Innovation and Change Lead the Way in Industrial Upgrading

If you want to ask where the tasty apples come from, most people will think of Yantai apples. The establishment of this brand association is the inevitable result of Yantai apples' pursuit of a century of quality and a century of brand building.

Shandong Yantai, as the starting point of modern apple cultivation in China, began in 1871 with the introduction of Western apples. After a century and a half of development, the small apple has been planted on hills and beaches, moved west and north, and shouldered the industrial responsibility of enriching the people and revitalizing the industry. Today, China has become the world's largest apple producer and consumer. Yantai apples have not only become Yantai's most resounding calling card, but also Shandong's ace fruit in the fruit industry, and have established the pride of a national brand in the hearts of Chinese people.

Over the past century, Yantai apples, with their persistent spirit of innovation and seeking “change”, have persevered in pursuing technological innovation, variety improvement, quality enhancement, and brand building. They have not only dominated the domestic market for a long time, but have always led the development of China's apple industry. A history of Yantai apples is a history of Chinese apple development, and also a history of reform in which Yantai people wanted to change, thought about change, and sought change in the apple industry. It embodies the sweetness and bitterness, joys and sorrows of Yantai people growing apples. Today, Yantai apples are full of confidence in industrial leadership. The internationally advanced modern dwarf rootstock high-density planting system was introduced first, commercialized and cold-chain technology processing leads the country, and functional markets such as forward trading, auction trading, and electronic trading are beginning to take shape…… Yantai apples stand at the forefront of industrial development, fighting forward.

A plate of apples, filling the room with fragrance, whether strong or faint, is hidden in many people's memories; an apple tree, through the four seasons, whether joyful or sorrowful, is engraved on the faces of millions of fruit growers. Recently, reporters went deep into Yantai's apple production areas to feel the thick apple sentiment overflowing in the air and explore the future of apple industry transformation and upgrading.

Quality is the core of apple industry upgrading——

Good apples start from planting

When Yantai people entertain guests, apples are indispensable, and when chatting about apples, they are even more eloquent. The seed of this century-old apple has been deeply buried in this city and has grown into people's hearts.

It is generally recognized that Yantai apples are delicious not only because their fruit surface is bright and their color is good, but also because their taste is crisp and refreshing, and their flavor is sweet and fragrant. Excellent quality benefits from a superior geographical environment and people's unremitting pursuit of quality.

Yantai apples are located in the core production area of China's Bohai Bay advantageous industrial belt, growing up in the sea breeze, at the same latitude as the famous Washington apple production area in the United States. With such good resource endowments, Yantai people have no reason not to grow apples well.

Before the 1980s, Yantai mainly planted traditional apples such as Green Banana and Red Banana. Beginning in the 1980s, Yantai experienced multiple leaps in apple variety selection and breeding, seedling propagation, and orchard management, laying the foundation for its competitive advantage and industrial position under market economy conditions.

Bai Guoqiang, Director of the Yantai Municipal Agriculture Bureau, said that choosing what variety to plant is a strategic decision that determines the direction of the entire industry. In the mid-1980s, Yantai people realized that traditional varieties had to be upgraded, otherwise it would be difficult to adapt to the new market environment, so they decisively introduced the then internationally popular Red Fuji variety, laying the foundation for the apple industry in Yantai and even the whole country.

Since then, in terms of breeding and seedling propagation, Yantai has always maintained a national lead. Yanfu 1—6 Red Fuji are outstanding representatives, and the variety structure has been continuously enriched and optimized, filling the gap in early and mid-maturing varieties. Yantai has successively built 3 national-level professional research institutions, including the Apple Breeding Center of the Ministry of Agriculture, the Fruit and Seedling Quality Inspection Center of the Ministry of Agriculture, and the Yantai Comprehensive Experimental Station of the National Apple Industry Technology System, becoming a strong support for cultivating excellent new varieties with independent intellectual property rights and promoting apple variety upgrading. Yantai has also adopted market-oriented operation methods to form seedling groups integrating breeding, propagation, and promotion with scientific research breeding units and leading enterprises as the main body. The apple seedling industry is developing toward high-end and clustering, creating a “Silicon Valley” for China's apple seed industry.

