Sales have fallen below expectations for Shandong Oriental Ocean Sci-tech Co, a processor and aquaculture firm based in Yantai on China’s east coast.
A lot of Chinese processors will quit the industry soon, the company’s head of international marketing, Enid Jiang, said. Whereas government support has aided the survival of firms in many of China’s industries suffering from overcapacity, it is unlikely to happen for the seafood sector, which is largely dominated by private firms.
“The market will decide. It’s not about government deciding or intervening,” Jiang said.
As China’s economy has boomed, a surge in wage rates steadily eroded profit margins for Chinese processors, putting many into difficulty. In Oriental Ocean’s case, the average company wage has doubled in the past 10 years.
“Living standards have risen, everyone expects more, from the management to the ordinary workers,” Jiang said.
One possible solution involves targeting the Chinese youth market, but that has proven difficult for Oriental Ocean because the firm is still trying to understand what exactly that will entail. Jiang estimated catering to a diversified youth market will require several strands of products.
The traditional preference for whole fish among Chinese consumers has complicated efforts to transition to the domestic market, according to Jiang, whose firm, like many Chinese processors, has been set up to supply Western markets.
China’s younger consumers, however, are “more globalized” and open to breaded, processed products, Jiang said. He sees the transition as a 10-year project. This will be the case for all processors but he believes rather than adapt many of the country’s firms will exit the sector.
