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.
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
Tel.: +86 532 88265513
Fax: +86 532 88265718
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
Certificates: BRC, MSC, HACCP; EU export number
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.