By Mark Godfrey, SeafoodSource contributing editor reporting from Beijing, China

Published on Wednesday, June 17, 2015

Seafood exporters in one of China’s key seafood processing regions have been told they must improve currency hedging and adapt products after a shock drop in exports in the first five months of the year. A collapse in shipments to Russia blamed on a weak ruble was largely to blame for a 7.4 percent drop year-on-year in seafood export volumes and a 10.02 percent drop in value terms from the east coast province of Zhejiang, according to local authorities.

Cities along the Zhejiang coast have built up canneries and processing plants for seafood landed from Chinese vessels fishing local and far-distant seas. Officials were alarmed when the province of Zhejiang saw its shipments to Russia – a top-five market – fall by 62 percent, a fall attributed to the drop in value of the Russian currency.

Meanwhile, the Zhejiang provincial General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) office blamed the ongoing appreciation of the yuan against the dollar for hurting shipments to the United States, which fell 32 percent year on year. Weaker demand for tuna was also blamed by the AQSIQ, which pointed to the same reason for a 20 percent fall in exports to Thailand.

Unspecified “technical trade barriers” by the United States along with rising Chinese labor costs were perennial reasons cited as challenges for Zhejiang in AQSIQ’s statement. Some of the solutions it suggested, however, are newer: it wants seafood producers in the region to switch to “small-volume, fast dispatch” shipments, which means firms will have to become more nimble and adaptable rather than waiting for high-volume orders.

This comes as AQSIQ is suggesting more “deep-processed” and “added value” products rather than filets and other quick-frozen products. Africa and Southeast Asia are pointed out as the alternative markets to chase.

Weaker demand in Korea for live fish and higher labor costs at home were outlined by one key aquaculture player in Zhejiang for a weak year thus far. Yu Huan Zhong Gang Aquaculture Co. based in Taizhou city typically ships 1,000 metric tons (MT) annually but has only managed 100 MT so far this year, according to general manager Chen Meizheng. The firm, which ships live perch and grouper among other species, has seen feed prices rise 30 percent over the past year while labor costs in the past five years have doubled, according to Chen. The firm hopes to benefit from a traditional pick up in Korean demand in June and July. “But we are definitely looking to alternative domestic markets for our fish,” he said.