Interatlantic exec: China remains a processing powerhouse
Economists have been predicting the decline of China’s seafood processing sector for years, but that prediction may not be correct, Jesús Martínez, Asia managing director at Interatlantic, a Vigo, Spain-based seafood trading firm, told SeafoodSource recently. Founded in 1994, Interatlantic has an office in Dalian, China, and has increasingly turned to China and its booming seafood market for a bigger share of its revenue.
Statistics do show a decline in the Chinese processing sector – the number of Chinese aquatic product processing enterprises dropped from 9,674 in 2017 to 9,336 in 2018, according to the Chinese Agriculture Ministry, and the country’s processing capacity of aquatic products processing enterprises fell from 29,262,300 tons per year in 2017 to 28,920,600 tons per year in 2018. Additionally, actual processing volume of aquatic products in China decreased by 1.79 percent compared with 2017, to 21.56,850 tons. Freshwater processing products and seawater processing totaled 3.883 million tons and 17.75 million tons respectively.
It’s true that some of China’s processing factories may have closed, but others are opening, according to Martínez. Martínez predicts China will hold its competitiveness as a processing base due to slower wage growth and a rise in processing for domestic markets buttressing China’s traditional business of processing for export. Martinez also sees China as an increasingly important consumer market.
SeafoodSource: How is the sourcing business changing? Are we seeing a move away from Chinese processors to other locations like Poland and Vietnam?
Martínez: Four to six years ago, some processors moved to Vietnam and others closed down, but in the last two years, following the economic slowdown in China, salaries and costs have stabilized. We have not noticed more processors moving away. In fact, it is the opposite – some new factories and cold storages have been opened.
SeafoodSource: What are the new factories processing? Are they processing for the domestic market?
Martínez: New factories are based on a combination of both export markets and domestic market. They don’t rely only on one.
SeafoodSource: Which products are your customers in Europe most seeking this year?
Martínez: Our product range has not changed. Squid, salmon, pollock, arrowtooth flounder, cod, mackerel are the main items.
SeafoodSource: Can you get better prices (and demand) in China? Won’t you shift your focus there instead of supplying lower value species like cod and mackerel to the European Union?
Martínez: Cod, salmon, and squid are not low-value fish. We do in both ways, we continue buying more and more from China but also in recent years since we got a better knowledge of domestic market we are increasingly selling more here.
SeafoodSource: How important is China as a market for your company? Do you plan to expand sales to China and if so which products?
Martínez: Interatlantic is a worldwide processing and trading company [and] China is an important part of our scheme. From China, we buy many items but we also sell into China, so the overall volume from this country is important for us. Local market demand for seafood products is booming here.
SeafoodSource: Is China your biggest market, or is it the European Union?
Martínez: The biggest market for us is still Europe.
SeafoodSource: Has the Sino-U.S. trade war effected your business or your sourcing operations?
Martínez: Definitely. Demand in the U.S.A. for most of the items which have … faced tariff increases have decreased drastically and prices dropped, such as scallops or cooked tuna loins.
SeafoodSource: How do you adapt to the price drop? Has it hurt your revenues?
Martínez: As we are not deeply involved in the U.S. market and it represents a small part of our business, this has not hurt us.
SeafoodSource: Does the continued growth of the Chinese squid fleet in Peru, Argentina, and other places impact your ability to source squid products, or do you also buy from the Chinese trawlers?
Martínez: We buy squid from all around the world. We also regularly buy squid from the Chinese fleet.
SeafoodSource: Many Chinese processers report losing competitiveness and profitability and some of them have closed. Do you continue to operate processing facilities in Dalian and do you experience similar difficulties?
Martínez: Four to five years ago, the amount of product on offer exceeded demand. There were many processors, some of them unexperienced in seafood and in international business, who saw profitability reduced, and a good number of factories had to close down. [However,] we have a long experience and good knowledge of China and therefore we continue doing business here and our volume continue growing year after year.
Photo courtesy of Interatlantic