Seafood supplier-online retail partnership a trend in China

A major Chinese seafood processor has signed a deal to supply a leading online retailer directly with seafood to meet growing demand among middle-class consumers.

Zhejiang Ocean Family (also known as Dayang Shi Jia) has announced a “strategic partnership” with Womai.com, one of China’s leading ecommerce sites. The new deal has the potential to “shock the whole industry” and will bring “new vitality” to China’s seafood sector, Ocean Family founder and CEO Yue Xiang told journalists at a lavish press conference at which journalists were treated to a seafood meal and the carving of a giant tuna.

Under the deal — for which no financial data has been disclosed — the Hangzhou-based Ocean Family will conduct processing and packaging exclusively for Womai. While Ocean Family claims in its statements that it’s the biggest tuna canner and seafood processor in China (a claim that may be disputed by other firms) the deal appears to be focused on imported seafood, including tuna but also shrimp, crab, abalone and lobster.

Announcing the deal, Yue Xiang pointed to huge growth in the purchasing power of the “ordinary” Chinese consumer, pointing out that seafood products previously off limits to the masses have now become easily accessible. He credited online commerce with helping to open up a market that had hitherto been the preserve of high-end restaurants.

Online retailers have become the key sales avenue for imported and high-end seafood as the government’s ongoing purge of official corruption squeezes consumption at luxury eateries. Ocean Family becomes the latest seafood firm to link up with an online retailer: Shandong Homey has a partnership with Jingdong while Oriental Ocean has a similar distribution deal with Yihaodian, the online grocer controlled by Walmart. This trend is happening as both online and traditional retailers have sought to increase their logistical capacity, building cold chain warehousing and delivery fleets in particular.

Ocean Family has become well acquainted with tuna since it has a separate cooperation deal with Japanese conglomerate Mitsubishi to process and distribute the latter’s seafood for the Chinese market, where demand for sushi-style cuisine continues to grow rapidly.

Womai.com has said it will use USD 100 million (EUR 87.6 million) in private equity funds raised last year to widen its range of imported food. Broadening the company’s seafood offering is obviously part of CEO Zhao Pingyuan’s thinking in signing the deal with Ocean Family.

Importers of seafood into China will be watching carefully as leading local supermarket operator Sun Art expands its www.feiniu.com online site to new forms of fresh food categories: another recent trend in China is the growing demand in supermarkets for fresh produce.

Womai is owned by the giant state-run Cofco Corp., which formerly held the monopoly on imports of grains and other foodstuffs into China. Ocean Family meanwhile is headquartered in Hangzhou, the wealthy coastal city also home to the headquarters of Alibaba, the e-commerce giant that many credit with revolutionizing e-commerce in China with its B2B site Alibaba and B2C site Taobao.

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