“For the improvement of China's apple industry level, Yantai should take the main credit.” Ma Degong, head of the Yantai Fruit Tree Station who has witnessed decades of changes in Yantai apples, told reporters that since the mid-to-late 1990s, the seedlings they cultivated and the advanced cultivation and management technologies developed by agricultural technicians, including full bagging cultivation management of apples, mason bee pollination, friendly ecological pest and disease control, transformation of closed orchards, orchard grass covering to increase soil organic matter, and efficient utilization of fertilizer and water, have been exported to apple production areas across the country, directly promoting the adjustment and great development of China's entire apple industry structure. At present, Yantai apples rank first in the country in average yield per unit area of full-bearing orchards, high-quality fruit rate, and commercial fruit rate.

However, in recent years, the domestic and international apple industry situation has undergone major changes. Apple industries in Shaanxi, Xinjiang and other places have risen abruptly, competition in the world apple industry and trade has become increasingly fierce, and Yantai's apple industry itself faces the challenge of quality improvement and upgrading.

Although on the whole, the quality of Yantai apples is still leading. But what must be faced is that orchards built in the mid-to-late 1980s are beginning to age, orchard soil and ecological conditions are deteriorating, and a series of physiological diseases are increasing. This is also a problem commonly faced by most mature orchards across the country.

“Old orchards must be transformed immediately, and both new and old orchards must adopt a series of modern scientific and technological measures for upgrading.” Bai Guoqiang said.

At the apple dwarf rootstock intensive cultivation model demonstration orchard in Zhaoyuan City, reporters saw an apple orchard completely different from traditional orchards. The 500-mu demonstration orchard is neat and uniform, with plants more densely spaced, but rows as wide as 3.5 meters, and the tree shape is upright. Various modern technologies are integrated and applied, greatly different from traditional orchards.

Wang Guangyao, Mayor of Zhaoyuan City, told reporters that old orchards have tall trees, many branches, closed canopies, poor ventilation and lighting conditions, and are difficult to mechanize. The dwarf rootstock high-density cultivation model, however, uses slender spindle and tall spindle tree shapes, which are not only easy to manage and facilitate intensive, standardized, and mechanized operations, but also provide sufficient light inside the canopy, resulting in better fruit color and quality and a high rate of high-quality fruit.

Technician Sun, who has grown apples all his life and is 64 this year, is responsible for managing 200 mu of the orchard. He said that the traditional standard cultivation model takes five or six years to bear fruit, while the dwarf rootstock high-density cultivation model uses large seedlings with branches to establish the orchard, and can bloom and bear fruit in the same year of planting, entering full bearing period in three to four years, with a yield of about 4,000 kg per mu. Technologies such as integrated water and fertilizer management and harmless pest and disease control can be fully applied.

Reporters saw that Old Sun alone could operate a remote-controlled vehicle to complete multiple planting and management steps.

In most traditional orchards, cultivation, fertilization, irrigation, spraying, and pruning almost all rely on manual labor. Bagging apples alone costs dozens of yuan per hour. At present, most fruit growers in Yantai are over 50 years old, and the question of who will grow apples in a few years is right in front of them. Therefore, mechanization is an inevitable trend for the apple industry.

Zhang Jiangting, Secretary of the Yantai Municipal Party Committee, said that if Yantai apples are to continue leading industrial development and realize the dream of becoming a world-renowned brand, they must maintain their unique industrial and market advantages, especially pay attention to quality and safety issues, and put quality improvement first.

During the interview, reporters met Atanas Blagov, a famous Bulgarian fruit tree expert and one of the first batch of specially appointed experts under China's “Foreign Expert Thousand Talents Plan.” This burly and hearty “foreigner” has supported Yantai apples with technical support for several years and is loved by Yantai fruit growers. Blagov spoke highly of the construction of Yantai's apple industry technology system and expressed that he would make new efforts for the development of Yantai's fruit industry. He said that Yantai's apple industry has the foundation and potential to build a world-renowned apple.

