Dec. 11, 2015
China has been dominating global economics for over a decade – it is the production centre for many of the world’s vital proteins. A recent survey revealed many Americans believe that China is the world’s No. 1 power. Unsurprisingly, China is also the world’s biggest fisheries producer. Fishing News International takes a closer look.
By Elisabeth Fischer and Rachel Mutter
For a country that is often described in superlatives, getting a coherent picture of its fisheries sector – given the sheer disparity in regions, species and methods – is a Herculean task. But Fishing News International persisted, and this is our report.
China has a coastline of 14,500km, and an exclusive economic zone (EEZ) of 877,019 sq. km. The fishing grounds range from sub-tropical to temperate zones and include 431,000 sq. km of continental shelves (within 200m deep).
There are ongoing disputes with several neighbouring nations over the exact extent of the EEZ in the South China Sea.
The China seas contain about 3,000 marine species, of which more than 150 species are fished commercially.
Some major marine fishing species in recent times are hairtail, chub mackerel, black scraper (oval filefish or Navodon modestus), anchovy and some species of shrimps, crabs and smaller fishes.
Chinese distant water fishing activities started in 1985 when China gained access to new fishing grounds through agreements with foreign countries.
By 1996, these fisheries had extended to 60 regions around the world, employing 21,200 fishermen, 1,381 fishing vessels, and caught 926,500 tonnes.
The China National Fishery Corporation is the major operator in the distant water fisheries. It sent the first Chinese fishing fleet to West African waters in 1985.
The following year, with other Chinese partners, CNFC started trawling operations in the North Pacific. Tuna longlining followed in the South Pacific, and in 1989, squid longlining in the Japan Sea and the North Pacific.
Concerns about over-reporting catches
In 2001, the fisheries scientists Reg Watson and Daniel Pauly expressed concerns in a letter to Nature, that China was over reporting its catch from wild fisheries in the 1990s. They said that made it appear that the global catch since 1988 was increasing annually by 300,000 tonnes, whereas it was really shrinking annually by 350,000 tonnes. Watson and Pauly suggested this may be related to China policies where state entities that monitor the economy are also tasked with increasing output.
Also, until recently, the promotion of Chinese officials was based on production increases from their own areas.
China disputes this claim. The official Xinhua News Agency quoted Yang Jian, director general of the Agriculture Ministry’s Bureau of Fisheries, as saying that China’s figures were “basically correct”.
However, the FAO accepts there are issues about the reliability of China’s statistical returns, and currently treats data from China apart from the rest of the world.
Growth in wild fish consumption
A clamp-down on official corruption and a slowing economy dented Chinese seafood sales in 2013. But importers nonetheless have much to be optimistic about in China, the world’s number one consumer of seafood in absolute and per capita terms, as demand is growing – especially for wild fish.
The country has little food-sized wild fish to satisfy the strong local demand – as opposed to abundantly available farmed seafood. And seafood consumption is on the rise: Per capita consumption in China’s cities rose from 10.34 kilos in 2000 to 14.62 kilos in 2011.
While the country can still draw back on a large supply of tuna, squid and mackerel from its deep water fishing fleet of 2,000 vessels, imports are in high demand.
A steady stream of news stories in China’s provincial and trade press last year suggest supplies of local wild-caught seafood continue to diminish, which could drive demand for imported wild-caught species such as crabs, oysters and finfish.
In volume terms, China’s top suppliers of seafood for human consumption are Russia, the United States and Norway, according to the IntraFish China Industry Report 2013. Russia accounts for between 30 and 60% of supply – estimates differ between Moscow and Beijing – with the bulk of that coming in frozen whitefish including cod, herring haddock and Pacific salmon.
These species are processed for re-export and increasingly, consumed locally. The US supplies Pacific salmon as well as cod, plaice, and smaller – but higher value – volumes of shellfish. The last decade saw southeast Asia emerge as one of China’s key suppliers of finfish and crustaceans, and both Chile and New Zealand have free trade agreements with the state.
According to official Chinese figures, its 2,000 vessel strong fleet reported an annual haul of $300m. Others have put that figure at US$9bn and claimed gross underreporting of offshore catches by China. Tuna in particular remains much sought after.
However, demand for imports is continually rising, driven by a gradual reduction in local output capacity.
Data from China’s agriculture ministry shows output of aquatic goods grew an average 3.8% in the period between 2000 and 2011, compared to an average 6% annual growth in 1990-2000 and 10% annual growth in output between 1980 and 1990.
Factors behind these figures are overfishing of local seas and increased competition for land and water resources from industry. While aquaculture output has surged, wild-caught seafood remained largely flat at 14.7 million tonnes between 2000 and 2007, rising slightly to 15 million tonnes in 2010.
Port expansion Dalian’s port is expanding fast and will have a cold storage capacity of one million tonnes by the end of 2013, Athen Tang, warehouse manager at Dalian Port Yido Cold Chain, told Fishing News International at the China Seafood and Fisheries Expo in Dalian held in November last year.
But will it actually need it? That is debatable, as rising processing and labour costs are hitting processors in the region, which are consequently cutting down its shipments, he said.
Tang was quick to promote the port as a one-stop platform for importers, with rapid custom clearance and services such as bonded warehousing storage, international transhipment, processing and dispatching.
