China’s slowing economy forces seafood firms to adapt fast

Seafood market in Hong Kong.

Two Hong Kong-listed seafood firms have blamed China’s ongoing economic woes and the country’s ban on Japanese seafood imports – both issues of which have unclear resolutions as 2024 begins – for tighter margins and losses that have forced them to adapt quickly.

Revenue at import investment business Ocean One, which sources seafood for Hong Kong and mainland Chinese customers, dropped 3.1 percent to HKD 240.6 million (USD 31.2 million, EUR 28.8 million) for the six months ending 30 September 2023, “primarily due to a decrease in sales of products such as Canadian snow crab, king crab legs, seasoned salmon fish roe, flying fish roe, and roasted eel,” the company said in a recent financial results release.

In the same six-month period, the company’s net profits decreased over HKD 8 million (1.02 million, EUR 935,720) year over year, totaling HKD 21.4 million (USD 2.78 million, EUR 2.56 million).

Among other factors, Ocean One has blamed the 24 August 2023 ban China placed on Japanese seafood imports – stemming from the controversial release of wastewater from the Fukushima nuclear power plant – for denting demand for salmon and other species traditionally used in Japanese dining.

Epitomizing those claims are China-based Japanese dining chains like Momtaro Sushi and Sushi Hanzo, which have both issued statements stressing they are no longer stocking Japanese seafood ingredients.

“Consumers may lose their appetite for Japanese food due to concerns in food safety,” Ocean One noted in a recent earnings report.

Ocean One has also pointed to customers trading down on the types of species they buy as reasoning to explain a tightening of its average profit margins to 14.5 percent, compared to 17.6 percent for the six months ending 30 September 2022.

“Decreases in gross profit and gross profit margin were mainly due to the selling of various low-margin products such as smoked salmon, black cod, Canada spot prawn, Japanese sashimi scallop, Arctic clams, and Greenland cockle during the period, together with a higher proportion in sales to mainland China customers at lower margin owing to bulk orders and shipment in containers,” Ocean One said.

China Shenghai Group is another firm that has been hit hard by China’s ominous financial landscape, as it announced recently ...

Photo courtesy of Shutterstock/estherpoon

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