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Web posted Sunday, January 8, 2006

State shifts focus in growing Korean seafood market

By Bob Tkacz
For the Journal


  Visitors to the Busan International Fisheries and Seafood Exposition in South Korea taste samples of salmon at a booth set up by the Norwegian Seafood Export Council. The Norwegians have felt the sting of a free trade agreement between South Korea and Chile, allowing Chilean farmed salmon to be sold at a much lower cost than the Norwegian product. PHOTO/Bob Tkacz/For the Journal    
BUSAN, Korea - Neither the state of Alaska, nor any private Alaska or Seattle seafood company exhibited at the third annual Busan International Seafood and Fisheries Exposition, Nov. 24-27, in South Korea's seafood capital and second largest city.

Opening its four-day run on the U.S. Thanksgiving holiday, BISFE has yet to draw much U.S. participation. It was originally scheduled, on a three-year contract at the modern BEXCO exhibition center, to follow the late-October China Fisheries and Seafood Expo in an effort to minimize conflicts with both the U.S. holiday season and Islam's month-long Ramadan, which floats over October and November on a lunar calendar.

To increase U.S. participation, the Asia Pacific Fisheries Trade Association rescheduled BISFE in 2006 for Nov. 16-19. The organization manages the show for the Busan Metropolitan City. The shift is expected to attract substantially more U.S. participation in the growing Korean seafood market, but BISFE has other problems, participants said. Whether Alaska returns to the show next fall remains uncertain.

Alaska's Office of International Trade hosted booths at the first two shows. Jointly, the Southern United States Trade Association (SUSTA) and Virginia Marine Products Board exhibited at all three shows, as has the National Oceanic and Atmospheric Administration with an information booth managed by its Tokyo-based economist Tom Asakawa.

This year, the U.S. Agricultural Trade Office (ATO) organized and paid most of the cost for a U.S. pavilion. It strongly supports BISFE over the year-old, and much smaller, Seoul International Seafood Show. That event is scheduled for April 13-15.

"I think Busan has something going for it with seafood that Seoul doesn't, in that it's right at the port and it is a big seafood hub here anyway," acting U.S. ATO director Susan Phillips said during the Busan expo. The Seoul show, she added, "is just not very big, and we don't think it's worth it for U.S. companies to attend those other shows."

The Seoul event drew 110 exhibitors and a total of 25,222 visitors over four days in 2005, according to promotional material for its 2006 edition, where booths cost $2,000 each.

BISFE offers a low-cost venue. International exhibitors paid $1,500 per booth this year, roughly a third the price of the China expo and even less than the much larger Boston and Brussels, shows where the Alaska Seafood Marketing Institute exhibits using annual, country-specific, federal grants that do not include South Korea.

Following the 2003 BISFE, Alaska hosted a two-day salmon promotion in Seoul in May 2004 and organized a doublewide booth at the '04 expo. Coincidentally, Trident Seafoods opened a Korean office early in 2004 and helped staff the state's booth at the expo that year, even distributing samples of donated Ocean Beauty Seafoods salmon burgers and sausages, among other Alaska products.

All of the activity, including the creation of BISFE, is responding to Korea's shift from a seafood self-supporting country to a net importer. While they number only 48 million, South Koreans are world-class seafood consumers who took it as a point of national pride when it was reported in 2003 that the per capita consumption IN Korea passed Japan's. Koreans each eat about 75 pounds of fish annually.

That activity has been paying off. Although Trident Seafoods has yet been unable to complete a deal to place its salmon burgers in Lotterias, the largest fast food chain in Korea, the related, upscale Lotte Department stores bought 3 million cans of pink salmon from Bear & Wolf Seafoods this year. Another of Korea's largest food companies, Dongwon Food and Beverage Co. Ltd., is in the midst of a long-term program to develop canned pink salmon markets. Dongwon introduced a variety of pink salmon products, ranging from fillets to "salmon cheese sticks" at the 2004 BISFE.

With no quantities of fresh salmon, and shrinking volumes in commercial inventories, Alaska's manager of seafood promotions in Korea said timing was a key reason for passing on BISFE.

