Price climb for Chinese New Year seafood rush tempered by economic concerns
An association with corruption continues to linger over high-end seafood products in China.
A recent exposé in Shenzhen revealed a state-owned company had spent thousands of dollars on a seafood and rice wine banquet, despite Communist Party disciplinary bans on such ostentation with public money.
The 80 revelers from Guangming District Construction and Development Group treated themselves to abalone, sea cucumber, and geoduck, along with CNY 160,000 (USD 24,000, EUR 20,900) worth of Maotai rice wine at the Mission Hills resort, according to footage from a camera phone broadcast by local TV.
While scandalous in nature, such episodes seem to increase the profile and lure of luxury seafood among Chinese urbanites, who fear they might be missing out on the exotic. However, domestic consumption may become sluggish in 2020 because slower household income growth, twinned with a rising household debt, could result in less demand for higher-end product in particular. On a broader level, Chinese growth in personal credit or debt – particularly credit card debt – has outpaced that of the E.U. and U.S. It remains to be seen whether this is reflected in retail spending by Chinese leisure seekers during the Chinese New Year holidays.
Prices being quoted in key seafood wholesale markets like Weihai suggest a strong trade for Chinse New Year for banquet staples and imports. Small croaker is averaging CNY 32 to CNY 40 (USD 4.80 to USD 6.00, EUR 4.18 to EUR 5.23) per kilogram, while Japanese mackerel is fetching CNY 40 to CNY 46 (USD 6.00 to USD 6.90, EUR 5.23 to EUR 6.01) per kilogram. Flatfish is bringing CNY 110 (USD 16.50, EUR 14.38) per kilogram and larger-sized, one-kilogram fish are pulling in CNY 150 (USD 22.50, EUR 19.61) per kilogram, up slightly year-on-year.
In the central city of Zhengzhou, “Caribbean” lobsters were selling at CNY 485 (USD 72.75, EUR 63.41) apiece at the International Yuan Xia Cai Fu Food Producers Sales Centre, where a two-kilogram box of imported vannemei shrimp was being sold at CNY 145 (USD 21.75, EUR 18.96). The Cuban lobster price – sized 900 to 1,100 grams and selling at CNY 568 (USD 81.52, EUR 72.79) – showed the product’s popularity when compared to the CNY 98 (USD 14.70, EUR 12.81) per 500 grams being fetched by Boston lobster, now considered a market staple.
The frothiest days of growth for China’s economy and its high-end seafood market may be over, though that doesn’t mean there won’t be more restrained growth in demand. China’s economy has slowed down considerably due to high leverage in its corporate sector, while trade tensions have sapped confidence in China’s export model. However, average personal income growth, at six percent in 2019, looks to be holding up, in part due to a shrinking workforce.
Usually a good barometer of China’s short-term economic behavior, the housing market is now under strain as well. A slide in residential rent prices in Beijing – with anecdotal evidence gathered from Beijing residents by SeafoodSource suggesting sharp discounting of 30 percent and upwards on sales of new apartments – has led to protests by bought-in residents, not surprising given real estate comprises 70 percent of the wealth of urban Chinese, according to People’s Bank of China data. Any sharp collapse in real estate value could quickly cool consumption of luxury goods like imported salmon or lobster. Spending by real estate developers, and the officials they frequently entertain, has long buoyed business for high-end restaurateurs in Beijing and Shanghai.
Slower market growth is likely to lead to increased enforcement by government agencies, as fines and customs duties are needed to boost revenue for regional governments suffering a downturn in the tax revenue that previously flowed from real estate and manufacturing. Central government transfers to regional governments rose 9 percent last year, the fastest growth in some time, while provincial governments have been opening handling facilities for seafood imports at airports and ports – a chance to collect revenues in the form of duty and sales tax.
Such enforcement could level the playing field so that legitimate, quality product no longer has to compete with inferior or smuggled goods. There was a 33.6 percent increase in cases involving seafood investigated by the Food and Drug Enforcement Unit of the Beijing police bureau in 2019, with 489 convictions out of 870 cases relating to excessive traces of antibiotics and other trace elements in seafood.
Further proof of the dark side of the trade came with the destruction of 300 tons of meat and seafood mid-January in Dongguan, a city near Shenzhen and a favorite landing place for smugglers bringing seafood into the mainland from Hong Kong, a free port. Authorities claimed the seafood was rotting and showed masked Customs officials and scenes of flies and melting ice.
Photo courtesy of Galina Kaneyeva/Shutterstock