices gradually rise. From March to April, cold storage apples are relied on and prices fall. In May, the only fruit left are old, and what remains is sold to juice factories as concentrate. In June, early-maturing fruit go on the market and the new sales cycle begins.

Du Lei, a cold storage manager at Shijie village, said that apples are generally stored in November. For a low cost, they can stay in cold storage until June the following year.

Last year, Du Xiao bought up apples at the end of the season and stored them for more than four months. Born in the 1980s, he is a college student who had returned to his family’s business in Shijie village. It was then that he thought up the idea of “pity sales,” and went on a dramatic sales push.

“Fruit farmers are weeping! 70 year olds are selling 20 kilos of apples for just RMB 12. That’s just RMB 0.6 a kilo! An extensive visit reveals 20,000 kilos of apples going to waste. Time passes, but now is the time to share this information!”. The three exclamation marks are a brilliant addition to this social media post in April 2018.

The article described the situation as critical. As snow and ice were about the block the route, merchants had evacuated the area. The apple surplus was soon to become unsellable. If no buyer were found by May 1, the apples would be dumped. There was an accompanying video: under the lens, carts were crammed with branches. The filmmaker asks pointedly, “But why are all the tree branches being cut down?”

It wasn’t entirely fake. The fruit tree branches on the ground were actually being thinned, and fruit growers had to ensure good environmental conditions, which meant cutting off some branches was a normal step. Due to the replacement of varieties, aging trees, and over-planting, Linyi did have to chop down trees on acres of orchard land every year. But this year, the branches had become props to a sophisticated marketing campaign.

In just 18 days, the e-commerce platform sold 1.17 million boxes of Linyi apples; almost 5 million kilos.

On delivery, many of the Linyi apples proved to be ugly, with scars, pitting, black spots or cracks. They were not from this year’s crop.

“This had a major impact on us.” Yang Yong, director of the Linyi County Fruit Industry Development Center, told Southern Weekend that most fruit farmers have no brand awareness. The “sad sales” marketing campaign was not strictly carried out. In reality, the quality of the delivered apples was highly variable, so consumers got a really bad impression.

The fruit industry: a broken supply chain

With tight-knit village relationships, outside businessmen and local farmers do not have direct contact, but rather they go through the local agents. These agent merchants tend to be from the village, setting up fixed spots to buy goods. According to the traditional model, the farmer first sells their product to a local wholesaler, and from here viamultiple intermediaries, it reaches the outside market.

Du Xiao knowns this traditional model well. His father is one of these merchants. The family runs a large-scale fruit operation and Du Xiao’s phone number is printed on the billboard outside. He is no stranger to the e-commerce model, and knows how to get his produce onto large-scale e-commerce platforms, leveraging the story of local fruit farmers opening their own online retail channels, taking charge of the process of transporting produce by logistics companies.

This apple case is not a one off. Recent social media cases include broccoli, cabbage, slow-selling Guangdong pineapples, Sichuan pears, Yanyuan apples, Yongxing oranges, and Henan slow-moving garlic.

The Linyi County Fruit Industry Development Center provides a set of data. It is known that the purchase price of apples is about RMB 2 per kilo, and the sales price is about RMB 7.2 per kilo. If costs are removed, the e-commerce site can earn at least RMB 2 per kilo. However, the platform explicitly states that buying from these farmers is a kind of social responsibility action. The platform has helped solve problems of unsellable agricultural products all over: Shaanxi dates, Henan purple skinned onion, Hubei potatos and Minqin honeydew melons.

Chen Jun, a professor of logistics management at Chongqing Jiaotong University who studies industry chain management of agricultural products, points out that e-commerce platforms need to guarantee a basic price to farmers, invest in labor costs, freight, packaging and other costs, and bear the losses in transportation logistics, before they can profit. Behind a large number of social responsibility campaigns, there is no supervision to determine whether or not products are actually slow-selling or not.

Yang Yong is more worried that the “sad sales” direction will have a devastating impact on the entire industry. Purchasers will question everything, and you won’t be able to sell any goods any more. So why plant? This campaign was short-term and only partially rolled out, increasing income for only a small number of fruit farmers. Overall and long-term, the brand image of local apples and fruit in general has been damaged.

Heather Mowbray

Heather Mowbray translates economics and social interest stories from her loft in the Beijing hutongs, where she's lived for a decade. She is training to be an interpreter so she can finally interact with...

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