At present, the Yantai Municipal Party Committee and Municipal Government have comprehensively deployed the strategy for apple industry quality improvement and upgrading, planning to spend about 8 years focusing on exploration in variety, seedlings, cultivation models, demonstration orchard construction, and other aspects, to build Yantai apples into a high-end apple product base and world-class premium apples.

Now in Yantai, 70% of rural areas and 50% of farming households grow or operate apples. The apple industry employs more than 2 million people, and the apple industry has become the top priority in Yantai's agricultural modernization.

Expanding the value space of the apple industry——

The whole industry chain is the future of maintaining competitiveness

With an annual output of 4.95 million tons, total controlled-atmosphere storage and cold storage capacity of more than 3.42 million tons, and annual fresh fruit exports of 240,000 tons, accounting for about 1/4 of the national total, Yantai has become the country's largest Red Fuji apple production, processing, and export base. However, the transformation from a “quantity-benefit type” to a “quality-benefit type” is a strategic reality faced by Yantai apples and even China's apple industry as a whole.

During visits, reporters saw that scattered planting and operation is still the main mode of Yantai apple production, which is not conducive to standardization and the integration of production, supply, and marketing. Problems such as the low utilization rate of modern orchard management technology and the low proportion of high-end premium fruit are prominent, which will weaken the market competitiveness of end products and make it difficult to change the disadvantaged position of fruit growers in sharing the industrial value chain.

Meng Fanli, Mayor of Yantai City, believes that it is necessary to strengthen the cultivation of new agricultural operating entities, accelerate the transformation of production and operation models, improve supporting industries, enhance processing levels, and realize whole-industry-chain development, thereby expanding the industrial value space.

Walking into Yantai Quanyuan Food Co., Ltd. in Qixia City, the “Apple Capital,” reporters immediately felt the vitality of market entities. Chairman Jiang Yanquan, who is well versed in market operations, told reporters: “When Yantai apples are picked, the gap with famous foreign apples is not large, but how to maintain this quality until it reaches the mouth of end consumers is a major challenge we face. This involves post-harvest handling, cold chain, and many other aspects, and requires market entities to do it. This is also a key link in future market competitiveness.”

Jiang Yanquan's company has a storage capacity of 40,000 tons of apples, and its fruit and vegetable storage technology has reached the international advanced level. With government support, the company has also developed an “Apple Internet of Things Safety Traceability Service Platform” to manage the production, processing, storage, transportation, and sales of apples transparently, allowing consumers to comprehensively and intuitively understand the entire process of apples from planting to sales.

Chen Zhaokuan, Mayor of Qixia City, said that Qixia apples have fully achieved seasonal production and year-round sales and year-round supply. On the one hand, the government actively supports the development of related enterprises such as cold chain and packaging, guides enterprises to manage at a high level and in a standardized manner according to international standards, and encourages enterprises to expand scale and upgrade their level. On the other hand, it uniformly promotes commercialized handling methods, adopting cold-chain technical processing for apples after picking to ensure that the hardness, moisture, hygiene and other conditions of stored apples meet international standards. Qixia apples listed during the market gap period are priced 1-4 yuan per kilogram higher than during the picking period, increasing fruit growers' income by more than 1.4 billion yuan annually.

Although Yantai apples are mainly for fresh consumption, the trend of building a processing chain and transforming scattered rough processing into large-scale deep processing and ecological circular processing is obvious. Yantai has successively introduced and cultivated deep processing enterprises for fruit juice, fruit wine, fruit vinegar, apple crisps, pectin, and other products, with products exported to markets such as the United States and the European Union. At the same time, it has built a composite ecological agricultural system of “livestock—biogas—fruit—mushroom.”

During interviews, reporters also saw the important role of cooperatives in improving the level of apple industrialization. Many cooperatives have made contributions in accelerating technology promotion, providing comprehensive services, and adjusting industrial structure.

