With China and the United States locked in an increasingly acrimonious trade war, it’s noteworthy that two of China’s most high-profile seafood exporting firms continue to restructure their operations away from a reliance on exports.
Top tilapia exporter Baiyang Investment Group has invested CNY 340 million (USD 51 million, EUR 43.6 million) in a company focused on special effects for the film industry. The purchase will be integrated into Baiyang’s Huo Xing Shi Dai arts education subsidiary and seeks to tap into China’s enormous cinema sector, the world’s largest in ticket sales.
Baiyang’s mainstay industry, the production of tilapia and fish feed, has seen its competitiveness eroded in recent years as labor costs have risen and environmental enforcement forces higher compliance costs on the aquaculture sector. Baiyang Investment Group changed its name from Baiyang Aquatic in 2015 as part of a diversification strategy.
Similar challenges have also eroded the competitiveness of the shrimp sector and made imports far more competitive in the domestic Chinese market. China’s top shrimp producer and exporter, Guolian Aquatic, is making a success of repositioning itself away from exports towards China’s domestic catering sector, according to a research note on the firm from Tianfeng Securities.
Guolian’s move to supply the catering sector – it has built its own kitchens for ready-to-eat seafood products – will help ensure profits rise from CNY 316 million (USD 47.4 million, EUR 40.5 million) in 2018 to CNY 353 million (USD 52.9 million, EUR 45.3 million) in 2019 and CNY 480 million (USD 72 million, EUR 61.6 million) in 2020, according to the Tianfeng Securities note.
The move from reliance on exports and on the consumer market towards catering will buttress earnings in China where demand for convenience foods continues to grow in a more urbanized society, according to Tianfeng.
Prices for 40-50 count shrimp hit CNY 21.22 (USD 3.18, EUR 2.72) per 500 grams this month, according to data from China’s Agriculture Ministry. While that’s down on 2017, it compares poorly with Ecuador, where prices are CNY 17.20 (USD 2.58, EUR 2.20) per 500 grams, Vietnam’s pricing at CNY 19.50 (USD 2.92, EUR 2.50) per 500 grams and Malaysia’s CNY 20.90 (USD 3.13, EUR 2.68) per 500 grams.
