China’s booming seafood market offers huge opportunities for international exporters | Daxue Consulting
The Chinese seafood market is booming, and the demand for imported seafood is also growing rapidly. China has a long history of eating seafood, especially for coastal residents, seafood has always been an indispensable component of a complete dining-table. After China’s reform and opening-up, an active import of foreign seafood began. Back then, imported seafood was considered novel and luxury. However, seafood is now accessible to the Chinese mass market. With China’s economy growing and people’s quality of life elevating, the seafood market has expanded continuously, e.g. the sales quantity of processed seafood, including chilled, frozen and shelf-stable seafood, shows a steady growth since 2012.
The credit of Chinese seafood market’s growth can go to rising per capita disposable income in China and improved life quality, both in rural and urban areas. In 2017, the disposable income of national residents has achieved a 7.3% year-on-year growth. This means, more consumers are able to afford seafood, even in inland rural areas.
Chinese seafood consumers want it all: Health, Freshness and Taste
China has a rich catering culture and a long food-therapy history, Chinese people deeply believe in the relation of what they put in mouth and their health condition. In recent years, environmental pollution and food safety have been seen as crucial issues, imported seafood is often considered more nutritious and safer due to the water quality and stricter quality control. Consumers are becoming more and more aware of the health benefits of seafood, such as the high amount of unsaturated fatty acids.
“Besides pork and egg, seafood has become an important source of protein for Chinese consumers, which influences the consumption structure in China”, says Mike Vinkenborg, project leader of Daxue consulting.
Although the health factor plays an important role of Chinese dining table, taste cannot be compromised. As we can see from the comments on Chinese popular e-commerce platforms, positive feedback coming from seafood buyers mainly focuses on deliciousness and freshness, while negative feedback is usually about safety issues.
Brands capitalize on preference for freshness and flavor when naming their brand
Naming brands or products in China is a tricky, yet crucial part of a market-entry since Chinese people attach great importance to names. Not only the pronunciation but also the chosen characters have to be taken into consideration for brand naming. Looking at the Chinese seafood brands’ naming, most seafood vendors try to emphasize freshness by using Chinese words “鲜 (meaning fresh)” and/or “生 (meaning raw/living)”, as well as to imply deliciousness by using words like “味(taste)” and/or “香 (good smelling)”.
Chinese consumers are hungry for imported seafood
China has been one of the most important seafood markets in the world, its market demands of imported seafood have reached 7.6 million tons in 2017. In 2017, Russia is the largest exporter of seafood to the Chinese market. USA, Canada, New Zealand, and Norway are also important sources for importing seafood in China. Imported products mainly include shrimp, salmon, crab. Based on the information from e-commerce platforms, most popular imported seafood are frozen products. The top sellers’ prices are relatively low among all segments of imported seafood on JD. During important festivals, seafood has been one of the main products purchased online. For example, 38% of food sales on Fresh.jd.com came from seafood during Chinese New Year in 2018.
The most related keywords of “salmon” on Baidu Index mainly consist of “the way of making salmon”, “Norwegian salmon”, “price” and other saltwater fish like “trout” and “grouper”.
The most related keywords of “lobster” are “crayfish”, “Australian Lobster”, “lobster breeding”, “Australian” and “how to cook lobsters”.
Baidu is the number one search engine in China. More than ¾ of the total search is made by Baidu. Baidu index collects and analyzes the statistical data of searching behavior, which reveals the market trend.
The particularities about the Chinese seafood market that brands should consider
The Chinese seafood market is highly seasonal and festival-dependent
As we can see on Baidu index, the search frequency of both “saltwater fish” and “saltwater shrimp” went significantly high during the periods of Chinese New Year (normally at the end of Jan. to the beginning of Feb.). And again, search frequency grew enormously every year in the fall season, which is considered by the Chinese as a good season to eat fresh fish/shrimps. Due to the Chinese national day, which is on the 1st of October, the search frequency goes very high every time at the beginning of October. The whole country will have a 7-day-holiday at this period of time, and seafood producers may also prepare special gift boxes with living or frozen seafood inside so that the Chinese consumers can just grab it in an online or offline shop and bring as a present when visiting family or friends.
Chinese seafood is as peculiar as it is delicious
Many kinds of seafood which Chinese consumers love are not common in other countries and even considered as peculiar, like sea cucumber, fish balls, turtle and eel. However, even though consumers from other countries don’t purchase certain kinds of seafood, it is still an opportunity for international seafood exporters. For example, there are lots of dried sea cucumber from the U.S., Canada and New Zealand being sold at relatively high prices, China has a long history eating sea cucumbers and believe they have a lot of health benefits. Also, seafood snacks are quite common in China, e.g. processed dried squids or fish, which suit many Chinese consumers’ taste better and considered as a healthier option compared to other snack options like candy or chocolates.