"Busan was not a good salmon promotion for me to do because most importers were interested in buying white fish, and the time, Thanksgiving, is not a good time to bring processors to participate for the function," wrote Sun Kim, in an e-mail interview Nov. 7.

Asakawa, who left a state job to work for the federal government, also favors Seoul over Busan. Based on reasons other than harvest timing, Asakawa said on the final day of the expo, that he would recommend NOAA exhibit at the Seoul event rather than Busan in 2006.

Asakawa complained that international exhibitors pay $500 more per booth than Korean companies and that the location of the "foreign exhibitors zone," which is separate from the "seafood exhibitors zone" where Korean companies are grouped, is less favorable for pedestrian traffic.

For some the pedestrian traffic itself is another problem. BISFE boasts upward of 15,000 visitors daily, and 20,000 on Saturdays, but most are local residents, eager for a taste of the latest international seafood products and to buy roast seaweed and other staples at expo-discount prices. Admission tickets good for the length of the show cost less than $2.90 and senior citizens and young children get in free.

With exhibits like the Korean Maritime Research Centers' annual life-size display of mounted whale sharks, manta rays and other marine creatures, BISFE is a great family event, but a distraction from kind of event seafood industry road warriors expect.

"To me, it looks like Busan is citizen-oriented. It seems like the city is trying to create an annual event for citizens and businesses as far as it goes," Asakawa said.

In response to that continuing complaint, the organizers this year designated BISFE's opening day as "business day" and restricted public access, but business attendance was not impressive and the general public crowded through the doors for the next three days.

"Public access is actually affecting business," said Asok Padman, seafood manager for Ace Foodstuff Trading LLC, of the United Arab Emirates. Though otherwise happy with the event, Padman was one of several exhibitors asking for greater restrictions on public access.

"They need to have three days of nothing but buyers and one day of consumers," added Shirley Estes, executive director of the Virginia Marine Products Board. Working with the U.S. trade officials and Maryland-based crab-producer Handy International Inc., Estes held the "Great American Seafood Festival" at Busan's Westin Chosun Beach Hotel simultaneous to the expo.

"If we hadn't done all the outside events, it may not have paid to come just to the show," Estes said, who also attended the 2004 expo. Still, she said, the U.S. pavilion had "an excellent location."

Handy International, which includes Atlantic salmon cakes in its catalogue, was the only private company in the U.S. pavilion. On his first visit to Korea, company president Terrence Conway found BISFE a useful tool in his search for market connections rather than immediate sales.

"We came here looking for one exclusive importer, and I have found three very good candidates so far. If one of those candidates comes to fruition, I would call this very, very successful," Conway said.

Unlike wild salmon, farmed Atlantics were well represented in Busan by several Korean traders and international exhibitors. Alaska's top Asian competitor, the Norwegian Seafood Export Council, made its first appearance at BISFE to counter Chilean salmon sales that have been increasing since the South American country completed its free trade agreement with Korea in 2003. Depending on product form, the tariff on Chilean salmon is least 10 percent less than that levied on other imports and will drop to zero by 2009.

"Chile is taking market share from Norwegian salmon in the Korean market," acknowledged Jann Fossberg, council director for China and Korea. "We are here to see and follow, and trying to find out what's going on and evaluate, and eventually, if necessary put more effort into the market."

Fossberg said, "Korea could be, will be, a more interesting market in the years to come because the buying power is changing in Korea. It's on the increase, so I think the market for all kinds of products will increase, and that includes all kinds of what they call red fish, and also the Atlantic salmon we provide."

Chilean salmon is selling for about a dollar less than Norwegian product, according to several sources, including Jae Dyung Lee, president of Hwajin Enterprises Co. Ltd. After buying Norwegian salmon for four years, Hwajin switched to Chilean last February strictly, he said, because of the price in a growing market.

"Most Koreans customers think Norwegian quality is better than Chilean. In my opinion the quality is no different," Lee said, noting that his imports have doubled to three containers monthly.
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