Big brand names could emerge in China after coronavirus reshuffle

Published on
April 7, 2020

The impact of the coronavirus is reshuffling the old order of the seafood industry in China, according to executives at numerous seafood firms interviewed by SeafoodSource.

Steven Li, CEO of Zhejiang-based Blue Snow Food Co. Ltd., which specializes in processing, trading, cold storage, and logistics, supplying seafood to around 8,000 supermarket outlets.

“The coronavirus did affect the transportation and shipment and delayed some shipments, but we are still receiving containers on schedule,” Li said. “Cold-chain logistics are still not sufficient in China. There are no big players in this area, and the service level is low and not in a good order.”

Yushu Huang, the chairman of Shanghai-headquartered Huamer Foods Ltd., which claims to be China’s “leading aquatic fresh brand operator” and counts “French toothfish” as its star product, said he wants to improve his company’s procurement management to ensure enough stocks That one of many challenges he said his company faced as a result of the coronavirus outbreak.

“Inefficient custom clearance due to staff shortage influenced shipping and logistics, which resulted in very late product delivery,” he said.

The economic fallout from the impact of the virus shows Chinese seafood firms need better engagement with customers, and more informed future planning and preparation, according to Amy Zhao, chairperson of Qingdao Spring Seafoods Co. Ltd., which operates the “Ai Chi Yu” (“Love to Eat Fish” brand). Qingdao Spring Seafoods has been a major buyer and packager of Norwegian seafood, which it markets online via JD.com, SF-Best, and Tmall, as well as via stores like Walmart and AEON across nearly 200 cities in China.

“There is an impact in the short-term, but it is going to be stable from a long-term [perspective], though there is still uncertainty,” Zhao told SeafoodSource. “From the management and operations perspective … companies’ supply chains need to be more stable while retaining a certain level of flexibility. New channels are worth trying. In addition, companies should invest more in interacting with consumers. Knowing the customers well will help companies to face the changes easily.”

Zhao said the massive shift the seafood market has undergone as a result of COVID-19 may result a few Chinese mega-brands emerging from the crowd.

“There is a different way for Chinese companies to develop a branding program, as many Chinese consumers’ primary focus on the product itself due to consuming habits. Often, they don’t have much knowledge of seafood brands. Another reason is that many companies are still in an exploratory stage,” Zhao said. “However, many seafood companies have already realized the importance of branding strategy and they have been growing customer loyalty by offering more differentiated products. With the increasing brand awareness among consumers and the hard graft of brands in many sales channels, I believe there will be more well-known seafood brands coming to the market.”

The relative lack of nationally recognizable Chinese seafood brands remains a feature of the domestic market. Even though China is the world’s biggest producer and consumer of seafood, there is no local equivalent of Clearwater or Mowi. Blue Snow boss Li said this is because fresh and bulk sales still dominate in China.

“Wet markets continue to represent the majority of sales for perishable food. So it will be a long way to go to sell packed seafood,” Li said.

Chinese seafood companies are alert to the marketing power of international firms like Clearwater, according to Huang. Chinese consumers are more guided by price and quality, “and they are less sensitive to product branding,” Huang said.

“Thus, many manufacturers did not invest in brand-building. Clearwater is well-known for its product quality, rich history, and the advantage of [the] origin of its products. Today, more Chinese manufacturers are changing to focus on product quality in order to better compete in the market,” Huang said.

In the relative absence of domestic brands, distributors have thus far been content to align themselves with the well-organized marketing campaigns of exporters such as the Norwegian Seafood Council, which has invested consistently in marketing campaigns in China for salmon and cod products over the past two decades.

While big aquaculture players haven’t been able to come up with brands, there also isn’t much appetite amongst Chinese private equity companies to invest in aquaculture and seafood production as a result of the sector’s fragmentation, Li said.

“To investors, the seafood farming and production industries are not big enough for them to make investment,” Li said.

One brand that has been breaking through in China recently is the Marine Stewardship Council. Zhao said MSC has achieved success in generating consumer awareness, though she said “there is still a long way to go.”

“The [MSC] little blue fish [logo] is getting traction, as it’s easy to be remembered and consumers will see this logo as a guarantee of sustainability,” she said.

Zhao said a small but growing number of Chinese consumers invest the time needed to research the sustainability or the origin of the seafood products they buy.

“This [research] usually happens within some specific user groups, for example, moms with kids or health-seekers do check the origin of product followed by safety, then sustainability,” she said. “We have been promoting fish for future generations.”

Eco-labels like MSC’s are still an emerging concept to most Chinese consumers, Huang said, but more education on sustainability through seminars, food tastings, and introductions by sales teams could go a long way in furthering MSC’s effort, he said.

“More and more Chinese consumers will be aware of MSC brand, but most of them look on it as a guarantee for food safety and quality,” Li said. “Some of them may also aware of the environmental sustainability.”

Looking ahead, all three leaders are optimistic about the long-term future of the Chinese seafood market. Zhao said she sees a solid market for species “for which Chinese consumers have strong preferences, like shrimp.” Focusing on proven winners like shrimp “reduces the time [required] for the public education process,” Zhao said.

Huang also sees demand for “deep-sea species” such as cod, which is commonly perceived by Chinese consumers as less tainted by contaminants such as antibiotics used in aquaculture.

Products with a taste suitable for Chinese palates and at the right price level, along with a stable, available supply are the keys for Blue Snow boss Steven Li. He has three suggestions for turning Chinese consumers on to new products.

“Big, free tasting events, restaurant experiences, and overseas travel all sway minds,” he said.

While increased overseas travel has been a factor in changing Chinese tastes, Zhao said she sees distribution and promotion channels on social media as the dominant marketing channel for the future.

“Cooking shows and science-oriented blogs on social media, social KOLs [key opinion leaders] and the emerging live streaming promotion are also very important,” she said. The point was proven recently when aquaculture and distribution firm Zoneco sold 50,000 units of its packaged scallop product in one minute by hiring influencer Li Jia Qi, who runs his “Kou Hong Yi Ge” video channel on Douyin, a TikTok-type social media platform.

Huang, however, said he thinks retail stores and restaurants are still the essential sales channels for influencing consumers and introducing new products.

“The recipes of restaurants promote their popular seafood and generate consumer interest. This, as well as the new product and category promotions in supermarkets,” Huang said. “Also, seafood tasting in-store, on-site services, and the in-store environment can stimulate sales.”

Photo courtesy of Sorbis/Shutterstock

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