Zhaoyuan Fukai Fruit Professional Cooperative has a 2,500-ton fruit storage warehouse, transferred 2,676 mu of orchards and land, drove 1,450 fruit-growing households, and covered an orchard area of 6,000 mu. The cooperative's unified purchase rate of inputs reached 80%, the unified sales rate of fruit reached 82%, and members' income was 30% higher than that of non-members, making it the first farmers' professional cooperative in the province with import and export operating rights.

“Strengthening market analysis and correctly formulating sales strategies is the most important work of the cooperative.” The person in charge of the cooperative told reporters that in the past two years, the initial purchase price of the apple market has been relatively high, and some fruit growers have developed a reluctance to sell and hoard goods in hopes of price increases, but market risks are also gradually increasing. The cooperative promptly guides buying and selling conditions and sells fruit through multiple channels such as agricultural-supermarket docking and fruit promotion fairs, allowing each household to sell for 12,000 yuan more.

“In fact, the high efficiency of the world's most famous apple production areas depends on modern technology on the one hand, and also requires large-scale investment to achieve.” Xu Shaoning, Vice Mayor of Yantai City, said that in 2014, the Yantai municipal finance arrangement for modern apple industry funds increased by another 10 million yuan. At the same time, the central and provincial finances will also further increase support, with the total amount of financial support funds directly used for the apple industry reaching 53 million yuan.

Reporters saw that leading fruit enterprises have already formed cluster development, which is the main force maintaining the vitality and competitiveness of Yantai's apple industry. At present, the city's apple industry has 23 key leading enterprises in agricultural industrialization at or above the provincial level. By 2020, fresh fruit storage and post-harvest processing capacity are expected to both reach 4 million tons. At the beginning of this year, Yantai issued opinions on accelerating the quality improvement and upgrading of the apple industry, officially proposing that by 2020, “Yantai Apple” will be cultivated into a world brand, and Yantai will be built into the country's largest modern fruit industry cultivation base and storage, processing, and export base.

Improving the modern market system and brand marketing system construction——

A century-old brand leads the process of industrial modernization

Many Yantai business owners lament that the current apple market environment is completely different. Market channels and marketing methods have undergone fundamental changes. Many places have listed apple production as a governor's project or mayor's project, with great momentum and fierce force, pressing directly on Yantai apples.

Yantai has always insisted on combining the domestic market with the international market, establishing and improving a five-level sales network of leading enterprises, large marketing households, cold storage owners, professional cooperatives, and brokers in positive interaction, and establishing long-term supply relationships with more than 500 large and medium-sized supermarkets and professional markets. Through the Yantai Apple Production and Marketing Merchants Association, more than 20 large fruit purchasing and distribution dealers from across the country have been invited to settle in Yantai.

Xu Shaoning believes that the existing traditional farmers' market model is far from being able to adapt to the needs of the rapid development of the market economy. The contradiction between the pattern of small-scale production and the continuously improving degree of organization in post-harvest storage, transportation, processing, wholesale, retail, and other links is prominent. It is imperative to establish as soon as possible a market supply and demand and related policy information trading platform with wide coverage, large information volume, and timely and rapid service. In fact, the accumulation of market risks has also accelerated the establishment of a modern market system and the improvement of apple marketing models.

Yantai people have clearly seen this and have successively made active explorations in markets such as forward trading, auction trading, and electronic trading. The price discovery function, information disclosure function, quality traceability function, credit guarantee function, and logistics distribution function of the apple market have been gradually improved.

In the business hall of the Yantai Apple Trading Center of the Bohai Commodity Exchange, the large screen continuously scrolls timely apple prices and trading conditions. This is China's first listed apple spot variety, opening a brand-new marketing model for apples.

The person in charge of the exchange told reporters that in the traditional marketing model, merchants need to use large amounts of cash each year to purchase and store apples locally, and whether they profit can only be determined by gambling on the market. The Bohai Commodity Exchange currently has more than 600 comprehensive member institutions and more than 2,000 business outlets across the country, building a national marketing network. Using this platform, buyers and sellers connect directly, reducing intermediate links, and can expand sales revenue for the product itself by about 5%-15%. Moreover, through the “hedging” function of the board, it can lock in apple sales profits in advance and solve the income risks brought to apple traders and fruit growers by apple market price fluctuations.