Currently, around two million tonnes are going into Dalian every year, he said.
While several companies were proudly showcasing eco-labels such as the Marine Stewardship Council (MSC) at their booths at the China Seafood and Fisheries Expo, in Dalian, they are certainly not a driving force in the Chinese domestic market.
Retail packages in Europe and the United States are crawling with eco-labels, but in China they are still at “very initial” stages, Thomas Sun, general manager of Yantai, China-based processor Ted Foods, told Fishing News International.
This is despite increasing focus on food safety, and the “desire to build up standards,” he said. Processors will have to be the driving force to reverse the trend.
However, companies only looking for quick money are still lagging behind in several areas. Sun predicts those who are resistant will “disappear” from the market in the long run, and are set edged out by established players in terms of efficiency, service, traceability, food safety systems and product innovations.
Yantai Ted Foods, which produces more than 10,000t of finished products, and counts Tesco and Aldi as its clients, is in a good position to handle any market requirements will come its way, Sun said.
With an estimated growth of 15% of the domestic seafood market annually, the company is increasingly focusing on China.
But it is not ignoring the international market, said Sun. “In the next 10 years we’ll still be very strong for the global market.”
Goodbye ‘old Europe’
Europe is growing “poorer,” and while in Germany people spend about 10 to 12% of their income for food, China is picking up the slack, Oskar Sigmundsson, managing director at Bremerhaven-based German Seafrozen Fish, told Fishing News International.
For the company, which is part of the Parlevliet & Van der Plas Group, China has been a key market for many years, due to higher prices it gets for its frozen whole-round cod, haddock, pollock, Greenlandic halibut and ocean perch.
“Here we fetch the highest prices; around US$10 per kilogram of groundfish,” Sigmundsson said. “To be honest with you, China is a real threat to Europe. Selling to China is real creation of value.”
Being a foreign supplier is paying off, as many Chinese traders “mistrust” domestic production – and frozen-at-sea and quality always sells, he said.
Greenlandic halibut is the company’s bestseller in China, but ocean perch is also gaining ground.
The company is also seeing a growing market in Africa for its pelagic fish. “It’s not about old Europe anymore,” Sigmundsson said.
The Asian seafood market has matured on several dimensions over recent years, Bjarki Gardarsson, managing director at Promens Asia, told Fishing News International.
With the trend from a low-cost reprocessing country and manufacturer to a producer for its growing domestic consumption, has come an increased interest in food safety on levels of quality, regulation, hygiene and risk management.
With it comes a more holistic approach towards processing, in order to increase efficiency in terms of manpower, labour regulations and salaries – a “vertically integrated management trend or politics,” as Gardarsson describes it.
For Promens, a manufacturer of a range of thermal containers and boxes for the fishing, aquaculture and processing industry, this is “fantastic news”, he said.Nevertheless, some areas are lagging behind.
“Our success in Asia so far is mostly in processing,” Gardarsson told Fishing News International. However, the way from sea, sourcing or catching, to processing still sees some serious issues, he said.
“We see the success on land but from sea to land there are vast opportunities to improve.”
This not only extends to food safety and hygiene, but also to waste losses and lacking efficiency in handling product from the early stages.
“I would also like to see more emphasis on high-level education” of the ones who will run the seafood businesses of tomorrow. In addition, some companies have a “lack of interest in finding weaknesses” in their business.
“We have a lot to do – it is a challenge,” Gardarsson said. He is, however, convinced, a transformation will happen, but it remains to be seen when and how.
Alaska seafood demand in China
Exports from Alaska into China for domestic consumption are growing, Alexa Tonkovich, international program director at the Alaska Seafood Marketing Institute told Fishing News International.
“It’s always been a big importer for Alaskan seafood for reprocessing but more and more remains in the domestic market,” she said.
Snow crab, King crab, black cod and Pacific cod are the most imported species, she said.
Dalian Zhangzidao investing in South Korea
Seafood giant Dalian Zhangzidao group is looking to partner with Clearwater Seafoods and others to replicate its Zhangzi Island model of sustainable “sea-ranching” in a $100m South Korean expansion, Yuming Feng, executive president of global seafood business told Fishing News International.
The company’s model is unusual in China in its apparent sustainability credentials, and Feng likened it to basic farming where seeds are put down – in this case of various high-value shellfish – then left to grow without feed or other intervention, until ready to harvest.
Areas around the island are left fallow on rotation and residents of the small landmass are subsidised by the company to stop them farming livestock or partaking in any other activities which may pollute the surrounding waters.
More technology
Increasing labour costs might be turning into a bit of a tired story, but for Chinese processors it continues to be front page news, hitting their bottom line dramatically and forcing them down the path to mechanisation.
Dalian Hualian Food is one such processor who is suffering both sky-rocketing labour costs and increased prices for raw material, explained sales manager Kevin Sun.
The company buys wild-caught seafood – Alaska pollock, Pacific cod, chum salmon and yellowfin sole to name a few – from US and Russian vessels and re-processes for sale to the United States.
A fast evolving sector where changes can impact the entire value chain in the global seafood business – for once, superlatives are justified, describing all things Chinese.
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