A Hong Kong-based seafood firm is bulking up aquaculture and fishing operations in Cambodia and Mozambique to supply seafood to catering customers in China.
China Ocean Group Development Co. (known previously as China Ocean Holdings Development Co.), which is listed on the Stock Exchange of Hong Kong, saw net profits for the year ending 31 March fall sharply to HKD 26.7 million (USD 3.4 million, EUR 2.93 million), compared to HKD 46.5 million (USD 6.04 million, EUR 5.1 million) in the same period last year. This is on revenues of HKD 826.6 million (USD 107.4 million, EUR 90.92 million), compared to HKD 960.5 million (USD 124.8 million, EUR 105.6 million) in the financial year of 2019.
The figures reflect rising costs as the company hires staff and builds its offshore aquaculture facilities in Cambodia and Mozambique, but in a statement to investors this week company CEO Liu Rongsheng said he sees a profitable future for the firm’s business model.
China Ocean, which operates its vessels through a mainland China subsidiary, enjoys a Chinese tax break for fishing firms bulk up its distant-water fishing operations and, in turn, supply its supply chain management operations companies. Fishing firms are exempted from enterprise tax under Chinese law.
The company’s results were released this week after delays in completing audits at its Mozambique operations. The company, which is registered in Bermuda, has been following a strategy of vertical integration. It has invested into aquaculture facilities in Cambodia in order to supply catering customers in China and Hong Kong.
Company accounts show that the firm has HKD 405.9 million (USD 52.7 million, EUR 44.6 million) worth of “construction in progress.” The company in August 2019 announced its subsidiary, Shenzhen Jinyutang Fishery Group Co., had signed a deal with China Merchants Heavy Industry (Shenzhen) Co., Ltd to build three “intelligent fishery aquaculture production platforms,” which will be located off the Cambodian coast.
The company also claims to have 300 direct sales “Haifu Mozambique Frozen” shops selling seafood, including lobsters sourced by China Ocean subsidiary in Mozambique.
Last year, the company has signed a deal with state-owned infrastructure giant China Road and Bridge Corporation to develop the Zhongmao Marine Integrated Industrial Park, which will include seafood processing and canning plants.
China Ocean’s annual report makes no reference to the risks to its business caused by overfishing or a shortage of fish. This is unusual, sustainability reports that reference large influxes of foreign trawlers damaging the sustainability of local stocks in Mozambique and elsewhere in African waters.
Earlier this month, five new vessels were dispatched to Mozambique by Guangdong Xie Sheng Distant Water Fishing Co., which said in a statement that the launch was in keeping with the Chinese government’s Belt and Road Initiative to expand China’s global footprint.
