Chinese consumers have an insatiable appetite for premium live seafood products, such as lobsters, deep sea crabs and abalone, but Australian exporters face growing competition as other countries flood the market with cheaper alternatives.
Data from China’s customs agency show seafood imports increased by 17.1 per cent from January to June, equating to $US4.2 billion worth of fish and other seafood products.
And official forecasts from Beijing’s Ministry of Agriculture show each of the 1.3 billion people living in China is expected to eat 39 kilograms of seafood each year, on average, by 2020.
That consumption would be valued at more than $US20 billion per year, and the potential upside has caught the attention of seafood exporters around the world.
Over the past two to three years, China has begun to import live seafood, mainly crustaceans but also some molluscs, from the United States, South America, Africa, Europe and the United Kingdom, with many of the products coming at a cheaper price to premium Australian imports.
Southern Trading Australian managing director Glen Bosman, who has been exporting crystal crab, king crab, champagne crab and three different species of abalone to China for more than 13 years, said the availability of different types of seafood in China had increased exponentially over that time.
“In China, they have so much more selection of live products from all over the world,” Mr Bosman said.
“You can walk into a restaurant and see 50 tanks with 25 different species of rock lobster, 20 different species of crab and then make a selection.”
That sort of selection, and lower corresponding price points for competing products, has resulted in a shift of strategy for Southern Trading, which previously exported around 40 per cent of its catch of deep sea crabs to China.
The company’s prime catch is the crystal crab – a large crustacean that inhabits waters up to 800 metres deep off the Western Australian coast.
A fleet of three vessels fishes seven licences in the deep-sea crab fishery, which stretches from Augusta in the south of the state, all the way to the Northern Territory border.
The fishery is strictly regulated, with quotas only allowing 140 tonnes of crystal crab, and an additional 14 tonnes of giant and champagne crab to be fished from the water each year.
While the scarcity ensured a premium price point, cheaper mud crab and US-fished snow crab were putting a dent in demand for Southern Trading’s crystal crab, Mr Bosman said, leading the company to alter its export mix.
“The Chinese market has been impacted over the last few years by so much competitive crab product coming into it at a lower level of pricing than ours,” Mr Bosman said.
“Ours is still perceived to be the premium product, but they have so much more opportunity to select product from different countries at prices that are a lot cheaper.
“It’s still considered premium, but the price is not as high as what one would otherwise like, that’s why the majority of our product now stays in Australia.”
Chinese restaurants in Australia are snapping up that product.
Mr Bosman said Southern Trading supplies 30 different Chinese restaurants around the country with the choicest crabs from each catch, with the level of demand at home easily outstripping the strict quota deep sea crab fishermen are restricted to removing from the ocean each year.
“We put it out across Australia and that maintains a good pricing structure,” he said.
“Perth will pay the highest price, so it gets the largest product. Then the rest of the product would go to Melbourne and Sydney in the main.
“The current quota could all be absorbed in Australia without worrying about the Chinese market, however, you can’t have all your eggs in one basket because changes can and do occur.
“So, it’s nice to have a support infrastructure in China that maintains a flow of product should you need it at some time in the future, and also to bind your relationships with people that have looked after you for a period of time.”
Pressure from other countries importing to China is also being experienced in WA’s rock lobster industry, the largest and highest value of the state’s fisheries, with the catch having an annual commercial value of around $400 million.
Lobster is one of the most sought after live seafood products in China, where it is not unusual for consumers to pay up to $200 per kilo for rock lobster that is certified to have come from pristine Australian waters.
The largest single player in WA’s rock lobster industry is Indian Ocean Rock Lobster, a rapidly growing fishing, processing and hospitality business based in Cervantes.
Indian Ocean Rock Lobster owner Dave Thompson, whose father began fishing for lobster in 1966, estimated the company was responsible for around 18 per cent of the total lobster production in WA, with 90 per cent of the company’s catch exported to Asian markets.
But like the deep sea crabs, Mr Thompson said Asian markets had been disrupted recently by the availability of different species of lobster, with fishermen in WA also subject to strict quotas to protect the sustainability of the fishery.
“When you have a look at the Hallmark or Boston lobster, they’ve just saturated the market,” Mr Thompson told Australia China Business Review.
“Those guys catch serious volumes because it is coming from many different nations, there is no control of it.
“Comparatively, we are a small player in volume, they catch something like 15 to 20 million kilos.
“In the world, we aren’t the biggest fishery, there are a lot of other fisheries which are bigger than ours.
“Virtually every country in a world that catches lobsters is targeting that Asian market.”
Considering that competition, Indian Ocean Rock Lobster is evolving its strategy on the tourism and hospitality side of its business, known as The Lobster Shack.
Mr Thompson said when The Lobster Shack was established in 2011, serving 20 people for lunch was considered to be a successful day.
In 2017, he said The Lobster Shack expected more than 100,000 people to enjoy its offering of grilled lobster meals, necessitating an expansion from 350 seats to more than 700, replete with a liquor licence.
“The tourism side of the business is riding high because we can give Asian visitors to the state more than value for money, they believe it’s under-priced compared to what they would pay for it at home,” Mr Thompson said.
Adding to the hospitality side of the business, are tours of the processing facility, while a 48-seat 4D theatre experience is being developed to immerse customers into the experience of fishing for lobster.
“I’m calling it ‘The Ride’,” Mr Thompson said. “We are going to do a mild ride and a wild ride, and if it succeeds, we’ll launch into cattle stations, with a simulated cattle muster from a chopper.
“It’s something totally different, what we’re doing is we’re basically creating a theme park – we’re building a 160-metre jetty out the front, we have three charter boats, sea lion tours, deep sea charters, pot pulling tours, we’re taking The Lobster Shack to another level.”