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Current Position:Home » News » Agri & Animal Products » Meat & Seafood » Topic

Chinese salmon producer stumbles

Zoom in font  Zoom out font Published: 2014-02-14  Views: 21
Core Tip: A Chinese aquaculture firm’s ambitions to supply live salmon to Chinese consumers appear to have been dealt a blow.
A Chinese aquaculture firm’s ambitions to supply live salmon to Chinese consumers appear to have been dealt a blow. A report from Shanghai-based brokerage Qilu Securities is downgrading 2013 salmon sales at Shandong Oriental Ocean Co to 300 metric tons (MT) in 2013, down on the 450 MT originally projected for the firm, which is set to announce its full-year results for last year later this month.

Even as Norwegian salmon importers continue to struggle for access to China, Oriental Ocean’s problems appear rooted to a struggle to distribute its salmon. Analysts have blamed the Oriental Ocean sales model that focuses on selling live salmon in tanks in supermarkets — a common sales method in Chinese supermarkets where customers like to select a fish and observe its slaughter on-site. This is seen as a way of proving the freshness and quality of the fish. Yet the suitability of the model for salmon has long been questioned by seafood analysts here, given much of China’s salmon consumption happens in the booming sushi/sashimi restaurant scene rather than in homes while confusion over preparation means catering firms often prefer to buy ready-prepared salmon.

Also, investors have been disappointed by weak demand for collagen — a key byproduct for Oriental Ocean from its salmon breeding business. Collagen is sold in China as a solution for skin whitening, a cosmetic priority among the middle classes here. "Collagen sales were lower in 2013," according to Qilu.

Based in the port city of Yantai in Shandong province, Oriental Ocean had bet large on demand for salmon among China’s wealthy, having already invested in sea cucumber cultivation. Originally known as a seafood processor, Oriental Ocean has justified its strategy of charging slightly higher prices for its salmon than those of imported salmon. A company salesman at an Oriental Ocean shop in Yantai said the firm’s salmon was retailing at CNY 168 (USD 28, EUR 20) per 500 grams (g) live and at an average CNY 580 (USD 96, EUR 70) per whole fish (gutted). Norwegian salmon retails at approximately CNY 190 (USD 31, EUR 23) per kilo at wet markets in downtown Beijing.

In an earlier briefing company vice president Tang Jiyu justified the price gap to investors: “China’s salmon needs have so far been satisfied by imports but those imports are frozen and do not match the taste or nutritional value of our live salmon.”

Fatter margins were also designed to attract investors. While reducing the firm’s outlook from 450 MT to 300 MT, Qilu Securities has maintained its projection of a 60 percent margin on Oriental Ocean salmon sales. Salmon will thus become the main source of profit for Shandong Oriental Ocean, which had also sought to grow its cultivation space for sea cucumbers. Demand for sea cucumber has been hit by an ongoing austerity drive in Chinese government banqueting circles.

In an attempt to drive sales, Oriental Ocean has opened a large self-operated shop in the Caishan district of Yantai, showcasing its salmon in live tanks. Staff explain to customers how the salmon are Chinese, but with Norwegian origins: Norwegian firm Aquagen provided Atlantic salmon eggs while another Norwegian firm, Aquaoptima, sold Oriental Ocean “water circulation seed breeding outfits and technology.”

Aside from pointing out the reddish (regarded as auspicious in China) color of the salmon meat, leaflets in-store promote the health benefits of Chinese salmon: “it can reduce blood cholesterol levels…promote effective prevention and treatment of cardiovascular and cerebrovascular diseases, and promote brain, retina and nervous system development…”

Oriental Ocean earlier claimed to have the world’s largest Atlantic salmon farm and vowed to replace imports with local salmon. Tang Jiyu last year told investors his company — one of China’s largest listed seafood cultivators and processors - has “overcome the bottleneck of culturing problems of salmon” using salmon cultivation tanks, which according to Tang are based on “water recirculation technology” and “strictly monitored” water quality gauges.

Listed on the Shenzhen stock exchange, Shandong Oriental Ocean imported 200,000 salmon fish fries from Norway over the past two years and partnered with the Ocean Research Institute of the Chinese Academy of Science in a breeding program centred on Da Ji Jia town, near the port city and seafood processing hub of Yantai. Since May 2012, Shandong Oriental Ocean started to sell live salmon to local retailers, “and received recognition from food and beverage sectors for the quality of the fish,” according to an official statement from the firm. In September last year Oriental Ocean started to supply outlets JUSCO supermarket (a subsidiary of Japan-based AEON) with whole salmon selling for CNY 550 (USD 91, EUR 66), and fresh salmon sashimi retailing for CNY 140 (USD 23, EUR 17) per 500g.

 
 
 
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