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Amid tensions, Chinese fruit a turnoff in Vietnam

Tuesday - 3/19/2013, 12:30am  ET

This March 14, 2013 photo shows a corner inside the “No China Shop”, which sells only goods made in Vietnam - children's clothes, shoes and vegetables- and offers to source others in Ho Chi Minh City. The shop was opened in Dec. 2013 by Paulo Thanh Nguyen in Ho Chi Minh city, Vietnam. His decision to launch the business was as much about harnessing and spreading anger against China as it was about making money. (AP Photo/Na Son Nguyen)

Associated Press

HANOI, Vietnam (AP) -- Jack Nguyen had sold 20 of his 30 containers of imported American grapes when fresh rumors hit the Internet and state-run media: Chinese fruit on sale in Vietnam might look good, but it contains deadly levels of preservatives and pesticides. Shoppers quickly stopped buying imported fruit altogether, believing it all tainted or falsely labeled. The last 10 containers rotted.

While fears about the safety of Chinese food products are often well founded, in Vietnam they are so tangled up with anti-Chinese sentiment it is hard to tell where one begins and the other ends. More than 1,000 years of occupation, a bloody border war in 1979 and renewed assertiveness by China in pushing territorial claims in the South China Sea mean that tales of Chinese perfidy find fertile soil in which to grow.

Vietnam's authoritarian government tries to stop direct criticism of China, or discussion of its relationship with Beijing, because it is vulnerable to charges by nationalists and democracy activists that it lacks the guts to stand up to its fellow Communist country. As a result, anger at its giant northern neighbor China is increasingly showing up in consumer behavior.

Nguyen says sales at his firm, one of the largest fruit importers in the country, were down to $6 million last year from $11 million in 2011. While he and others in the trade say Vietnam's economic slowdown is partly to blame, he complains the constant media reports of toxic fruit are strangling businesses, even for those like him who no longer import from China.

"It's all about how they can sell more newspapers. Nowadays if you write an article about Chinese products, you immediately get millions of hits online," he said by phone from Australia, where he was buying up part of that country's grape harvest. "We lost a lot of money just because someone was writing something fancy."

Chinese companies selling computer games and Internet chat programs have faced online boycotts from anti-China activists. In December, Paulo Thanh Nguyen launched a website called "No China Shop", which sells only goods made in Vietnam -- children's clothes, shoes and vegetables -- and offers to source others. He says sales are good, but his decision to launch the business was as much about harnessing and spreading anger against China as it was about making money.

"Chinese made products are killing Vietnam's economy and Vietnam could become China's economic slave," he said. "I want to lend a hand in preventing this."

Territorial tensions have been finding their way into other markets in the region.

An ugly spat between China and Japan over contested islands late last year led to a drop in demand for Japanese cars, makeup and consumer electronic devices by Chinese consumers. Nervous Japanese investors are not pulling back on China, but are stepping up investments elsewhere in Asia as a way of hedging against more turbulence.

A restaurant in Beijing recently put up a sign saying that Vietnamese, Japanese and Filipinos -- whose government also opposes the Chinese claims -- and dogs were not welcome. The owner, who gave a single name of Wang, said he put it up to "release my anger" over the island dispute but took it down after fielding so many calls from reporters.

Given China's size, few countries in the region could contemplate locking economic horns with it for long. It remains Vietnam's largest trading partner, and that will not change anytime soon, regardless of the bad press its fruits get.

Business between the two countries has increased since they normalized relations in 1991 following a frontier war. Trade between the two reached $35.7 billion last year, more than triple the figure back in 2006, according to government figures. Cheap Chinese goods dominate markets. Many of its factories that make goods for exports must first import raw materials from China.

Fruit and vegetable imports from China are especially vulnerable to consumer backlash because of that country's well-documented instances of food tampering, overuse of pesticides and lax regulations on everything from baby milk, dried fruit to meat products. Moreover, Vietnam's recently minted middle class, like their brethren elsewhere, are increasingly concerned about the provenance and quality of what they put on their plates in general.

China has emerged as one of the world's leading exporters of fruit and vegetables, and is increasingly taking market share from U.S. producers in Asian markets. It grows more apples than any other country. There are no figures on how much of the crop Vietnam imports. Chinese fruit is often cheaper than Vietnamese, and offers more variety.

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