The kiwifruit giant signed the beginnings of a commercial arrangement with a Chinese state-owned firm late in 2020, in the hope of commercialising some of an estimated 4000ha of unlicensed SunGold kiwifruit being grown in China on vines that were stolen from the company.
The three-year trial has been touted both as a “win-win” for both Zespri and Chinese growers, and necessary to encourage the Chinese Government to enforce Zespri’s rights over the SunGold product.
But Kiwifruit New Zealand, which regulates Zespri, has declined to approve the proposal in a draft decision, deeming it a risk to the interests of New Zealand’s kiwifruit growers.
Zespri, which had already signed a memorandum of intent with Sichuan State-owned Assets Operation and Investment Management, could have taken the proposal and KNZ’s assessment to the industry’s 2792 growers to vote on whether it should go-ahead.
A summary of the judgement, published by KNZ, says the trial to buy and brand 1.95 million trays of unlicensed SunGold kiwifruit from Chinese growers was “more than a low risk” – and therefore did not meet a regulatory threshold – in three ways.
KNZ chief executive Geoff Morgan declined to say what the risks were, as Zespri was expected to return with an adjusted proposal.
Geoff says, among independent advice received, KNZ considered six risks to growers, including grower returns, brand reputation, market access through the NZ-China relationship, and orchard practice and intellectual property.
“New Zealand is definitely the world leader in Kiwifruit orchard practices ... So to transfer intellectual property around that to a country that has a huge scale and an ability to produce a very large volume of fruit, far in excess of anything New Zealand produces, is definitely a concern.”
Neither Zespri nor KNZ have made the full proposal public. A statement about the trial published on an industry website in November said the project, if successful, could grow to 50,000 tons of fruit, and would see Zespri provide its technology and growing practices to Chinese growers.
Carol Ward, Zespri's chief grower, industry and sustainability officer, says the company needed to “bring about some level of control” to the unauthorised planting of SunGold, and would adjust the proposed commercial arrangement to again seek sign-off from KNZ and growers.
She says there were a “broad array of risks”, including the need to protect the quality of the kiwifruit carrying Zespri’s brand, to protect intellectual property in China, and to maintain positive relationships, including with the Chinese government.
“We needed to have a look at some of these risks ... We've had the feedback and withdrawn it, and now we want to work constructively and positively with the regulator with our growers to say, ‘how do we frame this and scope this’.”
Carol says the trial might be limited to one-year, instead of three-years, to gain the support of growers.
She says Zespri had received support from the Chinese government, and “entwined” with that support was a conversation about Chinese authorities enforcing the company's plant variety rights.
“We have concerns that if we don't move in this direction, that the spread of unauthorised Gold3 [SunGold] will continue unabated and without our ability to have any influence.”
A spokesperson for the Chinese Embassy in Wellington provided a written statement to Stuff in December saying China had strengthened its intellectual property enforcement and punishments as of January 2020.
The embassy spokesman did not specifically comment on the enforcement of Zespri's plant variety rights in the statement.
“We appreciate Zespri's optimistic view of China's economic and market growth in the future and its commitment to developing the Chinese market.
“We hope that the business communities of China and NZ can work together, adopt a pragmatic attitude of friendly cooperation to properly handle some issues, and ultimately achieve mutual benefit and win-win results.”