Chinese wealth makes a bright future for Alaska seafood
BEIJING — The Chinese consumer economy is catching up with Alaska seafood prices.
Perspectives differ on the timeframe, and political influences, that may affect spending by the so-called middle class and those with “gold collar” jobs, but few exhibitors at the 18th annual China Fisheries & Seafood Exposition saw anything but an improving long-term market for high end products here. Most were making new plans to take advantage of the opportunity.
“Chinese people like to eat. They like to dine out,” said Dianne Hu, marketing director in China for Clearwater, the Canadian shellfish producer importing here for nearly two decades.
Hu said newly termed "gold collar" workers as well as those in white collar jobs, now enjoy incomes high enough to buy some imported seafood. Interviewed on the final day of the Nov. 5-7 expo, Hu also noted that common terms don't have exactly the same meaning as their English counterparts.
"Blue collar," in China, doesn't mean low-paid factory workers who build Iphones or remove pinbones from fish by hand, but skilled craftsmen. "Blue collar is not necessarily low income because they have a lot of experience," Hu said.
The size of the “middle class” is a moving target, according to Peter Redman, president of Sea Fare Expositions, the China show organizer, and former publisher of the “Alaska Fisherman’s Journal.”
“In the U.S., the middle class, their earning power is dwindling, declining, whereas here you’ve got a rising middle class pretty quickly. Per capita income is still well, well, well, well below Western countries but it’s still increasing and you do have a very wealthy class here that’s willing to spend a tremendous amount of money on safe products,” he said.
In her book 2010 book, “The Chinese Dream: The Rise of the World’s Largest Middle Class and What It Means To You,” Forbes magazine contributor Helen H. Wang defined the middle class here as those earning $10,000 to $60,000 annually and set it at greater than 300 million.
Above an earning level that allows the middle and millionaire classes to buy name brand clothing, imported food means putting safe food on their families’ dinner plates.
“The food chain supply, domestically, is not trustable. I think, right now the entire nation, everybody trusts the imported foods,” said Robin Wang, the Alaska Seafood Marketing Institute’s representative in China on Nov. 7.
“Quality” seafood, Wang explained, refers not only to properly handled but safe food and may command a premium as high as 80 percent.
“A Shanghai guy flies fresh milk from New Zealand and delivers it to your door for $20 a liter ($40 per gallon). There’s a huge demand for that,” said Redmayne, noting that Shanghai may be China’s wealthiest city.
Fishmongers from Alaska and the rest of the world are preparing to capitalize on economic developments.
“It’s been quite an eye-opener. The market potential is indescribable,” said Juneau seafood packer Mike Erickson, at the conclusion of his first China expo.
The president of Alaska Glacier Seafoods said he made the trip primarily searching for sea cucumber buyers. He’s going home working on the logistics to fly live Dungeness crab to Dalian on return flights of what are now sometimes empty Boeing 737s cargo liners.
“Based on the amount of interest that is here I don’t think it would be very difficult to put 25 tons of crab in here on one shipment. I don’t think that would be very difficult at all,” Erickson said.
Erickson’s new interest in, and enthusiasm for, the Chinese market was not unusual. Alexa Tonkovich, ASMI’s international promotions director, said “as many or more than any previous year I can remember” Alaskan processors visited this year’s expo.
“Alaska, I think, is really well positioned to capitalize on this market because we have a variety of different species and a variety of different price point. No, maybe not every middle class Chinese person is going to be able to afford king crab but I bet some of them can afford yellowfin sole or pink salmon.
ASMI’s annual expo reception also marked a first this year. The state Division of Tourism cosponsored “Night of Alaska Seafood” gala where top Chinese buyers dined on some 200 pounds of seafood donated by Alaska processors while watching videos of tourism destinations around the state.
“The middle class wants to buy all kinds of seafood,” said Cyr Couturier, of the Canadian Aquaculture Industry Alliance.
“A lot of our wild seafood we send over here for reprocessing doesn’t come back any more,” Couturier said of the shift by Chinese processors from re-exporting to their domestic markets.
Charlie Wu, Asia Pacific director for Marine Harvest, the world’s largest salmon farmer, called the growing China market “fantastic.”
