China’s shrimp industry has pinned its waning hopes at a revival this year on the country’s autumn holiday season, which traditionally results in a boost in nationwide seafood sales.
This year’s mid-autumn festival in China overlaps with the country’s annual National Day holiday, leading to a longer holiday season than usual.
Any boost in sales would be welcome news to firms like Guolian Aquatic, which has blamed falling shrimp prices for the CNY 186.5 million (USD 26.1 million, EUR 24.2 million) loss the company recorded in the first half of 2023, compared to a profit of CNY 32.8 million (USD 4.59 million, EUR 4.26 million) in the same period last year.
“The mid-autumn festival will be the best indicator of the situation,” said Pablo Resnik, the head of business development at seafood trading firm Roda International. “It will be five to seven days [after the holiday] before … we will know if the consumption was as expected or not.
Chinese shrimp firms are facing a supply glut, labor issues, high inflation, and weak demand, along with a struggling processing sector.
“It’s very clear there is oversupply,” Resnik confirmed. “It can be seen from the import volumes.”
For domestic producers, foreign competition is starting to bite, according to Peter Fleming, the CEO at Singapore-based LIM Shrimp. He said the supply surplus is the biggest issue facing the country’s shrimp sector, saying it’s currently “not profitable to produce in China” due to oversupply from Ecuador, which has resulted in lower prices globally.
Kevin Fitzsimmons, an aquaculture specialist and professor of environmental science at the University of Arizona, said he believes Asian shrimp producers are “acutely aware of Ecuador taking market share and are having lots of discussions on how to compete.”
“The drive to increase intensive farming is being questioned when Ecuador seems to be succeeding with semi-intensive production,” he told SeafoodSource. “But I think the consensus is that Ecuador is a bit of a special case for several reasons. For one, the industry is very mature there. They have long established farms with well-trained and experienced technicians and farm operators. They are acutely aware of carrying capacity, quality broodstocks and [post-larvae], high-quality feeds, and maintaining water quality.”
The larger scale of Ecuadorian farms provides economy of scale, giving Ecuadorian producers an advantage over Asian farms, which depend on higher numbers of small farms and contract farming, he told SeafoodSource.
“Asian industry leaders need to redouble efforts to inform farmers of proper methods and more vocally scold vendors who tout low-value, poor-quality inputs,” Fitzsimmons said. “There are no shortcuts to shrimp-farming success, and those who make ‘get-rich’ claims to Asian farmers need to be drummed out. I have no doubt that the strong and smart Asian shrimp farmers will succeed. No doubt that more marketing at all stages will help producers with larger market demand to everyone’s benefit – domestically and internationally.”
Echoing the sentiment about the necessity for marketing and higher-quality products was Jia Xiao, the founder of Nongben Consulting and a branding expert in the Chinese agrifoods sector. During a speech at the recently held China Factory Shrimp Farming Conference, Xiao said that branding and value-added processing are key to improved profitability for Chinese shrimp firms.
“Chinese shrimp enterprises need to create better brands and, thus, charge better prices,” Xiao said.
There are other challenges facing Chinese shrimp processors, severe enough that a single holiday season may not be able to rectify the situation.
According to Landy Chow, manager of the Guangzhou office of seafood trading company Siam Canadian, Chinese factories are facing a tougher situation than those operating in India and Vietnam due to Chinese workers’ wages being “much higher than other countries, while raw material prices are also higher than other countries.”
“The tax barriers for Chinese packers are [also] more serious,” Chow said. “Chinese shrimp going to the U.S. face anti-dumping tariffs. Chinese shrimp going to Europe are also subject to duty, while Vietnamese factories are paying zero duty, as Vietnam has a free trade agreement with the E.U.”
Despite the obstacles, Chinese companies continue to invest in shrimp production capacity. The giant conglomerate Tongwei has opened a USD 165 million (EUR 155 million) recirculating aquaculture system (RAS) facility in the northern coastal city of Dongying capable of producing 2,000 metric tons of shrimp per year. Other conglomerates like Charon Pokphand, Guangdong Evergreen, and Guangdong Haida – all producers of feed and shrimp – are also adding capacity in China, possibly signaling consolidation of a sector that has struggled to compete as well as peers in Ecuador and other parts of Asia.
Photo courtesy of chinahbzyg/Shutterstock
