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Indonesia badly wants to build its sales of value-added product in China, moving away from a trade that’s dominated by shipments of whole-round product. But it’ll be a hard slog, conceded a senior Indonesian fisheries official, speaking to SeafoodSource in China.

“It’s very difficult to compete with China…we have to study China,” said Machmud Machmud, deputy director for foreign market information and analysis at the Ministry of Marine Affairs and Fisheries.

The ministry will be taking buyers to visit Indonesian processors during an international Indonesian Seafood & Processing Expo planned for November 2014. The expo, Machmud said, is part of a government priority of nurturing a fragmented, small-scale processing industry into a regional player. “We have a program of supporting our processing industry and trying to grow this industry. Processing in Indonesia is dominated by small and medium sized businesses and we’re hoping to increase our exports of value added products rather than just raw materials,” he said.

Examples of potential products include shrimp balls and fish balls as well as breaded fish and crustaceans. Salmon ball and fish tofu and prawn balls are among the packaged offerings sold by the Cedea brand produced by Cedea Seafood, which is currently seeking Chinese customers. Machmud said the ministry also plans to increase Indonesian exports of pre-cooked tuna.

Indonesian seafood suppliers have been squeezed on pricing of whole round fish shipped here. The influx of suppliers seeking sales in China has hurt pricing for suppliers of whole fish in the country, according to Hadi Wijaja, head of Bahari Biru Nusantara, a Surabaya-based seafood exporter selling Spanish mackerel and Ribbonfish, among other species, in China.

“China only wants whole round but we’re trying really hard to promote our processed products,” said Wijaja. He’s hoping rising Chinese incomes will create a market for snapper filets, for instance. Wijaja says part of the difficulty in introducing and promoting new products in China is that to the Chinese wholesalers are worried that any product they promote and distribute will ultimately be copied and taken up by rivals. Only three Indonesian firms showed their wares at the just-concluded seafood show in Dalian, suggesting a lukewarm attitude. However a presence by the Indonesian Fisheries Ministry was aimed at drumming up interest in the seafood expo being organized next November in Bali.

Indonesian firms are caught in a double bind, said Wijaja, since China continues to focus on sourcing raw materials only, while Chinese firms seek to build their own value-added business. Cracking China remains difficult because of an ingrained Chinese preference for Western value-added product and western-style value added products. Wijaja believes there’s an ingrained bias against Asian suppliers of mainly raw materials in the minds of Chinese buyers. “For example if you cut ribbonfish into particles they [Chinese buyers] will assume it’s of low quality.”

The absence of any major Indonesian food brand in the Chinese market makes the challenge difficult. The only solution, says Wijaja, is to continue increasing the quality of Indonesian products. He also sees hope in the emergence of major Indonesian players, among them CP Prima, an Indonesian subsidiary of the Thai-based CP conglomerate, which focuses on shrimp.

Indonesia is a major source of live groupers flown into Hong Kong and south China and shipped overland northwards as far as Beijing for sale in high-end restaurants. Indonesia has a coastline of 104,000 kilometers, the world’s second longest after Canada, claim organizers of next year’s expo in promotional literature for the show. Most of the coastline is “teeming with fish” granting Indonesia “great potential” in fishery, which contributes 1.7 percent of GDP and employs 2.2 million fishermen.

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