There’s been an explosion in the number of entrants to China’s seafood distribution sector, according to research produced by Qi Cha Cha, a consultancy providing information on corporate credit worthiness in China.
The number of firms registered as trading seafood increased by 647 percent between 2010 and 2019, from 50,000 to 377,000, according to the credit research agency.
Additionally, there’s been a sharp increase in the number of firms providing cold chain services for seafood distribution, according to eMarketer. The market research agency recently released a report that also shows less than five percent of Chinese seafood exports and imports are covered by export finance. China’s seafood market remains highly fragmented, reducing its attractiveness to private equity, even though new players have piled into the imported seafood segment to target what’s seen as a lucrative trade.
While there’s been a proliferation in the number of firms selling or distributing seafood, the reverse has been the case in Chinese online commerce, with the post-COVID environment set to benefit behemoths like Alibaba, which have set their sights on consolidating market share at the expense of smaller rivals. The eMarketer report predicts the top three e-commerce players in China will command 83.6 percent of the market in 2020, compared with 80.3 percent last year.
Alibaba – which controls platforms like Tmall, Taobao, and online-to-offline platform Hema Fresh – held 55.8 percent of the retail e-commerce market in 2019 and will add 0.2 percent to that this year, even though growth in revenue will increase at a slower rate than previously forecast (16.5 percent instead of 18.7 percent), according to eMarketer, which predicts a similar trend for second-placed JD.com and third-placed Pin Duo Duo.
Retail sales in China will shrink by four percent this year, despite retail ecommerce growing by 16 percent, representing the first contraction for Chinese retail since the early 1980s.
“Like in many other countries in 2020, China’s retail e-commerce performance is a tale of two countervailing coronavirus-related outcomes,” eMarketer analyst Ethan Cramer-Flood said.
While the coronavirus lockdown drove an upswell in Chinese e-commerce, it’s not clear if high value items like imported seafood will be impacted by the uncertain economic outlook in China, Cramer-Flood said.
“On the one hand, e-commerce jumped because China’s residents were forced to remain indoors for long stretches and could not go to brick-and-mortar stores,” he said. “On the other hand, e-commerce has been constrained by recessionary pressures, negative consumer confidence, and a short-term move away from luxury items and discretionary purchasing, which form the core of many ecommerce platforms.”
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