Japanese processor: China still advantageous

Since Kanedai Co. Ltd. opened a processing plant in Yantai, in China's Shandong province, in August 2000, labor costs have nearly doubled, though they are still one-tenth of those in Japan, and utility costs are on the rise. Yet, the company thinks China is still the best place to process its Japanese snow crab, deep-sea red crab (Chaceon quinquedens) and sweet shrimp.
 
Choosing to go it alone rather than work with a Chinese partner, Kanedai initially struggled to stay on top of changes in Chinese laws. The company ensures sanitation through employee training, hygiene management and water quality management and obtained HACCP certification. It hired Chinese trainees who had studied Japanese and seafood processing for three years to help with language, teamwork and quality control. It maintains a staff of three full-time Japanese workers in Yantai and an executive and hygiene management representative.
 
Despite Kanedai's safety efforts, in January 2008 Japanese consumers temporarily lost confidence in all Chinese-made foods after a unrelated gyouza (pork dumpling) poisoning incident. Kanedai then received offers to move operations to Vietnam, where labor costs are lower. However, the company recognizes that China still has its advantages.
 
"Labor costs are relatively high, but they have good infrastructure and a strong market," said Kanedai spokesman Seiki Onodera. "In addition, recruiting has become easier after the recession. Both labor and utility costs have calmed down after the Beijing Olympics."
 
Kanedai is located in Kesennuma, Japan's largest port for Pacific saury. The company also exports saury, including to China, but does not process it at its Chinese plant. Onodera estimates about 20 percent of Japan's saury catch goes to China, while the amount re-exported to Japan is about 20 percent of the total, and increasing.
 
The U.S. Department of Agriculture's Foreign Agriculture Service reports that more than 40 percent of China's seafood exports are processed using imported materials.
 
Chinese seafood exports to Japan fell by 30 percent from January to February 2009, to 35,000 metric tons, partly due to a health scare when exported eels were found to contain malachite green, a synthetic anti-bacterial agent used as a disinfectant at some Chinese fish farms.
 
Looking to boost its seafood exports to the United States, Kanedai exhibited at the International Boston Seafood Show last month.