From the platform's launch at the end of 2012 to November 2013, it completed a total apple trading volume of about 710 million lots, equivalent to a total apple weight of as much as 7.1 million tons, with a total transaction value of more than 52 billion yuan. But relative to Yantai's and even the whole country's apple output, it cannot completely solve the problem. For this reason, Yantai is preparing to build the world's first apple auction center in order to establish a large market that leads the whole country.

According to the project leader, this new fruit trading model adopts the membership system organizational principle and organizational form, innovatively integrates the third-party auction market model with the supply chain management model, and, together with the logistics distribution system, creates a large professional fruit spot auction trading market covering China and even the world that integrates information flow, business flow, logistics, and capital flow.

In the current market construction, establishing a solid brand image is becoming more and more important. Sha Shengtao, Deputy Director of the Yantai Municipal Agriculture Bureau, said that Yantai apple brand building started earliest, but under the new market environment, the brand positioning needs to be further clarified. Yantai apple's scale cannot expand indefinitely, and high quality is what Yantai people pursue. According to surveys, Qixia apples, the best among Yantai apples, account for more than 60% of the domestic high-end market, including more than 80% of the Beijing market.

The Yantai Municipal Government has for 13 consecutive years treated fruit promotion as a major and important government matter, successively issuing documents such as opinions on promoting agricultural brand building and measures for the recognition and management of Yantai famous brand agricultural products, taking apples as the main content of agricultural brand building. Since 2001, the municipal government has for 13 consecutive years allocated special funds and successively held a series of activities such as Yantai apple promotion fairs in more than a dozen countries and regions and more than 30 cities, effectively enhancing the brand image and visibility of Yantai apples.

The key to the market competitiveness of an industry and an enterprise lies in the product, and the core is the brand. Only by concentrating efforts on cultivating advantageous industries and advantageous products and building strong agricultural brands can one “capture fortresses and pull out camps” in increasingly fierce market competition and fundamentally improve the overall quality and core competitiveness of the industry.

How to handle the relationship between Yantai Apple as a regional public brand and other apple brands within the region is an important issue in Yantai apple brand building. In practice, the specific designation of the century-old brand “Yantai Apple” has shown a tendency to be diluted, weakening the brand influence and market competitiveness of “Yantai Apple,” which is not beneficial to the entire industry.

At present, the Yantai Agriculture Bureau is formulating a strategic plan for apple brands, creating brand images, refining brand communication symbols, planning brand development models and management systems, and formulating implementation paths for brand strategy, strengthening top-level design at the strategic level, and building the mother brand “Yantai Apple.” At the same time, activities such as the selection of the “Top Ten Brands of Yantai Apple,” the “Yantai Apple Production and Marketing Alliance Summit,” and the selection of the “Top Ten Distributors of Yantai Apple” are also being carried out successively, encouraging and guiding fruit enterprises and cooperatives to cultivate, create, and integrate a number of enterprise sub-brands, forming a virtuous development pattern in which mother brands and sub-brands promote each other and bring out the best in each other, and promoting the continuous growth and strengthening of the Yantai apple brand group.

Cultural factors are the soul of brand building. Just as when French wine is mentioned, people think of France's long history and romantic and elegant lifestyle; when Australian animal husbandry is mentioned, people think of this “country riding on the back of sheep” and its natural scenery and inclusive ethnic culture. Bai Guoqiang said that it is necessary to combine building a strong Yantai apple brand with traditional excellent regional culture, create brand culture, and enable consumers to fully appreciate the Yantai style of golden coast, long history, and unique culture while obtaining material enjoyment.

After a century of tempering, Yantai apples are developing steadily at just the right time. It is stepping to the drumbeat of the times' changes, forging a path of its own in cultivation system reform, market entity cultivation, and functional market construction, and leading the industry forward continuously. May Yantai apples take deep root in century-old apple culture, absorb the nutrients of the times' development, and continuously write new history and glory.