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With it's rising popularity, durian, also known as the "king of fruits", has an enormous market in Southeast Asia. It is seen that in Malaysia, the pungent and stinky fruit is attracting investment opportunities from several companies and tycoon. This is due to its increasing demand in China. For example, at a Shanghai restaurant selling durian chicken hotpot, owner Chen Weihao said the store is able to sell around 20kg to 25kg of imported durian every month. Thus with such a booming market, we will be doing fundamental analysis using recent news to discuss the different aspects of the durian market.

References:
Anonymous. (2018, November 26). Durian set to become Malaysia's next major export on demand from China. Retrieved from https://www.straitstimes.com/business/economy/durian-set-to-become-malaysias-next-major-export-on-demand-from-china

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Prices for mao shan wang durians are falling, as vendors in Singapore see a slump in customer numbers.

The durians - also known as musang king - usually go for more than $20 per kg, but are now being sold for $16 to $20 per kg, according to four vendors The Straits Times spoke to.

One vendor that Chinese daily Lianhe Wanbao spoke to, King Fruits Durian, even slashed prices to $10 a durian on Monday.

Slow customer traffic is a key factor in this price drop. Ms Linda Ang, owner of Combat Durian, said the school holiday period is coming up "and people are going on holidays, so fewer people are buying".

Ah Seng Durian said this is a common occurrence annually because the year-end period is not a time when people normally eat durians. A spokesman said that besides the school holidays, other year-end activities also affect the buying power of customers. For instance, they might be saving up instead for Christmas or new textbooks and uniforms for their children, he said.

"Companies usually spend on dinner and dance events in December so they don't have the budget for durian parties, which they may hold in June or July instead," he added.

Singaporeans might also be waiting for a better deal. "Durians are a luxury, and not a necessity. People have a wait-and-see attitude. They are waiting for prices to drop further before they buy," said the Ah Seng Durian spokesman.

Customers might not have to wait much longer, as some vendors are projecting that prices can fall as low as $12 per kg in the coming weeks.

Mr Goh Hwee Leng, owner of Durian MPire by 717 Trading, expects the low prices to last till Christmas at least, with prices estimated to hover between $12 and $18 per kg. He also said that due to recent heavy rainfall, the quality of the durians has been slightly affected.

Some vendors have also experienced a small surplus in durian supply that has contributed to the lower prices.

Mr Alvin Teoh, owner of Durian36, said: "Our suppliers have had a good durian harvest recently. Prices are expected to fall to around $14 or $15 (per kg) because of the oversupply."

Durian lover Hendra Susanto, 45, a trader of natural resources, has already spent $400 on durians from Combat Durian in the past four days when prices ranged from $18 to $22 per kg, noting that the prices are "very good". He plans to buy more next month when prices are likely to fall further.

Currently, only mao shan wang durians are in season. Other varieties like D13 or red prawn will be available only in the later part of December and may also be priced lower, said vendors.

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Prices for mao shan wang durians are falling, as vendors in Singapore see a slump in customer numbers. The durians - also known as musang king - usually go for more than $20 per kg, but are now being sold for $16 to $20 per kg, according to four vendors The Straits Times spoke to.

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The product in question is Mao Shan Wang Durians. In the Durian market, the first non-price determinant of demand at work is the Number of Buyers. As seen in the article, in the month of November, the number of buyers have decreased to the fact that many "people are going on holiday so fewer people are buying" durians. Another non-price determinant of demand at work is the Expectations of Buyers. In the article, it is stated that the consumers "are waiting for prices to drop before they buy" in the month of November. Since the consumers expect the price to drop, they will decide to delay the date of their purchase of durians.
On the other hand, there is a non-price determinant of supply involved which is the Number of Sellers. The number of sellers increases which is evident in the article stating that the "suppliers have had a good durian harvest recently". There will be more sellers with the higher number of durians available.

With less number of buyers and expectation of buyers (anticipated lower prices of durian), the demand curve will shift to the left to imply a decrease in demand. With the higher number of sellers available, the supply curve will shift to the right to imply a increase in supply. Now at the same disequilibrium point, there will be a surplus as the quantity supplied exceeds the quantity demanded. This is due to the downward pressure on sellers to decrease prices. Thus, the market will shift to a new equilibrium at a lower equilibrium price at P'.  However, the impact on equilibrium price is indeterminate as we don't know the exact proportion of the simultaneous shift. The lower equilibrium price is also evident in the article as "durians that usually go for more than $20 per kg, but are now being sold for $16 to $20 per kg"

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Assumption: Demand curve shifts to the left more than the supply curve shifts to the right. In this case, the market will shift to a new equilibrium point E' at a lower equilibrium price P' and lower equilibrium quantity at Q'.

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Assumption: Supply curve shifts to the right more than the demand curve shifts to the left. In this case, the market will shift to a new equilibrium point E' at a lower equilibrium price P' and higher equilibrium quantity at Q'.

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Other than Market Equilibrium, the article has also shown an example of Opportunity Cost. In the article, it is stated that "the year end period is not a time when people usually eat durians". The reason for this is that consumers "might be saving up instead for Christmas or new textbooks and uniforms for their children". The scarce resource in this case is money. Scarcity of money forces consumers to allocate this limited amount of money efficiently. The opportunity cost or the next best alternative forgone of the consumers spending money on family or festive seasons is purchasing durians.

