Chinese fish processing looks towards new markets and domestic consumers

China has a vast network of fish buyers and sellers, catering to growing demand of fish and fish products. Markets are constantly changing and new products are being developed in order to fill rapidly increasing demand in the domestic market. Eurofish recently visited the company Kangbao Foodstuffs Co., Ltd in Qingdao during a study tour to evaluate the possibility of utilising high quality by-products from the EU fish processing industry.

EM6 14 PRO Kangbao DSC01387
Jiao Wen, President, and Mandy, Business Department Vice Manager of the Qingdao Kangbao Foodstuffs Co Ltd.

Qingdao in the Shandong province is a major area for fish processing companies in China and Kangbao Foodstuffs CO., LTD operation is similar to many other processing companies in the region. The company processed about 6,000 tons raw material last year, the majority (about 70%) is arrow tooth flounder production. Remaining production is made up by Greenland halibut, Pacific Ocean perch, rock sole and cod.

 

Imports from abroad, are re-exported to Japan

Sushi products are processed from arrow tooth flounder and supplied to the Japanese market. Other raw materials are processed into both fillets and portions depending on the client’s orders. The raw material is all imported from outside China. Halibut is primary imported from Greenland, perch and rock sole from USA and the rest from the EU.

At the moment, the primary end market is Japan. Some importers in Japan buy from Kangbao Foodstuffs and sell to other wholesalers, trade companies, supermarkets or even directly to sushi restaurants. Some of their buyers even have their own factory in Japan, so they buy fillets or portions from Kangbao and will do a second level of processing in Japan, for example breading or adding flavour. They also have exported to USA in the past. Exporting to Europe would be of interest if there was an opportunity.

Arrow tooth flounder is the most important product accounting for 70% of the approximately 6,000 tonnes of raw material that the company processed in 2013.

 

Wages and expectations rise

Currently Kangbao Foodstuffs holds the BRC, MSC, HACCP and EU certificates. In the Japanese market, many seafood products are consumed raw, and for this reason microbial control is much stricter. The factory has a laboratory to monitor quality and safety and the company president says the company’s internal standards are more demanding than those required in the certifications schemes.

The biggest challenge for the company is that raw material prices have been increasing more than 25% per year while the sales price has more or less stayed the same. The competition is very hard on the Japanese market. Last year the worker salaries were increased by 5-10%, but in 2014 there has been no room to raise the workers’ salaries again. That is a problem when everything becomes more expensive in the society.

 

Addressing new challenges ahead

The company is now considering initiating production for the local market to supplement the exports to Japan. Selling on the local market would give a greater degree of ability and reduce the dependence on a single market. The company is still able to get the labour they need to do the fish processing on the factory floor. In the future productivity could be increased by introducing automated processing equipment in the plant, but for now manual processing is more useful and feasible.

Qingdao Kangbao Foodstuffs Co. Ltd.

Jiaodong Industrial Park

Jiaozhou, Quingdao

China

Tel.: +86 532 88265513

Fax: +86 532 88265718

This email address is being protected from spambots. You need JavaScript enabled to view it.

www.kangbaofood.cn

President: Jiao Wen

Business Dept. Vice Manager: Mandy

Activity: Frozen food processing

Facilities: Three processing factories

Products: Fillets and portions of arrow tooth flounder, Greenland halibut, Pacific Ocean perch, rock sole, and cod

Markets: Japan

Certificates: BRC, MSC, HACCP; EU export number

Employees: 400

Turnover: USD30m

The visit to Kangbao was part of a project was to see if markets existed in China for high quality by-products from the European processing industry. The conclusion is that there is very limited space in the Chinese processing industry for high quality European by-products (fish heads, tails bones etc.) because China has an abundant supply of these product from its existing production. The market price for these products will not cover the costs of packaging, freezing and transporting the by-products to China.

Marco Frederiksen, This email address is being protected from spambots. You need JavaScript enabled to view it.