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International Sourcing: China
Buying quality fish from China means increasing communication
By Jeff Singleton
May 01, 2008
EDITOR’S NOTE: This feature was written by a consultant and freelance writer who visited several Chinese fish farms in late February and has several decades of seafood industry experience. With the recent focus in the press on quality problems with seafood from China, the following case study shows the lengths to which fish farmers go to adhere and surpass quality standards. While the format strays from our traditional International Sourcing feature, it dispels some of the myths about farmed Chinese seafood.
The reality of today's global market is changing. It is no longer just a matter of balancing supply and demand. Quality is now the third essential element. This is playing out in a variety of industries, including toys, pharmaceuticals and food, but nowhere are the indicators more compelling than in seafood, where the major global influence is China.
As the world leader in both consumption and production of seafood - in 2006 the source of 21 percent of U.S. seafood imports - China is the essential case study about seafood quality. Tilapia is the fastest-growing U.S. imported species from China. Its share of the imported tilapia market has increased annually from 23.7 percent in 2001 to 70 percent in 2007. Tilapia was not included in the 2007 import alert implemented by the Food and Drug Administration on five farmed seafood species from China, shrimp, catfish, basa, eel and dace, a carp relative. This case study follows tilapia's supply chain. A recent visit to China reveals what has been done to create a surprisingly strong and continuously improving focus on quality, and the challenges that Chinese fish farmers continue to face.
"How old is this fish?" a visitor asks Peng Ru Yun as a succulent-looking soy-sauce and ginger-infused whole grouper is served. "One year and eight months," says Peng, an operator at a family operated farm collective. Just 30 minutes earlier he had netted the fish and a red snapper from a sea cage floating off the coast of Hailing Island in China's Guangdong Province. A visit to the farm requires a sea taxi ride across the choppy waters of Dajiao Bay to one of China's largest floating villages of guard-dog protected sea cages. For this grouper to survive those 20 months from fingerling to the lunch table of a consumer, much care had been necessary - through two typhoon seasons and blisteringly hot summers.
The purpose of this visit was to understand one of the points in China's seafood supply chains, an industry with its product quality under heavy scrutiny and criticism in the recent U.S. press. Global consumers of seafood, and food in general, have be c ome increasingly alarmed, as well as sophisticated in their quest for quality. The addition of the words "organic" and "sustainable," along with proliferating adjectives such as "wild-caught" and "ocean-caught" each add a nuanced upgrade in the perceived quality of what is available.
Noam Weinberg Sehayek, a director at Gradient Aquaculture Ltd., based in Shenzhen, demonstrates that superior quality can create a market and has raised the bar. An Israeli ex-pat living in South China, Weinberg Sehayek has been involved in seafood farm operations in China for more than five years. Learning that some of the company's products are certified kosher, it is clear that Chinese farms can meet a higher standard. But how are these companies accomplishing quality goals within the constraints of relentless pressure from buyers who want lower prices and increased quality? This is an essential question for the global business community. To find some answers, one must trace the full supply chain, from hatchery to pond through processing and preparation for shipment.
Accessing a remote hatchery near Yangxi requires travel on roads that become narrower, rougher and finally disappear into dirt tracks. Like other nearby facilities, the Yangxi hatchery is a partnership between the Chinese government and local businesses. The best ones have sophisticated laboratories, which can check for the presence of various viruses and other contaminants. Indoor tanks containing different species of fish and shrimp are cultivated under the watchful eye of trained aquaculture technicians.
Weinberg Sehayek tastes a sample of the Japanese-produced feed. He lets it sit in his mouth, swallows and says, "I can taste the protein levels in this one. It's OK." A facility like this one is the beginning of the supply chain. The fish in Peng's sea cage start out as fingerlings in a hatchery, often from one of those near the pristine waters of Hainan Island.
Zhuhai, in 1999 the only city in China to receive the United Nations' International Award for Improving Best Practices in the Living Environment, is the home of a Norwegian-operated integrated fish farm and processing plant. It produces frozen fillets - the largest segment of the U.S. tilapia market - in which China's share has grown from 34.2 percent to 88.6 percent between 2001 and 2007. The worst winter in more than 50 years has damaged up to 90 percent of the production in China's tilapia farms, and this farm is no exception. Ponds have been emptied for extensive cleaning in preparation for a seasonal restart. After the removal of a layer of material from the bottom of each pond, drying, disinfecting and refilling were scheduled for completion by April, at which time they will be restocked with fingerlings. Plants operated by Weinberg Sehayek must use the exact fingerling hatchery sources that he specifies. Cheaper alternatives abound, but the lower survival rate of those fingerlings is an indication of lesser quality. For four months the tilapia will mature, nourished only by feed purchased from sources authorized by the increasingly strict China Inspection and Quarantine Bureau, known as CIQ.
