University of Sydney Cuttings of Prized Sun Gold Kiwifruits Article Questions

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Cuttings of prized SunGold kiwifruits were smuggled to China and NZ growers are
divided over what to do about it
By Emily Clark 2021
The SunGold kiwifruit was developed in New Zealand and has fewer seeds and a smoother texture than the green
variety. (ABC News: Emily Clark)
Kiwifruits are native to China, but it was New Zealand that perfected the golden variety found on
supermarket shelves today. 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.
While necessity is the mother of invention, New Zealand had been developing the new gold
varieties well before 2012. A little luck and good planning resulted in the quick development of a
patented variety that was far less susceptible to disease and by 2012, farmers were sowing
seedlings of the new SunGold kiwifruit.
Zespri is the co-operative that owns the SunGold brand and the patent, as well as 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 farm prices and a dividend (profit) paid by the Zespri cooperative, as the co-operative is collectively owned by member farmers.
There is a lot on the line. Zespri sold the equivalent of 20 million trays of SunGold kiwifruits to
China in the last financial year.
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 plants 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 Mr.
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.
They engaged private investigators and, on their advice, contacted a grower in China who “openly
admitted” he was cultivating SunGold kiwifruit but 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 by taking
“budwood” (plant cutting) of the SunGold kiwifruit to China, supplied growers there and had likely
been paid for it.
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. “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 New Zealand-produced SunGold kiwifruits.
In Beijing, the legitimate SunGold kiwifruit is very popular. Zespri believes counterfeit fruits are not being sold in so-called
tier one Chinese cities.
There is a proposal 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 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.
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
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. “I wouldn’t like to lose the Chinese market.
“There’d be a dramatic drop in price if we lost China.”
Zespri wants to use the trial to see if the Chinese-grown fruit can meet its quality standards and to
test whether Chinese consumers would be willing to pay a premium for fruit without the “Product of
New Zealand” sticker.
If the trial can go ahead the fruit produced as part of it can be sold with an official Zespri/SunGold
label but noted as “Product of China”.
Securing the golden gooseberry
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) – which is equivalent to a patent – to the SunGold
kiwifruit in New Zealand, which is why Gao was ordered to pay damages.
The story of the SunGold kiwifruit is one about managing risk, both commercial and political, and
the complexities of doing business with China. And there are big questions about whether working
with Chinese growers will reduce the chance New Zealand growers lose out in the future.
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.
Adapted from:
Question 1
What does “PVR is equivalent to a patent” mean? And what is the difference between PVR/Patent
and Trademark in the case of SunGold kiwifruit.
Question 2
What will happen to the Chinese kiwifruit market if Zespri is successful in getting all the Chinese
growers to pay the licensing fee? [Hint: what kiwifruits will be available in the Chinese market?]
Question 3
What are the advantages of New Zealand exporting their SunGold kiwifruits worldwide as they are
doing now?
Question 4
What is the advantage(s) of licensing the patent to overseas farmers, instead of exporting?

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Explanation & Answer:
4 Questions

Prized Sun Gold Kiwifruits

New Zealand exporting

foreign growers

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