China’s processing industry is slowly consolidating, but there remains a huge amount of overcapacity, according to a research report on the industry.
The in-depth report on the sector by Qianzhan, a Shenzhen based business research consultancy, also found there’s been an increase in value of China’s seafood processing to the point that it’s now outpacing growth in volume. Total product value of China’s seafood processing sector amounted CNY 444 billion (USD 62.1 billion, EUR 57.7 billion) in 2019, up 2.4 percent year-on-year.
China processed 21.7 million tons of seafood products in 2019, up 0.61 percent year-on-year, according to the report. Seawater products accounted for 17.76 million tons, suggesting pollock and other imported feedstock remains an important input for Chinese processing companies.
The report also suggests an overcapacity of more than seven million tons, based on a total capacity of 28.8 million tons, up slightly year-on-year, though the figure also includes fish oil and other fish by products for human medical use.
The report found 13 fewer seafood processing enterprises in 2019 compared to the year previously, and 2,570 enterprises “above scale” in 2019 – an increase of 46 enterprises, according to Qianzhan research.
The Qianzhan report pointed to “increasing mechanization” at the factory level as the labor force continued to contract. A tightening of the Chinese labor market has been observed since 2018, which was the first year that the total labor force dropped since China started its economic reform in 1979. That phenomenon has in turn been driving wages higher.
Qianzhan’s research was completed prior to the current COVID-19 crisis, which has badly dented Chinese industrial earnings and exports. Government supports and tax rebates have helped processors stay afloat through the downturn, but even local government prioritization of employment and social stability may not be enough to save weaker Chinese processing firms from going under, as many lack the resources to develop new products or launch new marketing programs for domestic markets.
The Qianzhan report suggests the sector needs to increase its value-added production – what it terms “deep processing” – in order to be more resilient.
Photo courtesy of Yuangeng Zhang/Shutterstock
