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Sector Trend Analysis – Fish trends in China

March 2020

Executive summary

Chinese fish imports from Canada represent 2.7% of the country's total fish imports, with frozen halibut, fresh salmon, frozen flat fish, and frozen hake representing 86.6% of total imports from Canada. Since 2015, imports of fresh salmon and frozen halibut have grown the fastest, at a Compound Annual Growth Rate (CAGR) of 111.9% and 76.0% respectively.

China mainly imports fish for further processing into value added products for export. Total value of China's fish imports reached Can$7.5 billion, largely consisting of frozen cod, fresh salmon, frozen Alaska pollack, and frozen fish.

The effect of the rising middle class and disposable incomes is allowing consumers to trade up for higher quality food products. Consequently, premium fish is becoming increasingly popular among these new Chinese consumers. Fish products with labels that claim the products are organic, caught in the wild, or imported gained popularity in recent years albeit with higher unit prices, mainly because consumers believe that they are healthier and more nutritious.

Canadian fish and seafood e-commerce retailers are expected to reach over 450 million Chinese consumers through the e-commerce pavilion established between Chinese online retailing giant Alibaba and Canada in 2016.

China a growing market

At 202 million people, China's middle class is the country's fastest growing social class and expected to remain so through to 2030. It is expected that lower middle class households will become the country's largest social class at 378 million people by 2030. Combined, low income and lower middle class households consist of 711 million people, or 62.3% of China's 1.14 billion population.

Average annual disposable income per rural and urban Chinese household is US$11,713 and US$19,498 (2017) respectfully. In comparison, average annual disposable income for rural and urban Canadian households is US$54,606 and US$67,382 respectfully.

The growth of China's emerging middle class has brought sweeping economic change and social transformation. The evolution of the Chinese middle class over the last two decades means an emergence of sophisticated and seasoned consumers, who are able and willing to pay a premium for quality food products.

Higher disposable income is expected to drive Chinese seafood consumption. Increasing food safety incidents related to livestock and poultry products have also encouraged Chinese consumer's spending on seafood products. Freshwater aquaculture products raised in China and local seafood are consumed at home and restaurants due to their affordable price and freshness. More expensive imported fish and seafood tend to be more widely consumed at high-end hotels and restaurants. With increasing discretionary spending and the quest for better quality food products, the growing middle-class consumer in China is able and willing to pay more for premium quality products. Canada's clean natural environment, its rich variety of seafood species and its strict food inspection regulations are good selling points in promoting Canadian fish and seafood to Chinese consumers.

Most Chinese consumers prefer live/fresh seafood goods to processed products. Thus, domestic consumption of processed seafood products is small compared to the overall domestic seafood consumption. However, along with the improvement of China's processing and distribution/cold chain systems and affluent consumers' increased interest in a more diversified and nutritious diet, frozen and processed seafood consumption is expected to increase. The per capita consumption of seafood products is the highest in China's coastal regions (where seafood products have been a traditional source of protein) and locations with relatively high disposable income.

The Guangdong region is China's largest in terms of total consumer spending due to its large population and strong economy. Consumer spending in Tianjin and Ningxia regions is forecasted to grow the fastest in China between 2018 and 2030, owing to a rise in manufacturing investments.

Chinese supply

China is, by far, the world's largest fish producer, producing 81.5 million tonnes (2016). Aquaculture is the key factor driving production, accounting for over 60% of world cultured fish and seafood production, also making China the world's largest aquaculture producer. Carp is the most popular cultured fish, followed by Tilapia and catfish. China is the world's largest Tilapia producer. Most Chinese consumers prefer live/fresh seafood to processed products. China's processed fish and seafood production is mainly destined for the export market.

