Chinese shrimp specialist Zhanjiang Guolian Aquatic Products has announced the annulment of a memorandum of understanding between it and a Saudi sovereign investment fund.
Last summer, Guolian announced a USD 560 million (EUR 515 million) tie-up with the Saudi Arabia Public Investment Fund (PIF) that would have given it access to various lines of credit. PIF, which in June 2023 acquired a 42 percent stake of National Aquaculture Group (NAQUA), a major Guolian supplier, is flush with cash from Saudi oil sales on prices driven higher by Russia’s invasion of Ukraine.
Guolian made the termination announcement in a note to investors, saying the two sides had been unable to agree on terms.
“After the signing of the agreement, the two parties actively communicated on follow-up cooperation, but so far, the two parties have not formed any substantive formal agreement; now, based on the actual situation, both parties have agreed to terminate the agreement through consultation,” it said in a 20 March 2024 announcement.
On 30 January 2024, Guolian announced 2023 forecasted losses between CNY 360 million and RMB 480 million (USD 50 million and USD 66.7 million, EUR 46 million and EUR 61.4 million), up from a loss of CNY 7.6 million (USD 1.1 million, EUR 972,000) in 2022. It reported operating income between CNY 4.9 billion and CNY 5.3 billion (USD 680.6 million and USD 736.2 million, EUR 626.7 million and EUR 677.9 million) and made an asset impairment loss provision of CNY 245 million (USD 34 million, EUR 31.3 million). Sunnyvale Seafood Corporation, Guolian’s U.S. subsidiary, suffered an operating loss of approximately 70 million (USD 9.7 million, EUR 9 million) in 2023.
“In 2023, the aquatic products industry was affected by complex and changeable domestic and foreign macroeconomic situations and changes in downstream consumer market demand,” it said. “Affected by the epidemic, market competition has become increasingly fierce, and the market conditions for vannamei shrimp, crayfish, etc. have continued to be sluggish, and product sales have declined.”
Guolian’s share price, though, recently received a boost after the company received an award for innovation at the International (Foshan) Processed Foods Conference in the southern city of Foshan. Co-organized by local government in Guangdong province and the Hurun Wealth Report, a magazine known for tracking Chinese elites, Guangdong Agriculture Ministry officials presented an award to Guolian for its innovation in launching new processed seafood meal products. Guolian has been marketing a growing range of processed seafood under its Xiao Ba Long brand.
Guolian remains a supplier of crayfish to KFC and the Red Lobster restaurant chains, though it shifted away from shrimp farming in 2022 in favor of value-added processing.
Guolian Marketing Deputy Head Yang Xiaogang said at a China Catering Association conference recently that while its shift in focus to processed meals and precooked products was a net positive for the company, increased competition from imitators had become a major challenge. Legions of copycat competitors have piled into the processed seafood and ready-meal sectors and have flooded the market with imitations of the company’s products, Yang said.
