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Seafood imports from China surge
U.S. seafood trade gap with China hit $1 billion in
By James Wright
June 01, 2006
In April, when Hu Jintao, president of the People's Republic
of China, made his first formal visit to the United States,
President Bush urgently sought to address last year's $202
billion trade gap.
While the trade deficit was only one of many key issues on
the diplomatic agenda, the message was clear: American
consumers are hooked on imports from China, and many U.S.
industries lean on China's low-cost processing and
manufacturing services to make American products more
affordable - and, of course, to make more money.
To U.S. seafood importers, China is a proven supplier with
considerable aquaculture resources and an economical work force
that makes it a formidable competitor in labor-intensive
industries. A popular manufacturing technique known as
"secondary processing," in which imported seafood like Russian
pollock is breaded and packaged in Chinese processing plants
before being re-exported worldwide, is widening the U.S.-China
seafood trade gap, which in 2005 eclipsed $1 billion for the
From textiles to tilapia fillets, the United States is
increasingly dependent on imports: Three-fourths of all seafood
Americans consume is from abroad, and nearly 15 percent of
overall imported goods are from China. Finite marine resources
and a restricted, land-based aquaculture industry limit what
U.S. fisheries and fish farms can produce at competitive
prices. Thus, the top suppliers look to China, which boasts the
world's largest aquaculture industry and various processing
services available for just cents on the dollar.
As a result, imports from China are increasing at a
remarkable rate. According to the National Marine Fisheries
Service, last year the United States imported from China 950
million pounds of seafood worth $1.4 billion, more than double
the total in 2001. The seafood trade gap with China has
increased nearly 250 percent since 2000.
The seafood gap is symptomatic of the big trade picture:
China has become the United States' third largest trading
partner behind NAFTA members Canada and Mexico, yet Chinese
imports out-value U.S. exports by a six-to-one margin.
M ost experts agree that a healthy, growing trade
relationship with China benefits both countries.
"China's exports to the United States and its investments in
American financial assets help restrain U.S. inflation and
interest rates, and thus permit faster economic growth and more
job creation," according to the newly released book "China: The
Balance Sheet," produced by think tanks the Center for
Strategic and International Studies and the Institute for
The current surplus of Chinese imports does not necessarily
sail calmly into U.S. harbors, however. Shrimp imports from
China are subject to tariffs of up to 113 percent to protect
the struggling domestic shrimp industry, which filed an
antidumping petition in late 2003. Importers are also paying
millions in continuous bonds to import product.
Further, some in Washington want to stifle China's trade
advancement because of its political philosophies, its human
rights record and its stance on hot-button issues in Taiwan,
Iran and North Korea, to name a few.
How Congress approaches trade with China in the future is a
sensitive subject. Sens. Charles Schumer (D-N.Y.) and Lindsey
Graham (R-S.C.) recently threatened a vote on a 27.5 percent
tariff on all imports if China doesn't significantly revalue
They contend the Chinese government undervalues its currency
by as much as 40 percent (1 yuan is approximately 12 cents
Sen. Graham, prior to a trade mission to China with Schumer
this past March, said, "The fundamental disconnect between us
and China is that we have a conscience and they don't."
"Generally speaking, we're in a China-bashing mode,
politically," says Greg Rushford, editor and publisher of The
Rushford Report, a Washington monthly newsletter on
international trade politics, and Trade Forum writer for SFB
"China is not a democracy, they're not allies," says
Rushford. "Will [protectionism] spill over into policy? That's
the big question.
"There's so much money at stake, and trade is what brings us
together diplomatically. You'd rather do business with them
instead of having them as enemies."
"Made in China"
Despite the often-negative sentiment echoed in corners of
our nation's capital and the mystery that often surrounds the
world's most populous nation, many seafood companies are
embracing trade with China. One is Newport International of St.
Petersburg, Fla., the nation's largest importer of Chinese
blue-swimming-crab meat, the bulk of which comes from China and
Troy Turkin, executive VP of sales and marketing, says
Newport has sourced Chinese crab since the 1980s - and for more
than just the competitive prices.
