Zespri faces flack from Chinese Customs crackdown on one of its four importers

The Ministry for Primary Industries and Zespri International, the world’s largest kiwifruit marketer, are monitoring reports that staff at a Chinese company that imports a number of New Zealand’s primary sector products have been arrested in a crackdown by Chinese Customs.

 According to a National Business Review report, nine staff at Dalian Yidu are understood to have been arrested in relation to importing prohibited fruit as well as an ongoing investigation, that started in March last year, into alleged under-declaration of customs duties. There is no indication at this stage that New Zealand kiwifruit is involved in the investigation.

But Zespri communications manager Olive Broad confirmed the company was one of Zespri’s four importers in China, dealing with around 4 percent of its China volume, which is about 10 percent of its overall trade.

In a statement MPI said it knows about and is monitoring the situation as part of its normal market access work and that while it has been told Dailan Yu imports other New Zealand commodities from across other primary production sectors, it doesn’t hold information on which ones.

Zespri’s New Zealand supply season to markets, including China, finished a few months ago and it has no financial exposure to Yidu, Broad said.

The company appointed Dalian Yidu as its sole agent and importer in Northeast China last year, one of four agents it appointed in China after its previous agent and importer, Neuhof, was found guilty in 2012 for failing to pay import duties. In 2013 the Serious Fraud Office launched an investigation into Zespri’s double invoicing problems which led to its Chinese subsidiary being fined almost $1 million and an employee jailed for five years over the underpayment of customs duties on kiwifruit imports between 2008 and 2010.

In its most recent annual report, Zespri said as a consequence of the problems with its previous Chinese agent it would “strengthen the global compliance framework without losing our execution capability”. Initiatives included more oversight of agents and a customs audit of all direct sale market/customers to ensure all its importers acted in accordance with international best customs practice.

Earlier last year Zespri was caught in a second Asian market when Taiwanese kiwifruit importers were found to have created fraudulent invoices to reduce their duty payments. The invoices used Zespri logos and forged signatures of its personnel.  Zespri ended its relationships with its three importers in Taiwan, which is New Zealand’s seventh largest market for kiwifruit, and appointed new distributors last season.

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