Top 10 world fish producers in tonnes
Country 2012 2013 2014 2015 2016
China 70,400,000 73,700,000 76,100,000 78,800,000 81,500,000
Indonesia 15,500,000 19,400,000 20,900,000 22,400,000 23,200,000
India 9,109,609 9,222,391 9,893,980 10,100,000 10,800,000
European Union 5,942,225 6,274,691 6,757,613 6,658,750 6,556,680
Vietnam 5,590,574 5,803,722 6,048,983 6,207,514 6,420,471
United States 5,521,244 5,582,390 5,405,670 5,471,445 5,375,386
Russian 4,484,507 4,521,642 4,429,766 4,617,875 4,947,253
Japan 4,836,243 4,763,637 4,756,123 4,655,760 4,343,257
Philippines 4,749,536 4,576,328 4,587,385 4,503,067 4,228,906
Peru 4,925,089 6,002,129 3,714,469 4,929,850 3,911,989
Source: OECD, 2018

Per capita consumption

Per capita consumption of fish and seafood in China increase from 3.4kg in 2012 to 3.7kg in 2017, which is lower than the global (5.4kg) and regional (4.7kg) levels. Furthermore, it is expected to increase to four kg by 2022.

Per capita expenditure of fish and seafood in China increased from US$10.1 in 2012 to US$12 in 2017, which is lower than the global (US$35.7) and regional (US$21.5) averages. Furthermore, it is expected to reach US$15.2 by 2022.

Historic and forecast per capita consumption (in kilograms) on fish and seafood in China, 2015-2022
Per capita consumption 2015 2018 CAGR* 2015-2018 % 2019 2022 CAGR* % 2019-2022
Global 5.2 5.5 1.4 5.6 5.8 0.9
Asia-Pacific 4.5 4.8 1.6 4.9 5.2 1.5
China 3.6 3.8 1.4 3.8 4 1.3

Source: GlobalData 2019

*CAGR: Compound Annual Growth Rate

Historic and forecast per capita expenditure (US$) on fish and seafood in China, 2015-2022
Per capita expenditure 2015 2018 CAGR* 2015-2018 % 2019 2022 CAGR* % 2019-2022
Global 34.9 37.4 1.7 38.8 42.5 2.3
Asia-Pacific 20.7 22.7 2.3 23.9 27.4 3.5
China 12 12.6

1.2

13.1 15.2 3.8

Source: GlobalData 2019

*CAGR: Compound Annual Growth Rate

International competition

Russia and the U.S. are the largest fish exporters to China, representing 42.3% of total exports. Canada is the 7th largest fish exporter to China.

Top ten fresh, frozen and processed fish exporting countries to China in 2018 in Can$
Rank Country Value % Share
1 Russia 2,216,286,120 29.7
2 United States 937,419,551 12.6
3 Norway 708,922,389 9.5
4 Viet-Nam 526,471,062 7.1
5 Chile 522,554,554 7.0
6 Indonesia 210,694,161 2.8
7 Canada 204,547,474 2.7
8 Greenland 182,036,489 2.4
9 Taiwan 180,799,029 2.4
10 India 177,956,443 2.4
Source: Global Trade Tracker, 2019

China mainly imports fish for further processing into value added products for export. Total value of China's fish import reached Can$7.5 billion, which represents a CAGR of 12.8% since 2014. Imported fish in 2018 largely consist of frozen cod, fresh salmon, frozen Alaska pollack, and frozen fish. Imports of frozen catfish grew the fastest at 101.6%, followed by frozen halibut (30.9%), and fresh atlantic salmon (30.9%).

Chinese imports from Canada represent 2.7% of the country's total imports, with frozen halibut, fresh salmon, frozen flat fish, and frozen hake representing 86.6% of total imports from Canada. Since 2015, imports of fresh salmon and frozen halibut have grown the fastest, at a CAGR of 111.9% and 76.0% respectively.

