Developing local demand for frozen fish remains a major undertaking for the mainly export-oriented South China fisheries industry. Given China’s limited natural resources, namely freshwater and fishmeal, the once export-oriented aquaculture industry in South China will need transform into a domestic supplier in order to survive the economic slowdown. Then, morph into an importer of aquatic products as China’s domestic demand outpaces that of the rest of the world.
Overview of China’s aquaculture: South China’s coastal regions have an advantage in producing for the domestic market. Abundant freshwater resources and transportation infrastructure have positioned south China as the largest aquatic production base in China. In 2012, 80-85 percent of China’s exported tilapia was farmed in Guangdong, Fujian, and Hainan provinces. Wild caught production, including overseas sourced is not expected to rise in the future due to ecosystem management policies limiting the annual size of these catches. U.S. aquatic exports to China increased 58 percent to over $1 billion in the first ten months of 2012, as the United States has practically caught up China’s aquatic trade deficit (with the United States) of $1.1 billion. Aquaculture is expected to continue growing, albeit at a somewhat slower pace than in previous years. In 2011, new aquaculture areas increased five percent over the previous year, a significant drop from a 14-percent increase in 2009. There are no new facilities being built though many companies in production regions such as Sanya, Hainan; Maoming and Shantou, Guangdong; and Guangze and Fuding, Fujian consolidation in the export-oriented sector is a leading industry trend.
Internal growth: Although China is a large aquatic product exporter, it gradually became a major importer of aquatic products and this has been evident for some time in South China. Since the 1990’s, China has been exporting processed farmed aquatic products such as corn bread shrimp and tilapia fillets to the United States, Europe, Japan and Russia. However, in recent years, some export oriented processors have started to promote imported aquatic products in the domestic market. Though some traditionally export-oriented aquatic varieties such as catfish (basa), shrimp, eel, and tilapia are now being marketed to local food service, central kitchens, food processors, and restaurant chains; the frozen fish concept, is not readily catching on with local consumers. This is not to say they reject the products altogether, but do not consider it a “real” seafood culinary experience yet. According to a tilapia processor in Sanya’s Dongji Aquatic Products Company, their sales to Europe have been cut in a half since 2011, and some of their contracted fish farmers have become reluctant to supply for export markets because purchasing prices keep going down and many are being outbid by South East Asian competitors. Additionally, farmers are now more willing to sell live fish varieties favored by buyers in local markets. Dongji for example, has also looked into developing processed tilapia fillets products suited for Chinese consumers’ palate though sales have not yet caught on.
Zhangjiang’s (Guangdong Province) Guolian Company is Mainland China largest shrimp exporter by value and volume. Beginning in early 2012, prior to the Chinese Lunar New Year they began to air television commercials promoting frozen packaged shrimp and tilapia products in many major cities in China. Guolian intends to change the way local consumers and the food service industry’s view seafood purchasing and consumption. The Guolian advertisements emphasize convenience, price and above all, safety, quality, and taste. So far, none of the other major seafood processors in China have promoted frozen fish in a similar scale. According to our conversations with Guolian, this is a long-term strategy that has not yet proven overwhelmingly successful in the short-term.
Relying on seafood imports: With a cleaner environment and more affordable feed and labor costs, some of China’s large fishery owners believe investment from the local sector into contracting fresh water carp and sardine production from overseas suppliers will be the next trend. According to the chairman of the Guangdong Provincial Aquatic Trade Association the United States and European seafood markets will face increasing competition with China to source seafood products. Since 2010, China began importing processed aquatic products from Thailand, Vietnam and South America.
Similar to Japan and Korea, seafood importers believe in time local consumers will become more receptive to chilled and frozen aquatic products. In Chinese culinary tradition, most aquatic products must be seen alive before being cooked. Although local consumers claim that the reason for this is because fresh seafood has better taste, this tradition also stems from lack of trust as seafood could have been dead, sick, or stored for a long time. When surveyed three years ago at a tasting event in Qingdao, in-country representatives from the Alaska Marketing Institute uncovered that most local buyers could not tell the difference better an imported farmed and wild ocean caught salmon. It is widely known by most importers that wild salmon has 20 percent higher protein content, no artificial coloring, and anywhere between 30-50 percent less fat than wild salmon. However, despite being fattier, farmed salmon has considerably less Omega-3 fatty acids. Whether local consumers begin to consider nutritional facts or social positions over their traditional eating habits, is hard to predict in such a large and diverse market. However, even in South China representing the largest demand for higher end seafood imports, if demand does grow, significant improvements to cold chain logistics are essential as local consumers will be relying on supermarkets for most of their food shopping instead of the outdated wet markets. An increased amount of chilled or frozen ready-to-cook packages of aquatic products are how supermarkets are beginning to promote these products to households. How consumers respond to these new product formats will determine the future transformation of China’s farmed aquatic industry from being an exporter of aquatic products into an importer.
