HO CHI MINH CITY, Vietnam -- Vietnam is slowly convincing the Chinese market to buy its pangasius fillets, with sales rising in major cities, like Beijing, through online channels such as Alibaba Group.
The acceptance of Chinese consumers required a step change in the purchasing behavior of Chinese consumers. China, formerly a country with cheaper labor, has traditionally been a reprocessor of whole fish to sell to other countries. So, even with imports, China has been reluctant to buy fish filleted in other countries.
But that's changing.
“Pangasius is a really good choice [for the Chinese consumer],” Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers, told Undercurrent News. “Before we only used to sell whole fish to the border region in southern China. Now it goes [as fillets] to Beijing and to Shanghai and even now goes to Dalian. The demand will be much higher.”
Pangasius. Credit: Hung Vuong Corporation
Pangasius. Credit: Hung Vuong Corporation
The increased popularity of Vietnamese pangasius fillets in China comes at an opportune moment. Vietnam’s exporters were last month issued harsher than expected anti-dumping quotas by the United States’ Department of Commerce (DOC).
The DOC was expected to issue rates on individual companies that ranged between $0/kg to $1.37/kg in the most penal case, but the April 27 ruling instead applied rates ranging from $1.37/kg in a best-case scenario to $3.87/kg in the worst case.
The ruling creates a complex scenario for Vietnamese exporters, who are trying to second guess how the US will likely increase tariffs on Chinese tilapia exports as part of the trade war between the two countries. Vietnam’s pangasius exporters benefited from the China-US trade rift last year, with major importers switching to Vietnamese pangasius. The fish is a type of catfish and widely accepted by US consumers who are used to catfish grown in their southern states.
Seafood companies in the Mekong Delta, in southern Vietnam, meanwhile, have switched to pangasius production in recent times as a defensive strategy against a prolonged slump in the global shrimp market, Ding Hoe said. Pangasius farming thrives in areas where farms have close proximity to rivers with a depth of at least 4 meters, Ngo van Ich, chairman of major exporter NTSF Seafoods, told Undercurrent.
The Chinese market heralds a big opportunity but is still risky because of problems with the handling of fish on the Chinese-Vietnamese border, van Ich said during a tour of the company’s operations in Can Tho, a town in southern Vietnam. NTSF’s vast processing facility produces pangasius fillets that are certified and approved for sale in the US market.
Tough to crack
Vietnam is the world’s largest pangasius producer, achieving 1.33 million metric tons of output in 2018, versus 1.25m in 2017, The next biggest players are India with 540,000t of output in 2018, Bangladesh with 455,000t, and Indonesia with 110,000t, according to the Brazilian Aquaculture Association, PeixeBR.
For Vietnam, the US market is tougher to crack but ultimately more rewarding because customers are gained through trust and relationship building, Van Ich said. By contrast, the Chinese market requires no certification and business is often conducted via email with no physical meeting of company representatives, he said.
Several Vietnamese pangasius entrepreneurs were refused a US entry visa to attend this year’s Seafood Expo North America show, in Boston, Massachusetts, further complicating their incursion into this key market.
Indonesian pangasius. Credit: PT Expravet Nasuba
China is fast catching up with the European Union as the world’s biggest seafood importer, as imports reached almost 5m metric tons seafood last year, according to Rabobank. Pangasius is a “really good choice” for Chinese customers seeking white fish fillets given that Vietnam neighbors the world’s most populous nation, Ding Hoe said.
One of the last challenges to overcome was getting Chinese customers to buy imported fillets, instead of whole fish, he said. China’s GDP per capita has surged from $3,471 in 2008 to $8,827 in 2017, according to World Bank data. By contrast, Vietnam’s GDP per capita rose from $1,143 to $2,342 over the same period, broadly meaning it’s labor costs are now much cheaper than China.
This means that selling fillets made on the Mekong Delta to China is highly competitive, Ding Hoe said.
“Before they used to eat the whole fish, and now they import the fillet,” he said. “We can only see on the radar that the supply is going to be higher."