Sector Trend Analysis – Fish and seafood trends in China

Market trends

China is not only the world's largest aquaculture producer and exporter (OECD-FAO, 2021), it also leads the world in fish and seafood consumption (USDA, 2019). With Chinese consumers increasing their spending on high quality, value-added fish and seafood products (Wang et al., 2021), the per capita consumption on fish and seafood will grow faster than that of meat.

China's coastal urban areas, where fish and seafood products have been a traditional source of protein, have the highest per capita consumption of such products. The Chinese seafood catering industry is highly concentrated in areas such as the Yangtze River Delta, Bohai Rim, and Pearl River Delta (Tian et al., 2021).

The rapid development of fresh food e-commerce in China is slowly changing the stereotypes related to regional dietary preferences. A Chinese market report published in 2019 found that the city with the highest preference for fish and seafood products is Lanzhou, the capital city of northwest China's Gansu province (CBNData & Alibaba local life service company, 2019). According to the Canadian Association of Prawn Producers, although northwest China does not directly import Canadian cold-water shrimp (called Arctic shrimp in the Chinese market), it is an important market for cold-water shrimp in China. Each year, a large volume of Canadian cold-water shrimp is exported to Qingdao, Dalian and other coastal ports and then reshipped to northeastern cities like Xi'an, Lanzhou, Xining and Urumqi, where they have become a favourite dish (Canadian Association of Prawn Producers, 2021).

With the rapid increase in disposable income, fish and seafood consumption grew faster in rural areas than in urban areas from 2015 to 2019. As Chinese consumers living in third-tier (and below) cities and rural areas are expected to drive the next wave of consumption (Tan & Wang, 2020), high-end imported seafood products like Canadian lobster will find new opportunities for growth in China. Big e-commerce platforms and fresh supermarkets such as Pinduoduo, Alibaba, RT-MART and Yonghui Superstores are bringing an affordable middle-class lifestyle to rural residents through live streaming and aquatic counters, while the ever-improving supply chain logistics and community retail models such as fresh group buying and front-warehousing-to-home are making imported fish and seafood products fresher and more affordable (Wu, 2021).

In 2021, China Nutrition Society, the country's dietary advisory body, recommended that Chinese residents optimize their animal protein consumption by moving away from consumption focused primarily on pork and increasing their intake of seafood products rich in omega-3 fatty acids. The average intake of fish and shrimp in China is 24.3 grams/day currently; this consumption has not increased significantly over the years but is expected to rise to 40.0 grams/day (China Nutrition Society, 2021).

Securing an affordable and sufficient supply of fish and seafood has been an indispensable pillar of China's food security strategy (Government of China, 2008; Han & Li, 2015; Ministry of Agriculture and Rural Affairs of China, 2017). Mariculture is seen as a "blue granary" that can help solve China's food security challenges as it can reduce demand for pork and raw grains and meet the varied nutritional needs of the Chinese people (Yu & Han, 2020). As domestic production capacity is unable to satisfy Chinese consumer demand for fish and seafood, the supply shortage in China is forecast to reach 6 to 18 million tonnes by 2030 (Crona et al., 2020). China will rely on a combination of domestic freshwater and offshore aquaculture, fish and seafood imports, distant water fishing, and investment in global seafood production to meet the increasing demand (Crona et al., 2020).

All these trends indicate that there are still opportunities for Canadian fish and seafood exporters to further expand their market share in China.

Trade overview

With imports of US$15.3 billion in 2020, China is the second largest fish and seafood importer in the world, after the United States (US$23.0 billion). Chinese imports grew in value at a CAGR of 13.7% from 2016 to 2020. In terms of volume, China's imports ranked 1st in the world.

China has a diverse network of suppliers of fish and seafood products, with imports coming primarily from Russia, Ecuador, Vietnam, Peru and the United States. Russia is China's largest supplier of fish and seafood in 2020, and the value of its imports has been growing steadily. Other fast-growing suppliers are Ecuador and India.

Canada ranked 8th among the leading suppliers of fish and seafood to China in 2020. Canada's share of imports grew at a CAGR of 8.1% from 2016 to 2020, but its market share was 5.5% in 2020.

