Liaoning surprises with 3Q growth

Published on
October 29, 2013

Officials in one of China's key fisheries regions are reporting bullish seafood production figures for the first three quarters of 2013. The northeasterly province of Liaoning, which includes the key seafood cultivation and processing port hub of Dalian, is reporting that its fisheries sector racked up revenues of RMB 102.8 billion (USD 16.9 billion, EUR 12.3 billion) in the first three quarters of the year, a 12.4 percent year-on-year jump on the same period last year.

Liaoning produced 3.9 million metric tons (MT) of "value added" aquatic products in that period, worth RMB 50.6 billion (USD 8.3 billion, EUR 6 billion) in value, according to the provincial fisheries bureau — year-on-year increases of 10.5 percent and 6.6 percent respectively. Mariculture (sea-based aquaculture) contributed 2.21 million MT or 56.7 percent of local seafood production, according to the official data.

While Liaoning has an advantage in being home to key Chinese producers seasoned in mariculture, among them Dalian-based Homey group, the province's output growth is above the predictions of industry watchers such as the Food and Agriculture Organization and the U.S. Department of Agriculture, both of whom have predicted aquaculture output growth of less than 5 percent for China this year.

Some clues as to the drivers of Liaoning's performance can be seen in the growth of a local long-distance fleet, which has benefitted from government grant aid and subsidies. Notably local state-run Liaoning Fishery Group increased its catch more than two-fold to 50,000 MT in the first three quarters of this year.

The processing sector meanwhile has benefitted from government subsidies for modernization, with new facilities being built in Dalian as well as in Dandong, a city on the border with North Korea. The local government stressed its assistance to aquaculture in promoting insurance of ponds and seashore cages.

Favorable conditions for exporters may have something to do with Liaoning's strong performance. Export tax rebates for seafood processors and producers have been expanded to an attractive 17 percent, according to a source at an international sourcing and processing firm with operations in Dalian. He told SeafoodSource that Liaoning-based firms will be refunded taxes paid before export. China has a standard 17 percent VAT rate applied across the country, meaning seafood exporters in Liaoning get a full refund. Chinese taxation authorities normally guide tax refunds for various commodities at rates varying from 17 percent down to 5 percent, with the top rate offered to industries that synch with government economic priorities, typically labor-intensive but also, increasingly, low-polluting industries.

Meanwhile, one of the country's key seafood exporters has also reported strong results for the first three quarters of 2013. Based in the southern province of Guangdong, Guolian Zhanjiang Aquatic Product Co made a profit RMB 26.26 million (USD 4.3 million, EUR 3.1 million), reversing a RMB 91.7 million (USD 15 million, EUR 10.9 million) loss in the same period last year. Guolian has credited higher prices for shrimp, its key product, for the reversal in fortunes. The firm lost RMB 226 million (USD 37.1 million, EUR 27 million) last year, in part due to weaker than expected shrimp prices.

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