Yunnan-based coffee producer set to brew up global interest

An upcoming spot trading center in Chongqing will provide the much-needed impetus for the coffee industry in China to gain global traction along with a boost from the Belt and Road Initiative.

Yunnan-based coffee producer Dehong Hogood Coffee Co Ltd, the company that is setting up the center, said the center will boost trade with countries on the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

Li Xiaoling, general manager of Chongqing Energy International (Hong Kong) Co Ltd, the second-largest shareholder of Hogood Coffee, said: "We are hopeful of setting up the center by the end of this year. We expect spot transactions of coffee at the center to range from 100,000 tons to 200,000 tons in 2016."

The company imports coffee beans from Southeast Asian countries such as Myanmar, Vietnam and Indonesia, mixes the coffee beans with those grown in Yunnan province, and then exports them to Europe. It began to export coffee beans and powder via the Chongqing-Xinjiang-Europe international railway from July this year.

Starting in Chongqing, the 11,179-kilometer railway line passes through Lanzhou in Gansu province, Urumqi in the Xinjiang Uygur autonomous region and the Alataw Pass, where it enters Kazakhstan, before continuing through Russia, Belarus and Poland, finally ending in Duisburg, Germany.

Before switching to the international railway, Hogood Coffee had to export its products from Guangzhou in South China's Guangdong province. It used to take the company 45 to 50 days to deliver goods from China to Europe but the same now takes just 14 days.

"The shorter transport time and faster deliveries have helped us gain more customers," Li said.

The coffee producer expects to increase its imports and exports to between $250 million and $300 million by the end of this year, up from more than $100 million in 2014.

Yuan Jian, corporate client manager at the Export-Import Bank of China Chongqing Branch, said the coffee producer has sought a financing loan worth $250 million. At the initial stage, the bank plans to extend a loan of $50 million to the company, he said.

If Hogood Coffee gets the full financial support from China EximBank, it can increase its imports and exports to $1.5 billion in 2016, Li said.

The company also signed an agreement with Bank of China Ltd to establish the coffee spot trading center. With the help of Bank of China, it joined a group of 27 Chongqing-based companies and 80 international companies in Germany in mid-November to promote trade and investment projects along the Chongqing-Xinjiang-Europe railway.

Xiang Heng, deputy director of the China Banking Regulatory Commission Chongqing Office, said the regulator will play an active role in guiding banks to support the Belt and Road Initiative and the building of an economic belt along the Yangtze River.

"As the traditional model of banks to maintain economic growth is unsustainable, supporting major national development strategies has become a must for the reform and transformation of the banking sector," he said.

By the end of October, the outstanding loans of banks in Chongqing for investment, cross-border trade and infrastructure projects in countries along the routes of the Belt and Road reached 39.87 billion yuan ($6.17 billion).