Conceived in 1960 as a method to plan out contamination risks and implemented for seafood in 1997, the FDA's HACCP (Hazard Analysis Critical Control Points) process already needed changes by 2000 to keep up with new, higher standards. HACCP plans are widely used, and is considered the minimum standard to which companies adhere. The awareness that quality standards are always on the rise has been built into the mindset of seafood industry managers.
The Norwegian plant's current practice matches HACCP requirements. Fish are harvested from its ponds and transported live to the nearby factory. In the first of three discrete, hygienically controlled steps, the receiving dock's holding tanks will maintain viable fish for at least one hour to flush mud from their systems. As needed, baskets of mud-free fish are passed through plastic-sheeted control windows into the room in which bleeding and scaling are done. Passing again through control windows, the fish reach a room in which they undergo filleting and sorting (and carbon monoxide treatment, if skinless). After passing through the third set of plastic-sheeted control windows, the fillets are individually quick-frozen in a new conveyor-driven tunnel, vacuum packed, passed through metal inspection and stored for final packaging.
As visitors pass through the facility, they must change headgear, masks, jackets and boots at each control point, and must follow a rigid cleaning and disinfecting process. Quality-adherence instructions are easily visible and are printed in both Chinese and English.
Not only is there no gap between HACCP and this operation, but there is an unexpected openness to having processes reviewed.
Moving to the coastal city of Yangjiang, Weinberg Sehayek introduces his visitor not as a journalist, but rather as a businessman gathering information for a case-study about China seafood production to be shared with the U.S. business community. Most managers and certainly none of the government officials agreed to let their names be used. However, nobody stopped telling their stories.
The consequences of even slight infractions uncovered by CIQ are severe. A foreign-operated company received a one-year prohibition from exporting after its documentation showed the use of food obtained from a source not on the approved list. That the source had not been banned didn't change the punishment. Along with this internal policy enforcement, in 2006 and 2007 Yangjiang hosted visits by FDA officials, as China continues to welcome foreign oversight even during the politically tense time beginning with the agency's seafood import alert last summer.
U.S. imports from China
In the past, consumers had no need to understand the U.S. end of the seafood supply chain. But times have changed. There's a growing need for them to understand where their food comes from. Americans living near coastal fishing areas may experience something similar to eating fresh grouper on Hailing Island, but for most U.S. consumers the next serving of China-produced fish will be purchased in a restaurant or at a fish market. They won't have the personal guarantee of quality that comes with eating lunch with the person who raised the fish.
"My customers demand such a wide variety of product that I have no great exposure to rapid changes in the market in any one particular item," says Brian O'Donohoe, the owner of Two Cousins Fish Market, a full-line seafood purveyor in the New York area.
It's not reasonable to expect the market to have personal expertise in China or the many other countries from which O'Donohoe's inventory comes. But that is different for importers.
Doug Deerin, a partner in Ocean Rich Foods LLC, an importer and trader based on Long Island, N.Y., agrees. Ideally, "I would want to see the history of any lot from beginning to end," says Deerin.
To effect any real change, it's the importer who has the best potential to make a difference in product quality and safety. Richard Xiao, a partner in the Boston-based fillet, scallop and squid importer Common Seafood Corp., sees this opportunity, too.
"We invest our effort and resources in filtering vendors rather than putting our money into any specific plants which we do not control," says Xiao. "We choose only those reputable ones who will consistently meet our requirements for HACCP, CIQ, ISO, SGS Group and other certifications, and fully comply with official U.S. and Chinese regulations. We require itemized official inspection reports for each of our containers. We also randomly take samples and submit to FDA certified labs here in the States for double checking."
By reading the news about not just seafood, but other consumer goods, it is easy to predict that more industries aside from seafood will soon get their time in the spotlight. In early February, China had shut down all seafood production in Liaoning Province where 60 percent of China's wild fish are processed. It is reported that seafood factories are being inspected one-by-one. Clearly, China is serious about improving more than just the perception of good quality.
The time has come to invest in quality by financing innovation and process re-engineering. There may be a fourth essential element in the global marketplace, which is communication - communication about safety-oriented innovation, best practices and partnerships throughout the supply chain.
This is where a new breed of business person may step in to ensure that all of the pieces of the puzzle stay together. Importers that also own factories in China clearly have an advantage, but there's plenty of opportunity for smaller, more nimble companies to take advantage of this opportunity.
There may also be room for a new breed of businesses focusing just on the methodology of delivering quality. Building a new sustainable vision for the seafood supply chain can solve the current crisis in confidence. Using China as the model for the new paradigm of supply, demand, quality and communication will prepare the seafood industry for the next production frontier. Few will disagree that in other areas, when China makes up its mind to change, it will change and change rapidly.
Jeff Singleton is a consultant focusing on quality systems, process improvement, supply chain and technology. Along with more than 20 years in the seafood industry, Singleton has 12 years experience manufacturing in China, Europe and the United States. His company, Asia Europe America Business Alliance LLC, is in New York