In a landmark consolidation in China’s seafood corporate sector, tilapia farming firm Baiyang Industrial Investment Group has entered into a “cooperation agreement” with state-owned conglomerate Qingdao Guoxin Development (Group) Co. Ltd.
According to a note to investors on Monday, 24 February, Baiyang joined forces with Guoxin subsidiary Blue Silicon Valley Development Co. for “development of modern fishery projects.” Details of the transaction were not disclosed but the deal will entail “integrating resources,” the note said.
In December 2019, Baiyang – a key player in China’s tilapia sector – indicated it would lose between CNY 180 million and CNY 240 million (USD 25.2 million and 33.6 million, EUR 23.1 million and EUR 30.9 million) in 2019, though its seafood business remained profitable. The losses were primarily due to its expansion into industries unrelated to seafood, it said. However, the company recently revised its expected losses for 2019 so its financial pictures looks even worse, as it’s now set to lose between CNY 270 million and CNY 290 million (USD 39.1 million and USD 42.1 million, EUR 35.1 million and EUR 37.7 million ) in 2019.
Guoxin’s deal for Baiyang is built around the latter’s experience in aquaculture as well as its feed and seed units, while Guoxin’s deep pockets and access to government decision-makers could prove useful to Baiyang. Being part of a bigger entity may have been a motivating factor for Baiyang, as the firm has struggled to make its diversification strategy a success.
For Qingdao-based Guoxin, which recently bought out the salmon-farming assets of another firm, Oriental Ocean, the deal with Baiyang is further evidence it is moving deeper into China’s seafood sector, and particularly into aquaculture. With its purchase of Oriental Ocean’s pioneering on-land salmon farm, Guoxin is stepping further into China’s aquatech scene. Its new joint venture, Qingdao Guoxin Oriental Recirculation Aquaculture Co, is 70 percent controlled by Guoxin, with Oriental Ocean holding the remaining 30 percent stake through a subsidiary. And in November 2019, Guoxin contracted with China State Shipbuilding Corp. (CSSC) to build a 100,000-ton platform to be docked in the Yellow Sea.
