CNFC Overseas Fishery Co., China’s flagship distant-water fishing firm, remains unprofitable.
The company is the listed arm of China National Fisheries Co., which posted losses of CNY 32.3 million (USD 4.9 million, EUR 4.2 million) in the third quarter of 2021, a 152.3 deterioration on the same period last year.
CNFC's recently released results showed its 2021 revenue through the end of September at CNY 336 million (USD 50.4 million, EUR 43.6 million), up 26.4 percent year-over-year. However, CNFC has recorded an overall loss of CNY 27.8 million (USD 4.2 million, EUR 3.6 million) thus far in 2021. While that figure is actually an improvement of 50 percent over 2020, the company’s debt-to-assets ratio sat at 41 percent at the end of September.
As a state-owned firm, CNFC enjoys subsidies for its fuel and vessels, as well as easier access to funding, given the fact its liabilities are effectively guaranteed by the state.
New research from investment bank Natixis reveals that, based on public financial statements, Chinese firms received RMB 323 billion (USD 50 billion, EUR 42 billion) in total subsidies in 2020 – up from RMB 224 billion (USD 35 billion, EUR 30 billion) in 2017. According to Natixis, 85 percent of Chinese firms were granted fiscal support in 2020, a reversal of earlier government pledges to reduce leverage and to make firms more competitive in market-oriented terms.
Despite their losses, Chinese fisheries firms could be enjoying higher tolerance from the central government because the seafood sector appears to have been designated as strategically important. Natixis noted the two industries enjoying the most government currently are the automotive and IT sectors, both areas in which China is seeking to establish dominance. The seafood industry could be benefitting as the result of a renewed Chinese policy prioritizing food security, long a driver of Chinese subsidies to its agriculture and fishing industries.
The increasing dominance of the state in the economy – and its absorption of stakes in private firms – have been growing trends in the Chinese economy under the government of Chinese President Xi Jinping. The percentage of loss-making firms in China surged from 12 percent in 2017 to 21 percent in 2020, according to Natixis, but their continued subsidization from the central government allows them to operate at a loss while establishing market share.
Photo courtesy of CNFC