"Domestic blue crab, there's simply not enough of it," he
says, noting that Newport relies on China and Indonesia to
supply its Jack's Catch® brand of canned crabmeat. "The reality
is, it costs less for us to produce a product at the price
point [our customers] want."
Crab is only one species within China's grasp. Howard
Johnson, president of H.M. Johnson & Associates of
Jacksonville, Ore., says China's most visible impact on the
U.S. seafood industry is in supermarket freezers across the
"Of the top 10 seafoods consumed in the United States, China
currently exports products in every species category," Johnson
writes in his 2005 Annual Report on the United States Seafood
"Particularly shrimp (peeled, breaded and shell-on),
crabmeat, pollock (fish sticks), salmon (twice-frozen fillets),
tilapia, scallops and even good-old 'American' channel-catfish
The lure to buy from China is ultimately the savings: Lump
crabmeat from China is often $3 per pound less than product
from nearby producers like Vietnam and Indonesia, Turkin
"Remember one thing," he adds: "There is no industry
standard for crabmeat sizing, so one person's jumbo could be
different in size and quality from another's."
While China's crab fishery is a
viable resource, the
country's aquaculture industry is what drives exports,
accounting for 70 percent of its overall seafood output. China
produced 38.6 million metric tons of seafood in 2003, the
latest data available from the Food and Agriculture
Organization of the United Nations.
While several species of carp comprise a large portion of
that total, the shrimp and tilapia China produces is typically
available at irresistibly low prices for major seafood buyers,
to whom cost often matters most.
And, with the price of China's processing services at a mere
fraction of that charged by the U.S. labor force, buying from
China drives up profits for distributors of value-added,
retail-ready packaged seafood.
"Even with transportation factored in, it is still far
cheaper to pick crab, fillet fish, bread portions and produce
surimi in China than in the United States," notes Johnson.
The raw materials for the breaded shrimp and surimi seafood
China produces are sourced from Russia, Alaska and throughout
Southeast Asia. The products are then re-exported all around
This secondary processing is a boon to U.S. seafood buyers,
since breaded shrimp enters the country duty-free, exempt from
U.S. Customs and Border Protection's continuous-bonds
The growth of breaded shrimp imports from China in the past
five years has been explosive, increasing from less than 90,000
pounds in 2001 to 73.7 million pounds in 2005.
Peter Redmayne, SFB contributing editor and president of
seafood consulting and marketing firm Sea Fare Expositions in
Seattle, which organizes an annual trade show in China, says
China's seafood companies can satisfy price-driven buyers from
the United States.
"If you're not a player in China, you're not a player,"
Redmayne says. "If you don't know what's going on over there,
you're missing out, because it's going to affect you one way or
another. If you don't buy from there, your competitors
Finding the right Chinese supplier, however, can become a
"You have to separate the wheat from the chaff to see who
the legit people are," Redmayne says.
Further, trade with China can present several hurdles, such
as accessing foreign currency, overcoming language barriers and
negotiating payment conditions.
To overcome these obstacles, some seafood exporters choose
to work through brokers. Others own and operate their own
Chinese processing facilities.
Trident Seafoods, North America's third-largest seafood
supplier, with 2005 sales of $800 million, has run two
operations in China since 1995 - a purchasing office in Dalian
and a processing facility in Qingdao that fillets, portions and
vacuum-packages Alaska pollock, cod, salmon and yellowfin
For a company to succeed in China, it's important to
understand the country's unique business culture, says Doug Van
Devanter, VP of international project development and national
accounts for Trident. The Seattle supplier has proven its
cultural acumen by more than doubling its annual sales in the
past six years.
"I notice [the difference] the most when I talk to people in
other industries, who ask 'How do you handle all the problems
with China?' We haven't had any problems," Devanter says. "You
don't see the problems that you can avoid. We've gotten some
good advice from our people over there."
Cooperative efforts between the two countries' seafood
industries are forming. The China Seafood Certification
Institute of Beijing is working with the Aquaculture C
ertification Council of Kirkland, Wash., so that buyers will
see China's seafood in a positive light via certification of
its responsible aquaculture operations.
