The bustling port town of Zhangjiang in Guangdong province is seeking to become what Hong Kong once was: the entrepot for trade between mainland China and the world. The prosperous South China Sea port city, once a French-ruled fishing port, is keen to capitalize on an increasingly interdependent relationship between China and southeast Asia, driven by Chinese demand for resources and its search for markets in the ASEAN block.
In part by putting in place crucial infrastructure, Zhangjiang’s ambitious mayor Wang Zhongbing wants the city to be the gateway for seafood trade between China and Southeast Asia, with local firms like Zhanjiang Guolian Aquatic Products Co. shipping in raw materials from ASEAN member states like Indonesia, Thailand and Vietnam for processing and re-export.
Listed on the Shenzhen stock exchange, Zhangjiang Guolian is an investor in the new South China International Aquatic Trading Centre. A fall off in manufacturing exports is forcing coastal cities like Zhangjiang to look at trading and high-end aquaculture as an alternative boost for incomes, explained an official at the foreign trade department at Mayor Wang’s office.
A port city in the populous and prosperous Guangdong province, Zhanjiang has been named a “national demonstration base for the transformation of the aquatic product industry.” The city is also one of China’s biggest exporters of furniture and electronics.
Much nearer Hanoi than Beijing, Zhanjiang is processing shrimp from Indonesia and Vietnam as well as Burma and Bangladesh, explained the official.
In a theme common to many local governments and Communist Party bosses across China, local officials say they’ve been trying to improve credit to firms and to link executives with local universities to improve product quality and innovation.
“They’re cheaper,” explains a shrimp trader at the center by way of explaining why he hopes to import shrimp in particular from Burma. Imports are also tariff-free. A China-ASEAN free trade agreement that came into force in January 2010 sets Zhanjiang up well to be a trading hub, given its proximity to the region. Like China as a whole, Zhanjiang exporters have been trying to compensate for weaker EU and US demand by expanding shipments to Latin America, Africa, Russia and ASEAN.
Traders at the center, with their weighing scales and Styrofoam ice boxes, repeat many of the same mantras. Rising costs, scarcer labor, but also, rabid demand for seafood, particularly if its wild catch: “you can charge more,” explained a trader who ships marine fish and shrimp from southeast Asia thousands of kilometers north to cities like Beijing and Xi’an.
The new aquatic trading center includes seven tons of refrigeration capacity — two tons of that are bonded refrigeration zone, for the import-export trade. A trader from Bangladesh, Nazmul Karim, meanwhile came to scout markets for shrimp.
“China’s changing. The labor costs here are now ten times what they were fifteen years ago and ten times what we can do it for [in Bangladesh shrimp farms]. However the infrastructure is a lot better.”
Aside from being a port city on the South China Sea, Zhangjiang has air, rail and highway connections to put it within range of regional cities like Guangzhou and southwestern metropolises Chongqing and Kunming, both thriving from investment from the wealthier coastal regions.
Wages have grown much stronger in China than its southeast Asian neighbors. Monthly manual labor wages in China will average USD 400 per month in 2012, according to calculations of figures from the Asian Development Bank and World Bank. That compares to USD 110 in Vietnam and USD 102 in Cambodia and Bangladesh — or USD 182 in Indonesia.
Not surprisingly, local newspapers such as the authoritative Nanfang Ribao (Southern Daily) report cases of illegal workers, usually from southeast Asia, staffing Guangdong factories. According to the local government website Zhanjiang has 557,000 hectares of shallow coastline as well as 547 types of shellfish and 28 shrimp species. The city produces 40 percent of Guangdong’s prawn output.
Local government PR however doesn’t mention the city’s battle with pollution: Zhanjiang is also a manufacturing hub, with both furniture and chemicals among its key industries, with a Sino-Kuwaiti joint venture ethylene plant set to be functional by 2016. Increased discontent — and protests — among affluent locals over high-polluting industrial facilities might make it easier for the area to expand aquaculture.
The CP Group, a Thai conglomerate, has shrimp farming and feed mill operations locally — “a demonstration zone for China-ASEAN agricultural cooperation.” CP supplies Thai shrimp as well as Vietnamese basa fillets to Chinese outlets of WalMart.
Indonesia, according to USDA data, is the biggest Southeast Asian shipper of fish to China while Thailand and, increasingly, Burma, are top-five sources of crustaceans for China. Costlier labor and rising affluence in mainland China have created opportunities for southeast Asian states, both as destinations for Chinese investment and sources of Chinese seafood imports. While Bangladesh and Cambodia have both allied themselves closely to China others, like Indonesia, have expressed disquiet about being limited to being a source of raw materials, without being able to compete with Chinese low-cost imports. Hong Kong, with its tax-free regime and English language fluency and long-held connections to southeast Asia and India, has long been a gateway to mainland China.