“We have seen 15 to 20 percent year-to-year increase in terms of customer demand,” Wu said Nov. 6.
Charlie Chang, overseas enterprise manager for one of China’s largest seafood processors, the Zhangzidao Group, said he expects to import $20 million worth of crab and lobster in 2013 and “next year we’ll be at least four times” as much.
Five years ago, Zhangzidao’s “best products” were all exported to foreign markets, according to Chang, but are now sold in China.
“If U.S. and Canadian customers want it, we don’t think about that,” Chang said Nov. 6.
Zachary Mazetta, head of Illinois-based Mazetta Co. LLC, said he’s found “a lot of new business” in the 20- to 35-year old demographic for his snow crab and lobster in the three years he’s attended the China Fisheries Expo.
“China, they’re buying. They’re going to be a player,” added Mazetta Sales Manager Gary Digout.
Even Norwegian farmed salmon producers, whose imports have been severely limited by Chinese authorities since the Nobel Peace Prize was awarded to dissident Liu Xiaobo in 2010, say their product is finding its way into the country and to the tables of new consumers.
“Especially young people. That is the most increase in salmon consumption,” said Steffen Martinsen, of Norway Royal Salmon ASA. “Due to all the problems between Norway and China we seeing if there are any problems on your side they have to stay on your side. They are taking the risk. They are still buying salmon.
“Some customers, they know people at high levels in the government and so they get (import) quotas. Some people have more influence than others.”
This year’s expo was not entirely free of political influence. The opening ceremony, including nothing more than welcoming speeches by Chinese government officials and visiting dignitaries followed by a ribbon cutting, was cancelled to avoid TV news coverage.
“The government spending, they’re very sensitive about that. Even the opening ceremony, apparently it’s not OK any more,” Redmayne said.
The expo is cosponsored by the Ministry of Agriculture and supported by the China Council for the Promotion of International Trade.
Among a dozen exhibitors interviewed at the expo, only the spokesman for the Marine Products Export Development Authority of India, which sells ribbonfish and other low value products here, said “no major changes” in sales to China.
“You can say a slight increase, but many in the China market can’t access” imported seafood, said Dr. Shine Kumar, deputy director of MPEDA.
Others were consolidating their efforts to access the burgeoning market with greater efficiency. The hot news in the Chilean pavilion was the announcement that four salmon and trout farm companies had formed a new company to handle all their Chinese business while they continue as independent competitors in other world markets.
“Until this moment every Chilean probably treated China as a spot market. With this joint venture we are going to work here the whole year and will be the biggest Chilean supplier” of farmed salmon, said Erwin Campos, managing director for New World Currents, the new company on Nov. 7.
Campos has been China sales manager in Shanghai for Camanchaca for the past decade. It and Australis Seafoods, Blumar Seafoods and Yadran High Quality Seafoods formed the new joint venture.
Campos said New World Currents plans to transition from a raw material supplier that is often confused with Norwegian product, to value-added products manufactured at its Chinese factories.
“The people will pay for the quality and we will be in a good position to sell value-added if we brand ourselves” as Chilean product, Campos explained. He said he expects current imports to China of the four companies totaling 2,000 metric tons annually to at least double.
“We are ambitious. We actually can do 10,000,” Campos added.
Four Irish salmon, white and shellfish producers formed Jade Ireland Seafoods to jointly market their products in China under the “Ocean Jade” brand.
“The four companies said, alone, we’re too small to crack the Chinese market,” said James O’Donnell, China director for Bord Bia, the national foods marketing agency.
O’Donnell said Irish seafood is “not the cheapest, one of the most expensive,” and was more guarded in his expectations from China’s new consumer market.
“Because the world economy is depressed everyone thinks all roads lead to China ... Anyone who comes to China (expo) thinking they’re going to sign contracts, you won’t. If you do it will be the cheapest product,” O’Donnell warned.
Billy Carr, a spokesman for Ocean Jade, said the foursome made their move partly because “our European buyers had us pretty well controlled” and to capture new efficiencies in the China market. Ocean Jade is operating under a three- to five-year plan “we feel is going to be successful,” Carr said.
Bob Tkacz is a correspondent for the Journal based in Juneau. He can be reached at [email protected].