Seafood traditional traders send out mixed signals
Middle class shoppers in China are showing a growing appetite for seafood products and a passion for imported delicacies as they prop up an industry going through turbulent times.
Data released in August by the Ministry of Commerce showed that China imported seafood and fish products worth $3.52 billion during the first seven months of this year, down 5.12 percent from the same period of 2014.
Aquatic exports reached $10.66 billion during the same period, a year-on-year drop of 4.7 percent, according to the General Administration of Customs.
Against that backdrop, leading businesses in the traditional seafood sector are having to work hard to retain their market share.
At the Seafood Expo Asia 2015 event, which was organized by Diversified Communications earlier this month in Hong Kong, opinions were mixed about the state of the industry.
Cooke Aquaculture, the world's largest independent, fully integrated salmon farming company based in Canada, was bullish about the Chinese sector.
Marketing Director Andrew Lively pointed to the rising sales in upmarket seafood products, fueled by middle class consumers.
"We believe this trend will continue into the foreseeable future," Lively said.
But there are challenges ahead. China's economy is slowing, while the depreciation of the yuan since August by as much as 3 percent has increased the price of expensive imports, such as seafood products.
D&D Seafood Corporation, a lobster exporter based in the United States, has had to adjust to the new economic environment. The company has been in China for seven years and now plans to switch its focus from "live lobsters", which make up 70 percent of its business, to frozen ones.
"Frozen lobster now make up to 30 percent of our operation," Robin Dopico, president of the company, said at the Expo. "The price is more stable and it helps us withstand currency fluctuations amid a cooling global economy."
China accounts for about 70 percent of D&D's overseas business, so Dopico is concentrating on the long-term picture.
Even so, his company and the rest of the industry face issues that cannot be ignored. The government's anti-corruption drive has hit the luxury consumer market, including sales of upmarket seafood produce.
"We suffered a 20 percent drop (in business so far this year compared with last year)," Dopico said. "But for foreign seafood exporters like us, this was a piece of good news.
"We can move back from a 'corrupted market' to a realistic market and get a better idea of real prices instead of artificially high ones."
Other companies have also felt the pinch.
Zoneco Group, a Chinese wholesale company based in Dalian, and specializing in scallops, sea cucumbers and abalone, has reported a 30 percent drop in business this year compared to 2014.
Domestic sales account for 70 percent of the firm's revenue.
"Not only are domestic sales shrinking, but prices are going down," Jackie Yin Youchun, managing director at Zoneco, said at the Expo in Hong Kong.
"We are forced to shift our focus to the middle-end market as well as roll out some cheaper products for the mass market."
To add to the company's problems, the overseas market in scallops is stagnating, especially in the US and Europe, while export payments can take up to two months.
Rising labor costs in the seafood processing industry are another negative factor, making banks more wary about increasing credit lines, and forcing small companies out of business.
"As a large market player, we are still struggling and striving in the belief that we will get through the bad times so that we can vie for a place in the market when the good times return," Yin said.
In a move to boost revenue and sales, Yin said he is turning to the country's booming e-commerce marketplace after launching an online store on Alibaba Group Holding Ltd's Tmall platform.
But foreign seafood exporters, such as Cooke Aquaculture and D&D Seafood, are playing a waiting game before joining the e-commerce rush in the country.
"We are obviously willing to ride on the e-commerce wave to beef up our presence in China, as long as some platforms can prove to be sophisticated partners," Robin Dopico said.
Aquatic exports reached $10.66 billion during the same period, a year-on-year drop of 4.7 percent, according to the General Administration of Customs.
Against that backdrop, leading businesses in the traditional seafood sector are having to work hard to retain their market share.
At the Seafood Expo Asia 2015 event, which was organized by Diversified Communications earlier this month in Hong Kong, opinions were mixed about the state of the industry.
Cooke Aquaculture, the world's largest independent, fully integrated salmon farming company based in Canada, was bullish about the Chinese sector.
Marketing Director Andrew Lively pointed to the rising sales in upmarket seafood products, fueled by middle class consumers.
"We believe this trend will continue into the foreseeable future," Lively said.
But there are challenges ahead. China's economy is slowing, while the depreciation of the yuan since August by as much as 3 percent has increased the price of expensive imports, such as seafood products.
D&D Seafood Corporation, a lobster exporter based in the United States, has had to adjust to the new economic environment. The company has been in China for seven years and now plans to switch its focus from "live lobsters", which make up 70 percent of its business, to frozen ones.
"Frozen lobster now make up to 30 percent of our operation," Robin Dopico, president of the company, said at the Expo. "The price is more stable and it helps us withstand currency fluctuations amid a cooling global economy."
China accounts for about 70 percent of D&D's overseas business, so Dopico is concentrating on the long-term picture.
Even so, his company and the rest of the industry face issues that cannot be ignored. The government's anti-corruption drive has hit the luxury consumer market, including sales of upmarket seafood produce.
"We suffered a 20 percent drop (in business so far this year compared with last year)," Dopico said. "But for foreign seafood exporters like us, this was a piece of good news.
"We can move back from a 'corrupted market' to a realistic market and get a better idea of real prices instead of artificially high ones."
Other companies have also felt the pinch.
Zoneco Group, a Chinese wholesale company based in Dalian, and specializing in scallops, sea cucumbers and abalone, has reported a 30 percent drop in business this year compared to 2014.
Domestic sales account for 70 percent of the firm's revenue.
"Not only are domestic sales shrinking, but prices are going down," Jackie Yin Youchun, managing director at Zoneco, said at the Expo in Hong Kong.
"We are forced to shift our focus to the middle-end market as well as roll out some cheaper products for the mass market."
To add to the company's problems, the overseas market in scallops is stagnating, especially in the US and Europe, while export payments can take up to two months.
Rising labor costs in the seafood processing industry are another negative factor, making banks more wary about increasing credit lines, and forcing small companies out of business.
"As a large market player, we are still struggling and striving in the belief that we will get through the bad times so that we can vie for a place in the market when the good times return," Yin said.
In a move to boost revenue and sales, Yin said he is turning to the country's booming e-commerce marketplace after launching an online store on Alibaba Group Holding Ltd's Tmall platform.
But foreign seafood exporters, such as Cooke Aquaculture and D&D Seafood, are playing a waiting game before joining the e-commerce rush in the country.
"We are obviously willing to ride on the e-commerce wave to beef up our presence in China, as long as some platforms can prove to be sophisticated partners," Robin Dopico said.
