December 4, 2013

 

ZF America builds seafood facility in China

 

 

ZF America has taken an aggressive growth mode buoyed by a 10-fold increase in sales to China this year and growth from parent company Dalian Zhangzidao Fishery Group.

 

ZF America CEO Jack Liu, who has been switching from sourcing from China to selling more to China, describes the task at hand as a strategic endeavour to conquer.

 

Despite his parent company Zhangzidao's less-than-stellar third quarter sales, which dropped 7.6% on-year, Zhangzidao is in the process of making acquisitions in China and putting pressure on Liu to increase its customer base to sell more products in the US.

 

Liu is looking to hire sales managers in its Toronto and Boston offices as well as a sourcing manager on the West Coast; and he has recently hired a sourcing manager based in Nova Scotia, Canada to take care of its lobster business.

 

Meanwhile, the 10-fold increase in China sales has moved China - suddenly and assertively - to the forefront of Liu's mind. China sales this year went from negligible to become 20% of his total sales this year, and as Liu expects that figure to grow to 30% next year, change is afoot.

 

The company is constructing a 400-metric-tonne capacity live seafood holding facility in China, where it is banking on huge gains for the two strategic items it is seeing hot demand for West Coast dungeness crab and live lobster from Canada.

 

It is also in the design stage of two smaller facilities in Beijing and southern China, which will make it easier to ship more products to China more frequently. More importantly, the facilities have the potential to improve margins.

 

Liu is predicting that by the end of 2014, his China sales will grow from being 20% of his total sales to being 30% of his total business, and "I'm sure it's going to be getting bigger and bigger", he said.

 

The company currently buys product from fishermen in Nova Scotia and Maine, and it is also looking to gain a stronger foothold there.

 

The US division of Zhangzidao is one of at least six divisions the US$500 million company operates outside of China, and times are not quite as rosy for the company as a whole.

 

Zhangzidao saw its total sales fall in the third quarter, from US$131 million last year to US$121 million this year, despite the rising demand in China. This, along with an increase in the cost of goods sold expense has led to a reduction in the bottom line from US$10 million to US$1.7 million.

 

The declines are likely largely due to troubles in its scallop production business, where farms have under-performed this year. Its products include sea scallops, bay scallops, squids, prawns, sea urchins, sea cucumbers, abalone, conches and fish.

 

The company has offices in at least six countries outside of China, but it is not simply a transient overlord with no care for the resources it touches, indicates Liu.