One of China’s leading tuna fishing firms, Shanghai Kaichuang Marine International today disclosed net profits of CNY 65.4 million (USD 10.7 million, EUR 8 million) for the first half of 2013, a year-on-year drop of 34 percent. Revenues at CNY 422.2 million (USD 69 million, EUR 51.5 million) were up 5.6 percent year-on-year. The deepwater specialist firm blamed higher operating costs for its lower profitability.
Kaichuang’s operating costs of CNY 401 million (USD 65.5 million, EUR 48.9 million), were up 21.5 percent year-on-year due to higher fuel and labor costs. Tuna fish accounted for 83.8 percent of its total sales, yet operating costs for tuna production increased by 64.8 percent, squeezing margins by 11.9 percentage points to 33.5 percent. Kaichuang’s profits were also dented by a CNY 17 million (USD 2.8 million, EUR 2.1 million) loss it booked on the sale of a tuna fishing vessel bought in 2007.
Intriguingly, Kaichuang also reported a shift to domestic sales, away from its traditional reliance on overseas tuna buyers. Kaichuang in the first half of 2013 sold CNY 243 million (USD 39.7 million, EUR 29.6 million) worth of tuna, down 16.8 percent from the previous year. International sales still accounted for 58 percent of its total revenues, whereas 42 percent or CNY 174 million (USD 28.4 million, EUR 21.2 million) (up 78.7 percent from 2012) worth of tuna was sold to domestic clients.
Though small, the Chinese tuna market is growing due to an embrace of Japanese style dining. Last year China imported 6,193 metric tons (MT) of canned tuna valued at USD 30.4 million (EUR 22.7 million), up 19.1 percent in volume and 32.6 percent in value compared with 2011, according to the Food & Agricultural Organization. Thailand was the leading supplier but its shipments to China declined by almost 5 percent while Korean firm Dongwon F&B recently established a partnership with state-owned conglomerate Chinese Bright Food Group to market canned tuna in China.
The emergence of a Chinese deepwater fleet has been facilitated by the country’s rise as the world’s top shipbuilder. Kaichuang operates China’s first self-designed large-scale tuna purse seiner “Jin Hui-8” — most of China’s vessels are second-hand ships imports. Designed by the Dalian Fishing Vessel Company, the Jin Hui 8 is 75 meters in length and 12.8 meters in width, with a hold capacity of approximately 1,100 MT.
While it describes itself in promotional material as a private firm Kaichuang — which was previously involved in making marine automation systems — enjoys a close relationship to local government. Its largest shareholder is Shanghai Fisheries General Corp, a fully owned subsidiary of the Shanghai city government’s State Owned Enterprises Supversion and Administration Commission. Like China’s other deepwater fishing firms, Kaichuang enjoys generous government subsidies for fuel and vessels.
