Analyzing of Potential Market of China for Ethiopian Coffee

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  • Topic: Coffee, Coffee preparation, Ethiopia
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Proceedings of the 7th International Conference on Innovation & Management

Analyzing of Potential Market of China for Ethiopian Coffee
Eskinder Asfaw Bantiwalu, Asfaw Yilma Demisse
School of Management, Wuhan University of Technology, Wuhan, P.R.China, 430070 (E-mail: eskinder_2001@yahoo.com, Asfity333@yahoo.com)
 
Abstract After analyzing the opportunities and challenges of Chinese market by using secondary data, this paper finds that the population of China (1.3 billion), the increasing demand of Coffee in China (30% per year), the fastest growing of Chinese Economy (an average rate of 10% per year since 1990) and the purchasing power of the people are the key indicators of Chinese potential market for all coffee exporter countries in general and for Ethiopia in particular. Therefore, doing a specific in-depth market research, identification of the best distribution channels, implementation of market entry strategy, distinguish how to increase market share, and establishing strong supply chain system is the best strategg drawn in this paper in order to get into the Chinese coffee market for Ethiopian Coffee exporters.

Key words Ethiopian coffee production; Chinese growing coffee demand; Chinese potential market for coffee

1 Introduction
Coffee has enormous economic, social and environmental significance in Ethiopia. It represents an important part of Ethiopia’s foreign exchange earnings, tax income and gross domestic product (Gole, T.W. et al, 2002). Coffee also directly supports the livelihoods of more than 25 percent of the population, and is at the centre of social and family life (Roussel, B. and Verdeaux, F. 2007). Despite its distinctiveness and reputation for excellence, Ethiopian coffee has been sold as a commodity like most coffees worldwide traditionally. In the past, sharp declines in the world price have thus reduced Ethiopia’s national income and severely affected its coffee farmers that are increasingly using the land for other monoculture crops. Due primarily to these changes in land use, at one point it was estimated that Ethiopian highland forests would disappear by 2015 (Tadesse, W.M. et al, 2001). Ethiopian coffee is undifferentiated in the market; higher incomes will do little to help counter the trend to maximize profits by manipulating coffee forests into quasi-industrial plantations with nonspecific production, and introduced varieties and know-how.

Also a number of terms used in the coffee trade on the basis of the districts where the coffee is grown, such as Harar, Sidamo, and Yirga Chaffee, have become known to consumers over the past years for their unique flavor profiles. According to the Ethiopian Coffee Network, the reputation of these coffees is the result of the hard work of generations of Ethiopian coffee farmers. In Ethiopia after the dramatic collapse of coffee prices, as well as the development of an increasingly ‘grey’ coffee market, the government bolstered control of its prized industry through a series of new government mandates in 2008. The new legislation is primarily designed to regulate the buying and selling of coffee by requiring all sales be conducted through the Ethiopian Commodity Exchange (ECX). In 2009, beyond the regulatory issues, there were additional challenges for Ethiopian coffee. Pesticides found their way onto the packaging and thus Japanese buyers, the number one buyer of Ethiopian coffee (purchases 20% of exports), instituted a ban on Ethiopian coffee when they discovered pesticides on packing bags. However this problem already solved.

Thus, Ethiopia continues to produce quality coffee to the international market. Now the question is how Ethiopian coffee can penetrate into different global markets like China. Since the population of China is over 1.3billion it is a huge market if possible to get in. Recently there is a growing coffee demand in China. This is one of the best opportunities to notice. For this reason, this survey focuses on...
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