Second Sojitz-Zoneco JV Dalian plant driven by duty savings

Published on
January 25, 2017

Dalian Global Food, a joint venture of Zoneco Group and Sojitz Corporation, began work on a second plant in Dalian, northern China, in late December. The new plant will process tuna and salmon.

Dalian-based Zoneco Group, formerly called Zhangzidao Group, is the largest scallop-farming enterprise in China. It also deals in sea cucumbers, abalones, conches, sea urchins, sea snails and other marine products. Additionally, it operates a logistics network for the distribution of frozen seafood in northern China that makes it an attractive partner for the distribution of tuna, and it claims to have the largest tuna distribution volume in the country.

Tokyo-based Sojitz is a trading company formed from the merger of Nichimen and Nissho Iwai Corporations.

The new 2,400-metric-ton capacity plant is being built in the Dayao Bay free trade area of Dalian. Dalian is a port city in the north of China, with access to the Beijing metropolitan area. By processing in this special port zone, imported raw materials can enter the Chinese market duty-free after processing.

The expansion of Sojitz’s Chinese manufacturing comes at a time when many Japanese companies are reconsidering China as a manufacturing base, as labor, land and utilities costs there are rapidly rising. Political tensions are also high, due to competing maritime claims. Japanese companies looking to re-export now see Vietnam as more attractive. But as the market for Dalian Global Food’s finished product is primarily China, manufacturing in the country – and specifically in the free-trade area of the port – apparently made sense to Sojitz, allowing it to avoid import duties.

The new plant will be the second in Dalian for the JV and represents a continuation of cooperation between the two firms in the distribution of Japanese farmed tuna in the Chinese market. It will have processing capacity of 2,400 metric tons and refrigeration capacity of 2,000 MT, adding to the existing 1,200 MT of processing capacity and 850 MT of refrigerating capacity at the first plant.

Sojitz’s initial foray into China’s tuna market was in 2011, when it began importing its bluefin tuna farmed at Sojitz Tuna Farm Takashima, a wholly-owned subsidiary based in Matsuura City, Nagasaki Prefecture. The tuna was sold into Chinese market through Dalian Global Food Corporation’s distribution network. For that initial operation, bluefin tuna was shipped from the farming site in Takashima to nearby Fukuoka Airport and shipped by air through Dalian Airport.

Tuna is prone to rapid discoloration unless kept at minus 60 degrees Celsius and carefully thawed. As the Chinese distribution system lacked such facilities and knowledgeable handlers, Sojitz and its Chinese partner started by distributing the fresh tuna flown from Japan.

For the new plant, deep-freezing facilities will allow more diversified sourcing, and the product range will be expanded to include salmon.

In China, consumers’ eating habits have been changing amid the rise in living standards prompted by the country’s economic development, and tuna for sashimi is sold both at Japanese restaurants and in the food sections of high-end department stores and supermarkets in large cities.

Contributing Editor reporting from Osaka, Japan

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