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Durian: the foul-smelling fruit that could make Malaysia millions

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Often reviled for its pungent odour, the crop has become a delicacy in China - and export demand is rocketing

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Based on the article, the demand for Durians are price elastic. One of the determinants is whether the good in question is a Necessity or Luxury and based in this sentence from the article “In China, durian has become a status symbol and the demand is huge, especially among the younger generation". This shows that durians are considered as a luxury good as being able to consume durians is seen as status symbol.

The demand is also price elastic as the Proportion of Income of the Chinese is huge and they are willing to spend more money to have the ability to consume durians. It can be seen in  "And where there is Chinese appetite there is money." This shows that the Chinese have the means of income to purchase durians. Furthermore, "The demand has driven up the price of durian by up to 20 times over the past four years." This shows that due to the demand, the price of the durians has also increased drastically yet the Chinese consumers are still willing to pay the increased price for the durians. This might also show the increased proportion of income used to purchase durians due to the increased prices.

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Other than Elasticity and Supply,  the article has also shown an example of Externalities. In this article, it was proven that the selling of durians causes negative externalities where costs are imposed on third parties. It was stated that the increase in durian farming "has raised some environmental concerns – mainly that jungle land is being cleared to make way for plantations."  This means that deforestation will take place in order to plant more durian trees. This can result to a negative impact on the environment such as a loss of habitat for the different species living in the jungle as well as decreasing "the numbers of the very pollinators that are necessary for durian fruit production, and which the durian industry therefore heavily relies on for profit." In conclusion, durian farming can result to Negative externalities.

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Malaysia Agriculture and Agro-based Industry (MOA) Minister Datuk Salahuddin Ayub signed the new protocol with China's General Administration of Customs Minister Ni Yuefeng in Beijing.

This follows closely from the successful opening of Chinese market access to Malaysian pineapples last year, a significant achievement in light of China's strict biosecurity and food safety regulations.

A spokesman from MOA stated that: "This agreement reflects on China's confidence in Malaysian agricultural products, whether it is from a hygiene, safety or quality point of view." ​

Soaring demand

More than 250 million tonnes of durian ​ are imported into China every year. The Musang King variety, in particular, is driving the craze with extremely high demand in the country, and prices can go up to USD 73 (RM300) per kilogramme.

The swell in demand for durian, known as the king of fruits in Malaysia, also led to increased interest in large-scale durian farming in the country. This resulted in a bumper crop earlier in June this year that sent prices of some smaller varieties plummeting to as low as USD 0.24 (RM1) per unit in July.

Musang King prices dropped from USD 30.52 (RM125) per kilogramme in 2017 to USD 12.21 to USD 15.87 (RM50 to RM65) per kilogramme in March.

In China, according to Mintel's The Chinese Consumer 2017 ​ report, over half of all consumers are willing to pay a higher price for better product performance (e.g. better taste), and this translates to durian as well.

Durian is expected to bring in more revenue for Malaysia in the near future, with high hopes that exports of fresh whole Musang King to China will be approved in 2019.

The rise of durian products

A large part of the appeal of durian in China lies revolves around its use as an ingredient in various products, especially across the dairy and bakery sectors.

The China Mengniu Dairy Company uses the D24 variety of durian in its flavoured yoghurt, and also produces durian-flavoured ice cream.

An enormous variety of cakes and pastries with durian filling are also widely available in China, from mooncakes to cookies. More significantly, one of the major avenues of sale for these products is via e-commerce, where sites like Taobao and JD.com are strong players. JD.com even holds a Super Durian Day ​ annually.

Loris Li, Food and Drink Analyst for Mintel China, said that: " Chinese consumers are open to trying different foods which incorporate durian fruit." ​

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China's durian boom: Malaysia secures export deal to extend the king of fruits' reign

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Malaysia Agriculture and Agro-based Industry (MOA) Minister Datuk Salahuddin Ayub signed the new protocol with China's General Administration of Customs Minister Ni Yuefeng in Beijing. This follows closely from the successful opening of Chinese market access to Malaysian pineapples last year, a significant achievement in light of China's strict biosecurity and food safety regulations.

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Characteristics & Product Differentiation

1. Product Uniformity
The article mentioned a few different types of durians sold in the market, showing that the durians in the market are similar but differentiated. The mentioned types of durian include Musang King and D24. This shows that different sellers may sell different types of durians from one another and hence there can be physical differences as durians may be of different sizes and variety. Additionally, the article also indicates that different sellers have incorporated durians as an ingredient in other food products such as cakes and ice-creams to increase their variety of durian-related products they are selling. Hence, we can see that different sellers try to make their products  unique from their competitors' products so that they can have some market power (ability to set prices).

2. Government Intervention
China requires government intervention for durian to be sold in their market. This is supported by the article mentioning that China's General Administration of Customs Minister and Malaysia's Agriculture and Agro-based Industry Minister needing to sign a protocol before the fruit can be sold in China's market. This is to ensure that China's biosecurity and food security are well maintained. Hence, we can further infer that the durian market supports a Monopolistic Competition market structure.

3. Number of sellers
There are also many sellers in the market selling durians. For example, in China, two of the sellers include Taobao and JD.com. These sellers sell durians in many forms - the fruit itself, durian yoghurts, durian ice cream, durian pastries and more. We can hence further infer that different sellers may have different services as those sellers stated in the article are online websites which may provide home delivery services. However, from our general knowledge, we know that durians can be bought in stores as well. Hence, we can infer that different sellers have different services that they provide to customers, further proving the market structure to be Monopolistic Competition.

These factors prove that the business for durian in China's Market has a Monopolistic Competition.

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