China shrimp exports slow, focus shifts to domestic market

Published on
January 22, 2015

China’s leading shrimp-producing region reported modest growth in exports for 2014, as companies sought to increase sales in the domestic market. Seafood exports increased 1.3 percent year-on-year in value terms to USD 988 million (EUR 867 million), and in volume terms of 120,280 metric tons (MT) last year, according to official data released by the city of Zhanjiang in Guangdong Province. The region is home to leading processors and producers of shrimp and tilapia, such as export-focused Guolian Aquatic.

Shrimp exports at 58,880 MT were worth USD 688 million (EUR 603 million) while tilapia shipments at 58,500 MT were worth USD 261 million (EUR 229 million). Curiously, there was no data given for year-on-year comparisons in either category.

“The outlook [for the city’s seafood exports] is comparatively rosy, despite difficult international trading conditions,” according to a statement issued by the Zhanjiang customs bureau.

Meanwhile, Guolian has issued an advisory to investors that profits for 2014 are expected to hit between CNY 140 to CNY 190 million (USD 22.5 to 30.6 million; EUR 19.7 to 26.8 million), though no final figure has yet been announced. The figure looks modest next to the CNY 200 million (USD 32.2 million; EUR 28.2 million) in profits announced by the company for the first half of 2014. The brief statement from the firm referenced restructuring of subsidiaries as a reason impacting on final figures for earnings and profits later this month.

As for the city of Zhanjiang itself, while the United States remains the top destination for exports, there’s been continued growth in sales to Southeast Asia, Africa and the Middle East. While USD 388 million (EUR 340 million) worth of exports went to the United States, the Association of Southeast Asian Nations (ASEAN) region bought USD 110 million (EUR 96.4 million) worth. The Middle East accounted for USD 11 million (EUR 9.64 million) though this represents a jump of 275 percent on the previous year. Shipments to Africa rose 25 percent to USD 36.19 million (EUR 31.74 million).

Trade data looks set to matter less to Guolian as the firm seeks to drive sales in the domestic market through new brands and marketing aimed at younger consumers in particular. This is the company’s way of insulating itself against volatile western economies and currency fluctuation. Company CEO Li Zhong has set a very ambitious goal of increasing domestic sales to between 40 and 50 percent of overall sales by the end of 2015 and has enlisted Chinese pop stars for endorsement campaigns.

The firm is listed as a model enterprise by the city’s influential General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). Authorities have taken credit for continued growth in Zhanjiang’s exports: This is due to new AQSIQ “demonstration zones,” which guide local seafood firms to higher standards in “food safety, product innovation and scale of production,” claimed the bureau in a statement on the latest data.

Located in Guangdong province near the border with Guangxi province — both major producers of shrimp and tilapia — Zhanjiang has leveraged its geographical proximity to Southeast Asia by establishing a huge wholesale trade center that sees shrimp from Vietnam and fish from Malaysia and Indonesia sold alongside mostly processed seafood headed from China into ASEAN, an economic bloc that enjoys a a free trade deal with China.

Guolian is also buoyed by increased domestic consumption of higher-end species like shrimp, though like many processors it faces increasing challenges in securing adequate supplies with Guolian dispatching staff to Ecuador, India and Venezuela to secure supply. With a market capitalization of CNY 3.4 billion (USD 547 million; EUR 480 million) and a staff of 4,000, Guolian’s efforts to build the domestic market will have a big impact on how the firm develops.

The firm’s Long Ba line of frozen shrimp products has been successful but there is so much more potential given China’s frozen food market was worth CNY 64.5 billion (USD 10.3 million; EUR 9.1 million) in 2013 and is growing at an annual rate of 30 percent, according to data from retail market research group Fung (Hong Kong) and Kantor. Chinese average per capita consumption of frozen foods remains, however, only 5 percent of the U.S. average and 10 percent of the EU average.

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