CSCI is also wooing the Marine Stewardship Council to
certify China's fisheries as sustainable.
John Ching, director of CSCI's U.S. branch in Seattle, says
the group trains Chinese seafood companies about food-safety
programs like ISO 9000 and HACCP (hazard analysis and critical
"We do not want any inadequate seafood to exit China," says
Ching, who hails from Hong Kong.
"We want to be able to say that Chinese seafood is as good
as anybody's internationally."
Though it's the world's fourth-largest economy and
third-largest trading nation, China remains a poor country with
a per-capita income estimated at one-twenty-fifth that of
according to "China: The Balance Sheet."
But its 1.3 billion people have a growing appetite for
seafood, which should only increase as their economic
According to the book, almost 400 million Chinese have
emerged from poverty since 1990. Whether this trend slows
seafood exports in the future remains to be seen.
China's per-capita consumption of seafood in 2002 was about
28 kilograms, or roughly 60 pounds (more than half of that is
carp, for which there is a limited export market), compared to
the 16.6 pounds per capita Americans consumed in 2004,
according to Johnson.
Needless to say, China presents huge opportunities for
seafood buyers and exporters willing to explore the market.
"[China's] potential as a customer is probably without
comparison," says Laura Fleming, communications
the Alaska Seafood Marketing Institute, which has led several
trade missions to China in recent years.
"Their market is expanding so fast. It's a dynamic
Some suppliers see China as a rival. Merle Knapp, VP of
sales and marketing at Glacier Fish Co. of Seattle, says China
is a "stiff competitor" when it comes to pollock, Glacier's
But Knapp says the quality of twice-frozen blocks China
sources from Russia simply can't compete with the quality of
Alaska pollock, which is frozen only once at sea.
Still, Knapp, a director of the Genuine Alaska Pollock
Producers and chairman of the whitefish committee at ASMI, says
Glacier does not usually go "toe-to-toe" with Chinese pollock
suppliers, nor does it sell to Chinese markets.
"There are good solid opportunities [for Alaska pollock] in
our traditional markets. I know China is growing, but until it
proves itself, you stay one step removed and see how it goes,"
Knapp says. "When you pioneer a market, you take a lot of
To which shellfish exporter Bill Taylor can surely attest.
The VP of Taylor Shellfish Farms in Shelton, Wash., has learned
to roll with the punches while cultivating a market in
"A lot of the folks [from China] we work with have Vancouver
businesses, or are pre-Westernized," Taylor says. "But any time
you get involved with the Chinese, it's going to be very
competitive. They'll grind you on price if they can, and
they're also very cognizant of quality."
As a mass producer of shrimp, America's favorite seafood,
and of tilapia, which has gone from obscurity to fame in less
than two decades, China appears poised to remain one of the
United States' top seafood suppliers.
But with the threat of future trade barriers and inevitable
economic change within its own borders, its future status in
that regard is unclear. And some fear that the long-term trade
policies the U.S. government is wrestling with are a bad
The impact of federal action has already been felt.
Non-breaded shrimp imports have slowed. The continuous-bonds
policy has taken millions of dollars out of the supply chain,
and it may not stop at shrimp - Customs has said it intends to
apply bonds to 13 other products, including Chinese
But clamping down on imports from China may not necessarily
yield the results sought by the U.S. government and the
domestic industries it intends to protect.
"Whatever one says about the longer-term macroeconomic
effects of trade deficits, it has always seemed to me that the
protectionist responses - higher tariffs and other trade
barriers - are exactly what not to do," says Rushford.
"Shutting down imports and more tariffs won't work. We need
to keep our borders open in our own interests."
For many U.S. seafood suppliers, China provides an
invaluable competitive edge; and Americans, who are consuming
record amounts of seafood, save in the end.
"China, Thailand, Indonesia - I don't think there's any way
you're going to see those countries not grow [in seafood
production]," Turkin says. "We simply can't support all our
needs domestically. More and more people want to eat healthier,
and they're demanding more seafood."
Suppliers can find it in China.
Assistant Editor James Wright can be