Consumer Power: U.S. and European consumers to pay great attention to whether the seafood they are consuming follows international sustainability practices, and as a result, large seafood buyers in the States such as Wal-Mart, Ahold USA, Darden Restaurants, McDonald’s and KFC have required their suppliers to provide sustainability certification for some ocean caught aquatic products they market. For example, KFC (including its outlets in Mainland China) claims their fish burger, using cod fish fillets are produced under sustainable fishery standards. Dalian’s aquatic giant Zhangzhidao also claims to follow such standards; the company mainly sells wild-caught and high-end seafood such as sea cucumber and abalone. The State Administration of Ocean and Fisheries, an independent government agency under the State Council, is the lead government body managing sustainable fisheries issues, but does not currently offer its own certification program. For now it appears the move to attain a sustainable fisheries certification by local companies aiming to promote domestically is merely a marketing ploy to improve brand image. South China aquatic producers interested in exporting value-added products to the Hong Kong market might find themselves having to register for some of these certificates before retailers there accept their products.
Popular international sustainability certifiers: Among the top two certifiers for sustainable fisheries practices in South China are the Marine Stewardship Council (MSC) and the Aquaculture Certification Council (ACC). Known by its distinctive blue colored “eco-label”, the MSC is the world's leading certification program for sustainable seafood. MSC’s popularity appeals to ecological consumer groups, while ACC goes a step further to certify social, environmental and food safety standards at aquaculture facilities. ACC applies the Global Aquaculture Alliance Best Aquaculture Practices standards in there certification system that combines site inspections and sampling. ACC’s certification also encompasses a thorough review sanitary controls and traceability. Larger aquatic producers in South China are registered with both certifiers, although they claim routine inspection requirements and registration fees are a sizeable and costly investment.
U.S. facilitates the growing movement toward sustainable fisheries in South China: In recent years, the USDA/Foreign Agricultural Service (FAS), American Soybean Association – International Marketing (ASA-IM) and USDA/Animal and Plant Inspection Service (APHIS) have offered training seminars to local fish farmers about ecologically-friendly farming technologies which can reduce or eliminate waste water discharge into the environment. The U.S. soybean industry conducted research to develop soy protein as an increasingly viable option for sustainable aquaculture feed. New breeds of soybean meals will have higher protein content (57-64 percent) and containing less inhibitors for growth of fish/shrimp. ASA-IM has also been cooperating with local aquaculture research institutes, technical extension services, feed mills, and aquatic product farmers to conduct subsequent feed trials. Preliminary data has shown soy protein concentrate (SPC) performs better as a replacement for traditional fishmeal in diets for many aquatic species.
Chinese Consumers: At present moment, local consumers care more about food safety and prices than sustainability practices. The average consumer may not understand entirely what is meant by sustainability or the role they can play as consumers purchasing products from sustainable fisheries. It remains uncertain when consumers will care about this topic, although the issue is dear to some Fujian fishermen. On September 14, ATO Guangzhou Director and staff met with members of the Fujian Provincial Seafood Trade Association to discuss the issue of sustainability amongst other topics. A member from Juizhen (yellow croaker fisher) said that in the last three years profitability of coastal fishing disappeared and attributed the problem to prolific toxic inorganic industrial contaminants being dumped into the open sea. Even with market prices soaring ten times exponentially to between $570-650 (3,500-4,000 RMB), this fisherman claims the yellow croaker catch is completely depleted. He now fishes for mackerel, although the smaller-sized fish and lower yields result in less profitability. In Hainan, Post met with the Provincial Fisheries Research Institute who claimed the lack of profitability in local coast fisheries was more impact of increased labor and fuel costs, but surprisingly, the issue of sustainable fisheries or pollution was not raised during Post’s discussions with Mr. Chen Jiming.
March 2013
