Higher costs of doing business and compliance mean China’s aquaculture sector is facing a corporate restructuring with the emergence of vertically-integrated champions. Producers like Baiyang and Guolian as well as feed manufacturer Tongwei will stay ahead of the pack due to their ability to secure quality raw material supply while also building their national cold chain distribution chains in order to tap undoubted domestic demand for processed seafood products.
The ability of firms to finance expansion will determine who emerges as champions but the large debt loads of Chinese seafood firms is a worry. Firms like Guolian have carefully studied the business model of vertically integrated regional firms like Charoen Pokphand (which is also active in China) and want to move up the value chain to distribution of value-added products.
This would indicate that a core group of Chinese aquaculture firms will be dominant players but will orient their activities more to the domestic Chinese market rather than a current dependence on export markets.
While their ability to create trusted brands with national distribution networks, giving better margins and earnings, the internationalization of Chinese aquaculture companies will likely be a feature of the next decade.
Much in the way that companies like Shanghai Bright Foods have secured land banks, dairy farms and food processors and brands overseas it is also likely that firms like Baiyang, Guolian and Tongwei will seek to secure supplies of fishmeal and supply contracts in overseas markets in terms of aquaculture production. Guolian has already sought to secure shrimp production facilities and firms in Latin American hotspots like Ecuador and Venezuela.
China's Ministry of Agriculture meanwhile has a cooperation agreement in training and equipment for shrimp production with Venezuela’s Socialist Institute of Fisheries and Aquaculture (INSOPESCA) while the China Development Bank is a key lender to governments in the region.
