China targets ASEAN to sustain seafood export growth

Published on
January 13, 2015

Forget seeking out western seafood buyers: Increased sales in Southeast Asia are vital to China sustaining growth in its seafood exports. That’s the view of Li Shumin, a vice minister at the department of agriculture with responsibility for fisheries, who spoke recently at a conference on generating Chinese seafood brands and strategies for exports and online sales in Association of Southeast Asian Nations (ASEAN) countries.

“China in 2013 for the first time saw its seafood exports surpass USD 20 billion (EUR 16.96 billion) (the actual figure was USD 20.2 billion; EUR 17.13 billion) in value terms and sustaining that figure requires new markets,” said Li. “China is the world’s biggest producer of seafood but it is also its biggest consumer.”

Li addressed the inaugural International Frozen Seafood Industry Forum of Maritime Silk Road in the city of Fuzhou in China’s tropical southeast.

The remarks of the China ASEAN Seafood Exchange chairman Jiang Xiong summed up China’s goals: China wants to “create a win-win for frozen seafood companies” and “share maritime resources” with ASEAN. Chinese seafood companies should establish frozen seafood brands specifically for Southeast Asia, he told delegates.

China wants fewer maritime conflicts with ASEAN and by promising beneficial opportunities in fisheries is clearly betting that by embracing the region economically it will stifle anger over the Beijing government’s heavy-handed approach to control of the South China Sea. But it’s hard to see how ASEAN (aside from Thailand, which is home to giants like Charoen Pokphand, which sells frozen seafood in China) can really win — other than as a supplier of raw materials to China — as fisheries companies in the region lack the scale, finance or infrastructure enjoyed by China’s big aquaculture and seafood processing sectors.

Since southern China is home to the shrimp and tilapia processing trade, it’s clear that buyers for these products will have to be sought. But by embracing new markets China also heads off lower cost threats to its own processing sector. Southern China is also increasingly a hub for China’s trade with and investment in Southeast Asia. A free trade agreement between China and ASEAN allows low-tariff trade in raw materials into China and, increasingly, finished processed goods to ASEAN member states.

Charming ASEAN member states is part of a new Maritime Silk Road strategy coming out of Beijing, which seeks to tap rising consumer spending power in the region while also helping cool territorial disputes with countries in the region, which have damaged Chinese trade.

China has been especially keen to get the message out about its Maritime Silk Road: It’s not often foreign journalists get free flights and banquet invitations from Chinese government officials (who tend to view us as a threat) but the past half year I’ve had two invites for all-expenses trips to southern China. In both cases the invitation was for conferences on the Maritime Silk Road theme. One of the invites was from the Fujian provincial government (the other from the Guangxi provincial government), which wanted foreign journalists to attend the first International Frozen Seafood Industry Forum of Maritime Silk Road and view the launch of the China-ASEAN Marine Products Exchange Centre. This is essentially a wholesale center for seafood trade between China and ASEAN states.

Maritime Silk Road has become a slogan of choice over the past year among officials in China’s southern provinces like Fujian and Guangxi. They are seeking to reboot their economies to take advantage of growing prosperity in Southeast Asia while also shifting away from increasingly less profitable traditional manufacturing to new sources of growth like tourism and value-added seafood production.

Fujian is located a short boat trip across the strait from Taiwan but is also a 90-minute flight from the Philippines, while Guangxi province — a shrimp and tilapia cultivation hub — borders Vietnam.

Investment from China into the region has been central to the construction of infrastructure, which has further integrated the region, with the planned establishment of an ASEAN Development Bank by China set to continue the trend. Highways and railroad connections being built to link China’s southern cities with ASEAN business hubs like Bangkok and Singapore will ensure smoother logistics for trade, allowing Chinese processed goods to reach ASEAN consumers as easily as consumers in remoter parts of China.

China, meanwhile, has spending power. Thanks to aggressive Chinese government efforts to increase wages and social security provisions the average monthly wage in China will sit well above levels for Thailand (USD 900; EUR 763) and well ahead of Indonesia (USD 400; EUR 339.50) and Vietnam (USD 350; EUR 297) in 2018, according to projections from the Economist Intelligence Unit.

Road connections built by China into Southeast Asia allow refrigerated Chinese trucks to bring seafood back up into China. But there’s another advantage in the 15 million Fujian natives overseas: Some 12.5 million of those are spread across ASEAN countries, according to the Fujian government, meaning plenty of channels and business connections through which to sell Chinese seafood.

Given much of China’s aquaculture production and seafood processing industries are located in southern provinces, it perhaps makes sense for the country’s seafood companies to use the proximity of Southeast Asia as a driver of sales, taking advantage of China’s scale and cost competitiveness to secure the markets of these nations where domestic processing ability remains limited.

Delegates from 300 seafood companies attended the conference in the Sheraton hotel in Fuzhou, with the United Nations Food & Agriculture Organization and the State Council (China’s cabinet) research office also represented. China wants to make the recent gathering in Fuzhou an annual forum for the China-ASEAN seafood trade. This could mean some more junkets for foreign correspondents in Beijing who wish to explore the Maritime Silk Road.

Want seafood news sent to your inbox?

You may unsubscribe from our mailing list at any time. Diversified Communications | 121 Free Street, Portland, ME 04101 | +1 207-842-5500