China's top fresh, frozen and processed fish imports from the World, Can$ million
HS Code Description 2014 2015 2016 2017 2018 CAGR* % 2014-2018
World total 4,609.8 4,7330.0 5,206.6 5,687.8 7,471.4 12.8
030363 Frozen code 556.4 626.8 749.7 879.6 942.5 14.1
030214 Fresh or chilled atlantic salmon 287.9 393.6 434.4 459.3 844.7 30.9
030367 Frozen Alaska pollack 929.0 935.2 865.7 838.2 843.2 −2.4
030389 Frozen fish, n.e.s.[1] 568.3 576.7 638.8 573.9 782.6 8.3
030312 Frozen Pacific salmon 443.8 430.2 529.0 555.1 740.7 13.7
030331 Frozen halibut 101.0 151.6 147.3 143.0 429.1 43.6
030339 Frozen flat fish 259.0 226.4 270.5 339.6 379.8 10.0
030462 Frozen fillets of catfish 21.1 42.2 69.0 119.1 348.1 101.6
030354 Frozen mackerel 225.6 193.7 183.8 222.7 218.4 −0.8
030364 Frozen haddock 167.5 115.9 132.4 160.9 205.1 5.2

Source: Global Trade Tracker, 2019

*CAGR: Compound Annual Growth Rate

1: No Elsewhere Specified

China's top fresh, frozen and processed fish imports from Canada, Can$ million
HS Code Description 2014 2015 2016 2017 2018 CAGR* % 2014-2018
Canada total 86.6 135.9 172.9 126.4 204.5 24.0
030331 Frozen halibut 7.0 18.7 6.6 4.6 67.4 76.0
030214 Fresh or chilled Atlantic salmon 3.2 37.0 66.2 22.0 64.0 111.9
030339 Frozen flat fish 13.3 15.2 18.3 22.3 24.6 16.7
030366 Frozen hake 21.1 15.9 24.5 35.0 21.1 0.0
030389 Frozen fish, n.e.s.[1] 13.0 25.4 29.8 15.9 9.2 −8.3
030312 Frozen Pacific salmon 9.4 2.8 12.3 9.9 4.7 −15.9
030520 Fish livers 2.6 4.8 6.1 5.3 3.9 10.9
030341 Frozen tuna 3.3 3.0 1.2 1.1 3.7 2.9
030351 Frozen herrings 1.4 2.0 2.1 5.1 2.7 17.3
030319 Frozen salmonidae 69,912K 405,913K 841,274K 2.8 1.1 100.1

Source: Global Trade Tracker, 2019

*CAGR: Compound Annual Growth Rate

1: No Elsewhere Specified

Import tariff reduction

Since joining, the World Trade Organization (WTO) in 2001 China has made considerable progress in reducing tariffs on fish and fish products. In terms of average import tariff for aquatic products, China has decreased the rate as low as 5% on certain products (World Trade Organization).

E-commerce: Emerging opportunities

Supermarkets and hypermarkets are the main distribution channels for live/fresh, frozen, chilled and processed fish and fish products. Directly Imported Goods Markets (DIG Market), such as the Shanghai Free Trade Zone (SFTZ), is a popular channel for Chinese consumers to buy imported merchandises. Frozen, chilled and processed products are especially popular because of their relatively low prices for a high end quality-imported product, which is made possible by cutting out distributors between overseas suppliers and customers.

However, these channels have lost market share in packaged food sales in recent years due to rising competition from e-commerce websites, which are experiencing growth thanks to the increasing number of smartphone and Internet users in China. Ecommerce currently is the fastest growing channel in China.

In 2016, Alibaba partnered with the Canadian Trade Commissioner Service (TCS) to help connect Canadian businesses, especially small and medium-sized enterprises (SMEs), with the Chinese e-commerce market, which are expected to reach over 400 million Chinese consumers through Alibaba's e-commerce platform.

Conclusion

China's ever growing middle class consumers is demonstrating growing interest in the health benefits of consuming fish and seafood products, as well as a keen awareness of value in quality. Demand for quality, safe fish product, and expanded services is surging, particularly home delivery, and these are becoming commonplace methods by which companies add value to their brands and expand their customer base. The fish sector in China is expected to continue posting growth over 2019 to 2022. Opportunities for Canadian exporters may be found in supplying high-quality ingredients and trusted fish products that suit the diversifying and discerning palate of Chinese foodservice patrons and home cooks alike.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

For additional information on China Fisheries and Seafood Expo (CFSE) 2019, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-Food Canada
ben.berry@canada.ca

Resources

Sector Trend Analysis – Fish trends in China
Global Analysis Report

Prepared by: Kris Clipsham, Market Analyst

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