Kiwifruits are native to China but it was New Zealand that perfected the golden variety found on supermarket shelves today.
It costs New Zealand farmers a sizable amount of money to license the SunGold kiwifruit and sell it across the world.
New Zealand even has a kiwifruit regulator that makes decisions on all national issues pertaining to the little fury fruit and at the moment there is one brewing between local growers, the owner of the SunGold copyright and China.
Central to the story is a man named Haoyu Gao, who is accused of smuggling cuttings of the prized SunGold to China’s Sichuan province, enabling local farmers to cultivate several orchards of counterfeit plants.
Now New Zealand needs to decide how to deal with China — SunGold kiwifruit lover, customer, and “pirate”.
SunGold kiwifruits are known for their tangy sweetness and bright yellow flesh. They’re smooth in texture and have fewer seeds than their green counterparts.
Another quality of the SunGold is its tolerance to a disease that devastated the previous variety of golden kiwifruits.
In 2010, an alleged biosecurity breach brought the pseudomonas syringae pv actinadiae (PSA) disease to New Zealand’s fertile plains.
PSA destroyed crops and saw orchard owners rip out vines or cut them down to the base in an event that was “as close as you’d get to an overnight collapse” of the industry, according to Richard Rennie from Farmers Weekly.
Mr Rennie has been following the New Zealand kiwifruit industry for 13 years and says that event left many growers without a crop.
While necessity is the mother of invention, New Zealand had been developing the new gold varieties well before PSA hit.
A little luck and good planning resulted in the quick development of a variety that was far less susceptible to PSA and by 2012, farmers were sewing seedlings of the new SunGold kiwifruit.
After enduring the kind of disease outbreak customs departments dread, the development of SunGold was indeed like striking gold.
“It’s proving to be quite fortuitous,” Mr Rennie said.
“As a fruit, it has a better taste profile. It’s easier to pack and it grows really prolifically. You get a really high yield off it as a crop.
“It’s the best of both worlds, really.”
Zespri is the co-operative that owns the SunGold brand and the body that sells farmers the licence to grow it.
The payment is a one-off and farmers gain access to global supply chains and marketing campaigns.
Farmers purchase licences by the hectare. At the moment it costs more than $500,000 for every new hectare of SunGold farmers want to plant — a sizable investment.
But the variety has become the golden child of the New Zealand kiwifruit family, selling the most trays across the world and driving the $3 billion in global sales Zespri made last financial year.
Farmers get a nice return too, both in gate prices and a dividend paid by the co-operative.
There is a lot on the line.
The ‘pirate’ and his golden cuttings
While New Zealand producers take on costs to expand their orchards, plantations of counterfeit SunGold kiwifruits are growing across China.
The vines are producing a golden variety of kiwifruits, but they are not licensed or held to the same quality standards as those grown by Zespri farmers in New Zealand, so they are referred to as counterfeits or “unauthorised” plants.
The first plants in these unauthorised Chinese orchards were believed to have come from Haoyu Gao.
Court documents reveal how Zespri came to discover their SunGold plants growing in China and the private investigation that led them to Gao.
It started with a rumour.
It was 2016 and Zespri’s China-based staff had heard their prized SunGold variety was being grown locally.
They engaged private investigators and on their advice, contacted a grower in China who “openly admitted” he was cultivating SunGold kiwifruit and welcomed Zespri staff onto his orchard to see for themselves, according to court documents.
The Chinese grower did not say how he had obtained the plants, but the investigation allegedly revealed a connection to Gao.
Gao bought an orchard in New Zealand in 2013 and signed with Zespri to grow SunGold, but Zespri alleges he then went ahead and made some agreements of his own, promising exclusive access and supply to the Chinese grower, according to court documents.
Zespri took their case to New Zealand’s High Court and Justice Sarah Katz found Gao had breached both NZ intellectual property law and his licence agreement with Zespri.
In her judgement, Justice Katz wrote that Gao had taken “budwood” of the SunGold kiwifruit to China, supplied growers and had likely been paid for it, although the exact amount was not clear.
She found in favour of Zespri and ordered Gao to pay $15 million in damages. He is now appealing.
The court result was a win for Zespri, but it didn’t change much.
Zespri now estimates there are more than 5,000 hectares of counterfeit SunGold in China, predominately in the Sichuan Province.
Zespri said the industry there was “increasing rapidly” and would soon “compete head-to-head” with the New Zealand season, in a document sent to growers.
“Unauthorised growing [is] forecast to surpass Zespri exports into China by 2023,” another Zespri document reads.
The situation puts the New Zealand industry in a delicate spot.
It must work to defend its intellectual property and the value of its licence, but China is also one of Zespri’s biggest buyers of real deal SunGold kiwifruits.
There is a proposal on the table that would see some of the Chinese growers brought under the Zespri tent, effectively licensing the fruit from the stolen plants.
The idea is not without risk, but as Associate Professor of politics and international relations at Auckland University Stephen Hoadley says, it could be the “least bad option”.
