Tight margins prevent China seafood processors’ automation investments

Published on
January 2, 2015

A cautionary note has been sounded about expansion of China’s huge seafood processing sector by one of the world’s leading suppliers of fish processing equipment.

“Our experience suggests that Chinese investment in processing technology has not grown significantly in recent years,” explained Sigurdur Olason, managing director of the Fish Industry Center, a research centre at Marel, the Iceland-based equipment maker.

In 2012 Marel scored its largest-ever single sale to the fish-processing industry with a complete processing system to Dalian Tianbao, one of the world’s largest processors of Alaska pollock. While that system was designed to help Tianbao cope with China’s rapidly rising labour costs, Olason wondered if there will be similar investments.

“The production margin is low and favors steady investment over heavy investment. It is also uncertain whether there will be much more growth in reprocessing in northern China, or whether that growth will instead occur in Eastern Europe, where there has already been significant growth in recent years,” Olason said. “China is facing various challenges in these times, with reprocessing growing significantly in Eastern Europe while low production margins in China do not favor heavy investment in technology to respond to the increasing labor costs.”

China’s processing sector has traditionally been focused on northern cities like Dalian and Qingdao but in recent years there’s been a huge expansion in tilapia processing in southern provinces like Guangdong and Hainan. But, noted Olason, “While there is significant growth in tilapia production in southern China, this is primarily to supply the domestic market and is therefore subject to somewhat different requirements.”

However, he added, Chinese consumer demand for more sophisticated products is also increasing, which generates further opportunities for other Marel products. Also, Marel has been trying hard to grow sales of machines like the target batcher, which enables better accuracy on pack weights. This approach has resulted in substantial sales success, especially in Vietnam, said Olason.

The trend to automation will continue, said Olason, but he also sees processors seeking efficiencies through IT and traceability systems. Export-focused regulations like certifications and EU law are the driving forces for Chinese processors to increasingly automate their processing, he said.

“The combination of less manual work and reduced processing time helps reduce bacteria, and helps satisfy western customers’ quality requirements,” he said. “Chinese producers are also responding to increasing pressure from European and U.S. customers for validated proof of origin, through the implementation of traceability systems. Due to the large size of most Chinese production plants and the correspondingly high number of employees, it is very difficult or near impossible to manually keep track of yield and throughput.”

Marel has been trying to market its INNOVA software to processors in China, who use the system to automatically collect data from all processes and thus assess the yields and productivity of their plants in real time.

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