China's total fish and seafood imports grew from US$9.1 billion in 2016 to US$15.3 billion in 2020, a CAGR of 13.7%. In 2020, the top five commodities imported by China were frozen shrimp and prawns (US$3.1 billion), flours, meals and pellets of fish or crustaceans, molluscs, inedible (US$2.0 billion), live/fresh/chilled rock lobster (US$897.3 million), frozen fish (US$825.0 million), and live/fresh/chilled crabs (US$803.1 million).

Top five global suppliers of fish and seafood to China, by top three products, in US$ million, historical

Canada's performance

Since 2016, Canada has increased its fish and seafood exports to China. Canada was China's 8th largest supplier of fish and seafood in 2020. China imported US$839.0 million of fish and seafood from Canada in 2020, with these imports having increased by CAGR of 8.1% from US$613.9 million in 2016. The top Canadian fish and seafood imports were live/fresh/chilled lobsters, (US$344.2 million), frozen cold-water shrimps and prawns (US$100.4 million), live/fresh/chilled crabs (US$86.6 million), and frozen crabs (US$49.3 million).

From 2016 to 2020, Canadian fish and seafood exports to China grew faster in value than in volume (7.6% vs. 1.3%). Much of this increase is attributable to growth in exports of luxury seafood products such as lobsters, frozen cold-water shrimps, crabs and sea cucumbers. The unit value of Canadian fish and seafood exports also rose (CAGR of 6.2%) from 2016 to 2020.

The increase in exports of luxury seafood products to China is associated with multiple factors including the popularity of famous regional seafood cuisines (Shandong's lucai (鲁菜) and Cantonese yuecai (粤菜), the influence of traditional Chinese medicine, and most importantly, the prevailing notion of social status ("mianzi") and conspicuous consumption linked to the increase in the size of the middle class and in the number of affluent consumers (Fabinyi, 2011, 2015, 2018).

Retail sales

China's total retail sales of fish and seafood grew in value at a CAGR of 10.3% from 2016 to 2020 and were valued at US$89.2 billion (42,267.4 thousand tonnes) in 2020. They are expected to increase at a rate of 5.8%, to US$100.6 billion (50,015.3 thousand tonnes), by 2025. Retail sales in 2020 indicate that Chinese consumers show a preference for fresh fish and seafood and frozen processed seafood. This preference is expected to continue during the forecast period.

Due to the COVID-19 national lockdown, food service closures and losses via institutional sales, the Chinese fish and seafood market experienced a contraction in the overall volume of sales in 2020. Meanwhile, the average unit price for fish and seafood products declined in 2020 as a result of the oversupply situation created by food service closures and reduced exports. Nevertheless, fish increased its share of the overall category in 2020 as it is widely popular among the majority of Chinese households and can be more easily cooked at home than crustaceans, molluscs and cephalopods (Euromonitor International, 2021).

Moving forward, the Chinese fish and seafood market is expected to recover in 2021 with growth set to return to pre-pandemic levels beginning in 2022. However, significant economic fallout from the pandemic could negatively impact disposable incomes, meaning that people are likely to cut back on their out-of-home consumption of fish and seafood compared to the situation prior to the pandemic (Euromonitor International, 2021).

Competitive landscape

In 2020, the top 10 processed fish and seafood companies in China accounted for 37.2% of the market.

Fujian Anjoy Food, Guangdong Ganzhu Canned Food and Fujian Haixin Food were the top three companies in 2020. Fujian Anjoy Food saw the largest growth (23.8%) in retail sales, from US$120.6 million in 2016 to US$283.5 million in 2020.

New product launch analysis

According to Mintel's Global New Products Database (GNPD), there were 1,251 launches of processed fish products in China between January 2016 and December 2020. In 2020, the top claims (may contain more than one claim per package) were ease of use, social media, no additives/preservatives, microwaveable and ethical or environmentally friendly product. The top five brands were Blue Snow, Hai Xin Yu Ji, Four Seas, Da Yu Shi / Harvest Fish Harbor and Ocean Gala. The top flavours were unflavoured/plain, hot, spice/spicy, cheese and garlic.

