Leading Chinese scallop and sea cucumber player Dalian Zhangzidao Fishery Group is escaping the worst of the Chinese government’s frugality drive according to company sources — good news for nervous investors as the firm ploughs USD 100 million (EUR 77.8 million) into a massive multi-species cultivation and processing project in Korea.
Addressing a conference of investors, no doubt concerned that company stock price has dropped from RMB 18 (USD 2.93, EUR 2.28) in February to RMB 11.6 (USD 1.89, EUR 1.47) this week, Dalian Zhangzidao Secretary General Sun Fujun said the firm had been able to lift the sales of sea cucumber in the first quarter of 2013, up more than 20 percent year-on-year while the price of sea cucumber in the company was improved by 10 percent in the third quarter of 2012.
Sales of shrimp and scallops “haven’t been affected” by the crackdown on banqueting, said Sun. His words will be soothing for investors in its Shenzhen-listed stock (shareholders include state-owned financial giants Bank of China and China Life). Fisheries companies in China have benefitted from demand for seafood among consumers turned off pork and poultry by disease and food safety scandals. China’s food prices went up by 3.2 percent year-on-year in May according to the National Bureau of Statistics, but while the price of pork was down by 4.9 percent and vegetables down 1.9 percent, prices for aquatic products rose by 2.2 percent.
The Chinese government’s frugality drive has clearly affected others in the seafood business. Listed restaurant chain Xiangeqing, known for its lavish seafood dishes featuring supposed luxuries like grouper and abalone, lost RMB 68.4 million (USD 11.1 million, EUR 8.7 million) in the first quarter of 2013, compared to a RMB 46.2 million (USD 7.5 million, EUR 5.9 million) profit in the same period last year. China’s catering sector reported sales growth of 8.5 percent in the first quarter of this year, down from 13.6 percent for 2012.
Engaged in hatching, farming, processing, and trading seafood, Zhangzidao claims to be active in 10 countries and regions, including the United States, Australia, Japan, and South Korea. While it has pledged to build its import and distribution business focused on China’s domestic market, the Zhangzidao Group is also keen to build its cultivation operations overseas. Most ambitious is the development of what the firm terms a “sea ranch” in the Jindo region of South Korea to be completed within five years. Zhangzidao invested USD 100 million in an aquatic products export industrial park which includes sea cucumber seed cultivation bases, as well as an abalone cage culturing zone, a seaweed farm and seafood processing facilities. Company chair Wu Hougang told Korean officials in June that the cultivation of sea cucumbers and other species was part of Zhangzidao Group's core strategic projects in becoming an international player. Wu also said the project would boost the entire Korean aquaculture sector and transfer expertise to local firms.
The Hong Kong offices of Swiss bank Sarasin last year included Zhangzidao in its recommended sustainable-themed investment bets: the firm noted Sarasin had “developed an interesting approach to integrated cultivation. The group also specializes in seafood species that can be cultivated in environmentally responsible conditions, using no fish-based feed in the rearing process.”