Seafood has different presentation and distribution channels in China
As mentioned before, Chinese consumers attach great importance to the freshness of the seafood. That’s why purchasing living seafood on a Chinese traditional food market is still common, especially for the older generation. Meanwhile, many retailers and restaurants present their seafood in glass tanks or on the ice, no matter if it is fish, crabs or turtles, in order to show the freshness of their products.
By looking at the Chinese catering industry structure, we see hot pot contributing 22% of the total revenue of China’s catering industry, following by Buffet with 12% and barbecue as well as Japanese cuisine both with 5%. For all these types of Chinese cuisines, seafood plays a significant role, which provides huge opportunities for imported seafood. For example, a major proportion of imported salmon on Chinese seafood market are not consumed at home, but on the catering market. China has no long history of consuming salmon, however, in the last decades, Japanese cuisine has become very popular, especially among Chinese millennials. Sushi and Sashimi (Japanese raw fish) are being widely accepted, raw salmon is even on the menu of many traditional Chinese restaurants as an appetizer.
Despite traditional offline retail channels and catering market, Chines e-commerce platforms can also not be ignored. Besides well-known platforms like Taobao and JD, many fresh food platforms have been developed and are achieving great success, e.g. the sales value of seafood has entered the top 3 on FFresh.jd.com in2017. For domestics and international seafood brands, dedicated websites are also important distribution channels. “Most popular seafood brands on the Chinese Market are selling their products on main e-commerce platforms. Fish dominates the seafood consumption in China for its rich variety and affordable price”, says Vinkenborg.
On Tmall/Taobao, frozen shrimp is the most popular product among all categories of saltwater shrimp and abalone is the most popular products among all categories of shellfish. There are many imported abalones being sold from different areas like Australia, South Africa, and New Zealand. According to Mike Vinkborg, Project leader of Daxue consulting: “Argentina shrimp remains the most popular imported seafood in China, salmon and crab also perform well in terms of online sales.”
A new blended retail ecosystem offers opportunities for fresh seafood distribution
New-retail is a retail ecosystem that blends online and offline channels in a unified way. Due to the rise of e-commerce, traditional retail businesses have experienced downturns. A number of foreign retailers have encountered difficulties in China, including Korea’s Lotte Mart, the US’ Walmart, and France’s Carrefour. But the growth of online retail sales will slow down as physical retail still dominates consumption, especially in the seafood section. Although many seafood products can be bought online, Chinese consumers’ buying habits make them prefer fresh seafood which they can see in a tank or on ice. New-retail offers good opportunities for the distribution of seafood on the Chinese market.
Chinese market meets all requirements for new-retail thanks to its strong consumer base, increasing purchasing power, preference for novel and luxury shopping experiences, and the widespread use of mobile payment.
Pioneer example of the new-retail model while selling seafood in China: Hema Xiansheng
Hema Xiansheng (盒马鲜生) owned by Alibaba is a combination of a supermarket, restaurant, seafood market, and mobile application. According to Daniel Zhang, Alibaba Group CEO: “Hema supermarket is what you get when you imagine a seamless blend of the online and offline shopping experience.” Chinese consumers can order seafood on Hema mobile App, which will be delivered within 2 hours to wished address. Consumers can also go to Hema supermarket to purchase grocery and pick up fresh seafood, which can be prepared and served directly in the dining area of Hema supermarket.
Now is the ideal time for foreign brands to enter the Chinese market
To sum up, the booming Chinese seafood market is offering huge opportunities for international seafood exporters. This is supported by the following chain of events: 1) the rising disposable income, the life quality of Chinese consumers has been significantly improved and can afford seafood as a protein source. 2) Because of the improving quality of life, Chinese consumers are pickier about the health, freshness, and taste of seafood. 3) Seafood from overseas is considered safer because of the higher water quality and stricter control standards.
Yet international seafood exporters should pay attention to and take advantage of the particularities of the Chinese seafood market. For example, the climaxes of the Chinese seafood market is dependent on seasons and festivals; the sales volume reaches the peak during Chinese New Year, followed by Chinese national day. There is also much peculiar seafood like sea cucumbers and eel which are not consumed in the west also offer opportunities for seafood exporters. Last but not least, the different distribution channels of Chinese seafood market should also be taken into consideration. For instance, the catering industry is a crucial distribution channel for China’s seafood market. Popular types of cuisines like Hotpot, buffet and Japanese food all contribute an enormous percentage of seafood consuming amount.
Author: Chencen Zhu
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