European exporters avoiding China due to pricing, access problems

Published on
May 17, 2022
Executives interviewed at the 2022 Seafood Expo Global say signs exist that European exporters are pulling away from the Chinese market.

There are signs that European exporters are turning away from the Chinese market, according to numerous seafood executives interviewed at the 2022 Seafood Expo Global in Barcelona, Spain in late April.

Difficulties with port backups due to more-stringent food safety checks and the threat of being banned from the Chinese marketplace if traces of COVID-19 are found on their products have scared some suppliers away from shipping to China. Others are simply realizing higher prices in the European market.

Boris Mirtchev, the director of sales at Halifax, Nova Scotia, Canada-based Ocean Fresh Seafood, said Chinese demand for the company’s lobsters has remained strong, but its exports to China will contract significantly this year due to problems clearing Chinese ports. Ocean Fresh Seafood’s lobster will primarily be directed to buyers in the European Union, the United States, and Canada, Mirtchev said. Domestic prices in North America are now better than those in China, he said. And with more than 40 Chinese cities currently experiencing various forms of lockdowns related to COVID-19, Mirtchev the situation in China is too volatile for comfort.

“We expect China will account for 20 percent of our exports this year, whereas last year and the year before, it accounted for 50 to 60 percent of our exports,” Mirtchev said.

Longer-term, Mirtchev expects his company to return to the Chinese market, and it is actively monitoring the COVID and customs issues there for signs of an easing of restrictions.

“The demand is always there,” Mirtchev told SeafoodSource.

The lockdowns and COVID-19-related dining restrictions are hurting demand from China’s hotel/restaurant/catering (HORECA) sector, which plays an outsized role in the country’s overall seafood market compared to Europe, where retail is more influential. Adding to worries about local buying power, the local currency has come under serious pressure in recent weeks. The Shanghai composite index declined by more than 10 percent during the first quarter, with the portfolio outflow adding to depreciation pressure on the renminbi. Chinese policymakers have set a 5.5 percent GDP growth target for 2022.

Des Moore, the owner of Irish oyster farmer and exporter Belles Isle, has ceased shipping to China due to the turbulence he’s faced getting his products through Customs.

“There has been a general reluctance to service China with COVID and air cargo costs. It’s just too uncertain the last two years,” Moore said. “It is more feasible to grow smaller 70- to 120-gram oysters and service the buoyant European market rather than grow to 120- to 200-gram [oysters] for China and then hope the market will be open.”

The uncertainty is also being experienced by salmon exporters, according to Bakkafrost Sales Manager Annika Frederiksberg. The Faroe Islands-based salmon firm has carved out a significant business exporting to China in recent years.

“Logistics are very challenging,” Frederiksberg said. “Destination ports continue to close and reopen. In some cases, shipments arriving in Guangzhou are being trucked to Beijing.”

China remains a strategic market for Bakkafrost, with more growth potential, Frederiksberg said, as the company’s crown logo has given it recognition and profile among customers in China, where she said references to royalty are embraced by the upwardly mobile middle-class.

“Customers may not know the name, but they ask for the ‘salmon with the crown,’” Frederiksberg said.

While sanitary checks have disrupted the live trade in seafood, China remains a strong market for frozen crustacean and shellfish from the U.K., according to C&N Chambers CEO Alan Price, whose Kilkeel, Northern Ireland-based firm exports brown crab, scampi, and whelk to buyers in China and Europe.

“Demand for imported seafood remains strong from the gift-box market,” Price said.

Strong pricing in China – price has seen brown crab rise from USD 6.00 (EUR 5.75) per kilo four years ago to USD 9.00 (EUR 8.65) today – has also put pressure on European buyers to compete, Price told SeafoodSource. While he has seen Chinese demand take a certain amount of supply away from Europe, buyers in Portugal are now willing to pay higher prices, he said. A reopening of Europe’s tourism sector has seen demand from the catering sector in particular rebound this year. The demand also extends to retail in Southern Europe, Price said.

“Some of our customers in southern Europe are supplying supermarkets with frozen products and Portugal is now willing to pay higher prices, which they weren’t prepared to do previously,” Price said.

Price – who built up a large book of contacts in China in his previous roles as a director at Rockabill Shellfish, the Dublin, Ireland-based seafood firm owned by his wider family – said he has had no issues with COVID checks on his shipments, as his Chinese buyers handle the screening and quarantine process.  

The strong pricing in China observed by Price and other vendors is backed by data from the Irish state’s seafood market development group, Bord Iascaigh Mhara (BIM). In its recently published annual Business of Seafood report, BIM detailed a 20 percent year-on-year increase in prices for shellfish and crustaceans in 2021. However, the rapidly rising price of marine diesel – which has increased by 150 percent since Russia’s invasion of Ukraine, according to BIM – is upping costs for Irish seafood companies.

Photo courtesy of Jen Finn/SeafoodSource

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