March 2, 2004



Good Prospects Seen for Investment in China's Aquaculture Production Industry

An eFeedLink Exclusive Report

In February, as the avian influenza inflicted one Asian country after another, the exports of poultry products from affected countries were badly hit. The epidemic has brought about severe repercussions on the global poultry industry which would incur losses running into billion of dollars. With the bird flu outbreak taking its toll on the poultry industry, the discovery of mad cow disease in the United States brought beef exports from the country to a standstill and the rampage of foot-and-mouth disease in other regions, Chinese manufacturers of aquatic products are hopeful that consumption of aquatic products would increase substantially for the near future.


Analysts believe that aquatic products is constituting an increasing market share of the non-staple food market in China due to their low fats, low cholesterol and high protein contents, as well as other nutrients.


Although the extent of the recent bird flu outbreak in China is not as serious as that in South Korea, the big impact on its poultry markets is undisputable. There have been reports of price fluctuations in chicken and aquatic products in some local market places in China, while prices of beef and mutton have remained unaffected. Currently, an increasing number of consumers in China prefer frozen aquatic products to other meat products, thereby jacking up prices of aquatic products. Industry insiders believe this provides a good opportunity for further development of the Chinese aquaculture production industry.


China is the world's largest aquaculture production country, and the industry is progressing rapidly in keeping up with the rising standards of living. In 2001, China's gross aquatic products output reportedly made up 35% of the global output, and has ranked first in the world for 13 years in a row. The production of cultured aquatic products accounts for over 60% of the country's gross output of aquatic products, and constitutes 2/3 of those in the world.


According to the "2010 Compendium of Food Development" released by the Chinese government, China's aquatic products' per capita will reach 44 kg, that is 57.2 million tons for the then Chinese population in 2010. Its current aquatic products per capita is only 33.8 kg. Therefore, market analysts foresee a sharp rise in the output of China's aquatic products in the next 10 years.


In the meantime, a large number of private investors in China are gearing up to make large-scale entry into the aquatic production industry upon seeing the prospects in this area. A representative example is Tongwei Company Ltd, which will be listed on Shanghai Stock Exchange in March 2004.       


Tongwei Co. is the leading aquatic feed production enterprise in China. Its core business is in the area of aquatic feed production, and the company is also set on expanding progressively into other areas such as aquaculture production. Tongwei is reportedly to launch a full-fledged effort in forging an aquaculture production supply chain in the bid to dominate the Chinese market. The company will utilize part of the funds raised from its stock listing to expand its aquatic feed production and the other part of the said fund will be used to build the largest aquaculture technological park in China and Asia.


Through such a move, an integrated supply chain from aquaculture breeding, cultivation, feed products processing to aquatic products processing will be formed. Industry insiders point out that such a move would bring about enormous impacts to China's aquatic feed production and aquaculture industries. This is a revolution of aquaculture production industry in China.


Tongwei is also known as a leader in genetic engineering research of aquaculture in China. Its aquatic research center contributes generous funds in constructing laboratories for genetic experiments, with the most advanced equipment and the finest talents. The results of its genetic engineering research in aquatic products will bring about a profound transformation in the future development of aquaculture production industry in China.


Industry experts reveal that the relatively low investment input in the aquaculture production industry results in an absence of a dominating brand name of aquatic products in China. In recent years, China's aquatic production industry's high growth potential act as an incentive to attract more public investments, a trend that has aroused intense concerns of the financial capital markets. Interest in China's aquaculture production industry is currently on the rise in the capital markets.


The crisis in the poultry industry that arose from the bird flu outbreak presents a golden opportunity for the development of China's aquaculture production industry in the long run. From a long-term perspective, aquatic products will become a source of health food products, and aquaculture production industry will be among one of the most promising industries in China. For this reason, industry experts believe that investing in the aquaculture production industry will be non-governmental capital's wisest choice in the Chinese market.


A fusion of capital from the financial market and the aquaculture production industry will significantly benefit the aquaculture production industry's advent into modernization, expansion in scale and industrialization. Many large Chinese aquatic products multinational corporations will thereby be established and will be major players in the global markets. This will certainly be a boost for the ongoing development of China's aquaculture production industry.

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