Despite the economic decline caused by COVID-19, Chinese consumers are still willing to pay a premium price for fish and seafood products that they perceive to be of better quality, natural, safe and healthy. Also, traditional delicacies like abalone, sea cucumber and fish maw, which are usually served on special occasions, are gaining retail presence and are likely to appeal to consumers (Mintel, 2020).

Examples of new product launches

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Resources

• Canadian Association of Prawn Producers. 2021. 北极虾"南下"趋势锐不可当，"南宋版图"等待您开疆拓土! (Arctic shrimp "south" trend is unstoppable, "Southern Song map" waiting for you to open up the territory!)
• China Nutrition Society. 2021. 中国居民膳食指南科学研究报告（2021) (Scientific research report on dietary guidelines for Chinese residents (2021)).
• Crona, B., Wassénius, E., Troell, M., Barclay, K., Mallory, T., Fabinyi, M., Zhang, W., Lam, V. W. Y., Cao, L., Henriksson, P. J. G., & Eriksson, H. 2020. China at a Crossroads: An Analysis of China's Changing Seafood Production and Consumption.
• CBNData & Alibaba local life service company, 2019, CBNData 发布《2019线上生鲜消费发展趋势报告》 CBNData released the "2019 Online Fresh Consumption Development Trend Report"
• Euromonitor International. 2021.
• Euromonitor International. 2021. Fish and Seafood in China.
• Fabinyi, M. 2011. Historical, cultural and social perspectives on luxury seafood consumption in China. Environmental Conservation.
• Fabinyi, M. 2015. Producing for Chinese luxury seafood value chains: Different outcomes for producers in the Philippines and North America.
• Fabinyi, M. 2018. The Chinese seafood market: Opportunities and challenges for Australian exporters [Text]. Australia-China Relations Institute.
• Global Trade Tracker. 2021.
• Godfrey, Mark. 2021. Demand for seafood outstripping supply in China.
• Government of China. 2008. 国家粮食安全中长期规划纲要（2008-2020年 National Food Security Medium and Long-Term Planning Outline [2008-2020].
• Han, L. M., & Li, D. 2015. 蓝色粮仓":国家粮食安全的战略保障 (Blue Food System: Guarantee of China's Food Security).
• Mintel Global New Products Database. 2021.
• Mintel. 2020. A year of innovation in fish, 2020.
• Ministry of Agriculture and Rural Affairs of China. 2017. 大力推进供给侧结构性改革 加快实现渔业现代化——农业部副部长于康震就《全国渔业发展第十三个五年规划（2016-2020年）》发布答记者问（Vigorously promote the structural reform of the supply side to accelerate the modernization of fisheries—Vice Minister of Agriculture Yu Kangzhen on the release of the 13th Five-Year Plan for National Fisheries Development (2016-2020) Answer reporters' questions).
• Tan, S., and Wang, Y. (2020). Can China's "Stall Economy" Save Its Stalled Economy? Center for Strategic and International Studies.
• National Bureau of Statistics of China. 2020. China Statistical Yearbook 2020.
• OECD-FAO. 2021. Agricultural Outlook 2021-2030.
• Tian, C., Luan, W., Li, S., Xue, Y., & Jin, X. 2021. Spatial imbalance of Chinese seafood restaurants and its relationship with socioeconomic factors. Ocean & Coastal Management, 211, 105764.
• USDA. 2020. Continued Seafood Import Growth in 2019.
• Wang, O., Somogyi, S., & Ablett, R. 2021. The influences of quality attributes and socio-demographics on Chinese consumers' general and online consumptions of Canadian, US and Australian lobsters.
• Wu, L. 2021. 1年吃掉2.5万吨波龙，谁把高端海鲜端上了下沉市场的餐桌？ (One year to eat 25,000 tons of Boston lobster, who put high-end seafood on the table of the sinking market?). CBNData.
• Yu, J., & Han, Q. 2020. Food security of mariculture in China: Evolution, future potential and policy.

Sector Trend Analysis – Fish and seafood trends in China
Global Analysis Report

Prepared by: Zhiduo Wang, Market Analyst

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