Why geographical indications are important for building agricultural product brands in China

Why geographical indications are important for building agricultural product brands in China

Staff Writer
Staff Writer
Pinduoduo Content Team
October 21, 2020

If consumers had to choose between "Champagne" and "sparkling wine," or between "Prosciutto di Parma" and "ham," the chances are the former would stand out as winners.

Only sparkling wine produced in the Champagne region of France can be called "Champagne." "Prosciutto di Parma" or "Parma ham" refers to a type of ham produced exclusively in the Parma region of Italy.

These product names are known as Geographical Indications (GIs) as they identify the product as originating from a particular place. Based on its place of origin, consumers may associate the product with a particular quality, characteristic, or reputation. Agricultural products typically derive their quality from the place of production and are influenced by specific local, geographical factors such as climate and soil. That is why the majority of GIs throughout the world are applied to agricultural products, foodstuffs, wine, and spirits.

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Protected by the World Trade Organization, GI is an intellectual property right (IPR) recognized by China and all 28 member states of the European Union (EU). GIs are designed to protect consumers from being misled and also to prevent unfair competition through differentiation of products in the market. With consumers showing preference for GI products and their willingness to pay more for them, GIs have also become a marketing and branding tool with the power to influence consumer patterns, command premium pricing, and generating agricultural, trade and economic benefits.

The recent agreement between China and the EU on GI Protection in September 2020 was hailed as a significant milestone in bilateral economic and trade cooperation. The two parties agreed to protect 100 European EI in China and 100 Chinese GIs in the EU against usurpation and imitation. The agreement is expected to enter into force at the beginning of 2021.

Among the Chinese GIs recognized are Shaoxing rice wine, Anxi Tieguanyin Oolong tea and Kweichow Moutai liquor.

The high level of protection through GIs is expected to help relevant Chinese products win recognition from EU consumers, further promoting China's exports to Europe, while providing legal protection from counterfeit GIs, noted China's Ministry of Commerce.

In the first half of 2020, China-EU agricultural trade volume reached $14.39 billion, up 12.8 percent over the same period last year. In addition, China imported $10.56 billion worth of agricultural products from the EU in the period, up 27.8 percent year on year, according to China customs data.

China is now the world's fourth-largest importer of food, with the food and grocery retail market set to grow by 15% annually. The growth of GI branding in the country has boosted the quality and sales of local agricultural produce and helped to raise farmer incomes.

Yanling Yellow Peaches

"Customers believe in the quality of well-known brands. They love Yanling yellow peaches," said Mr. Tan Zhongcheng, secretary-general of the Yanling Yellow Peach Industry Association in Hunan province.

The fruit must meet stringent requirements of the GI before they can be labelled as "Yanling Yellow Peach,” he said. The association ensures a series of unified technologies and specific quality standards are met in the growing, picking, and packaging of the peaches.

Yanling yellow peaches are exposed to fewer chemical fertilizers than similar fruit grown by individual farmers without unified standards. There is also a specified time for picking the peaches to become fully ripe and taste sweet by the time they reach overseas markets such as Singapore and Vietnam.

The successful registration for Yanling yellow peaches as a national GI product in 2016 resulted in increased sales, which helped lift more than 4,700 families out of poverty, with each family earning an average of 8,800 yuan (US$1,314) per annum.