January 17, 2019 — A recurring theme at the 2019 Global Seafood Market Conference, taking place from 15 to 17 January in Coronado, California, U.S.A., has been China’s dominance in the skilled processing sector, and whether rising labor costs would push that processing elsewhere.
A burgeoning middle class in China has steadily driven up the labor costs for skilled processing, particularly in the large groundfish processing sector. The trade for groundfish has historically been dominated by Russian exports to China, and Chinese re-exports to the European Union after processing.
Yet despite the rising labor costs, Chinese importing for processing show no signs of slowing, according to statistics from Rabobank International.
“They’ve had huge wage increases already,” Gorjan Nikolik, a senior industry analyst for Rabobank International, said. “They should not be this competitive, and yet they are.”
Between 2012 and 2017, Russian exports of groundfish to China decreased by more than 50,000 tons. Even with the decrease, the trade between Russia and China was still by-far the largest in the world in terms of volume, and the amount of groundfish exported from China to the E.U. barely slowed.
Those numbers tell the story of Chinese processing still representing a huge portion of the market, given Chinese exports of groundfish to the E.U. are almost exclusively processed.