“Zespri is in negotiation with some state firms in China’s Sichuan province to work out a deal to cooperate with the … rogue, or pirate, growers of this New Zealand-developed kiwifruit brand,” he said.
“Zespri thinks cooperation will be more effective in the long run, in terms of fiscal health of the kiwifruit industry in New Zealand, [rather] than confrontation, litigation and other kinds of attempts to gain justice.
Search for a solution
The value of New Zealand’s trading relationship with China sits at about $19 billion a year and while kiwifruits make up only a small portion of that, analysts are quick to point out how exposed the small nation is to the Asian superpower.
“In terms of the large trade picture, the kiwifruit is a minor item,” Mr Hoadley said.
“The New Zealand government could make a larger issue out of this, but we have Australia’s example front of mind that if New Zealand criticises China too directly … the possibility of retribution is always there and the Chinese could easily do without New Zealand’s imports.
“They’re growing half as many kiwifruits in their country as we’re growing here already, so just by ramping up production they could do without New Zealand completely.”
New Zealand Minister for Trade, Export Growth and Agriculture Damien O’Connor said the New Zealand Government was in regular talks with Zespri over the SunGold planting in China, but it was a private matter.
“The New Zealand Government is not involved in Zespri’s discussions with potential Chinese partners on its proposed commercial trial in Sichuan,” he said in a statement.
“This is a commercial matter for Zespri’s consideration arising from the nature of the situation on the ground. It is not a matter between the New Zealand and Chinese governments.”
The Economic and Commercial Counsellor’s Office in China’s New Zealand embassy was contacted for comment.
Growers are split on what to do and their opinion matters because Zespri’s proposal to trial working with some of the Chinese growers will come down to a vote.
One grower, who didn’t want to be named, told the ABC he was not in favour of the trial.
“My view is leave them alone. You’re not going to stop it, even if you do go over there and legitimise some of the fruit,” he said.
Zespri wants to use the trial to see if the Chinese-grown fruit can meet its quality standards and to test whether or not Chinese consumers would be willing to pay a premium for fruit without the “Product of New Zealand” sticker.
Zespri’s chief grower, industry and sustainability officer Carol Ward said there was no single legal, political or commercial solution.
“What is currently proposed is a small-scale one-year trial which would see us work with a small number of growers to test a restricted amount of fruit on-orchard, through our supply chain and with consumers,” she said in a statement.
“While we are not in the position we would like to be in respect to the spread of our licensed variety, we believe that the best pathway forward and that which has the best likelihood for a long-term positive result is one which works with the Chinese industry.”
The vote opened to growers this week and will run until June 25.
Growers get to have their say on two resolutions — that the trial can go ahead and that the fruit produced as part of it can be sold with an official Zespri label, albeit with China noted as the country of origin.
Securing the golden gooseberry
Research kiwifruits, China and New Zealand long enough and someone will make one very simple historical point.
“You could argue we stole the kiwifruit, then originally known as the Chinese gooseberry, early in the 1900s,” Mr Rennie said, referencing how the kiwifruit came to be in New Zealand in the first place.
“And you could say they’ve done an adept job of stealing it back from us.”
Intellectual property law is supposed to protect those who invest in developing unique goods, but it isn’t always easy in the global marketplace.
Zespri holds the plant variety rights (PVR) to the SunGold kiwifruit in New Zealand, which is why Gao was ordered to pay damages, but those rights mean little in the Chinese marketplace.
That only protects Zespri branding, not the unique plants the fruit grew on.
And as Mr Hoadley points out, what happens in Shanghai, and even at a national government level, does not always align with what happens on, or in, the ground.
“The [Chinese] government is concerned to protect its own intellectual property and the spin-off is it would then have to protect other countries’ intellectual property,” he said.
“It’s a big country and provinces often diverge from Beijing policy — there is a certain amount of corruption, a certain amount of political party interference in affairs.
“That’s why the Zespri [proposal to form] a direct relationship with the company in Sichuan is a very interesting one because it might be more effective to do that than, say, go from Jacinda Ardern to Xi Jinping and make a big issue of this.”
New Zealand’s kiwifruit regulator did not approve Zespri’s original proposal for the trial in China, saying it posed “more than a low risk” to producers.
Zespri made some amendments and now the growers will decide if it can go ahead.
The story of the SunGold kiwifruit is one about managing risk, both commercial and political, and the complexities of doing business with China.
New Zealand’s golden kiwifruit is its star export.
And there are big questions about whether working with Chinese growers will reduce the chance New Zealand growers lose out in the future.
There are risks either way, something that has been apparent since the SunGold cuttings were smuggled out of the country.
The only thing New Zealand producers know for sure is the quality of what they grow on their own farms.
And many will tell you, the best thing they can do to keep New Zealand-China kiwifruit trade on track is to simply grow a product Chinese customers love.
Their hope being that a “Product of New Zealand” sticker continues to be considered kiwifruit gold.