32 DECEMBER 2015 • WORLD AQUACULTURE • WWW.WAS.ORG processed products account for only 10 percent of export volume. This might be one of the important reasons for the low profit. To explore this problem further, we compared the prices of the top five exporters in the world from January 2012 to August 2014, taking frozen tilapia fillets as an example (Fig. 4). The price of frozen tilapia fillets from mainland China is about only two thirds of the average global price and it is much lower than prices obtained by the other four leading exporters. Thus, beyond the unreasonable production mix, there are deeper reasons for the low price. Weak market power At present, the place of Chinese tilapia in the international market is immature. The main sales approaches includes SEM (mainly sold to large supermarket chains) and bulk buying (mainly to big restaurants and hotels). Tilapia exported from China are also sold to foreign enterprises as raw material for further processing. All of the current sales places are short. The proportion of tilapia sold to foreign consumers directly is not high. Throughout the supply chain, the last links usually obtain the greatest profit and brand can usually help to add value. Tilapia from China are usually positioned at the low end of the market and there are hardly any independent, famous brands of Chinese tilapia in the world. Last link loss and brand loss make Chinese tilapia export enterprises obtain only a small profit. Why do processing enterprises in China not try to improve the value of tilapia by extending product lines and sales channels or building brands? This question can be answered from the perspective of the characteristics of processing enterprises in China. Currently there are hundreds of aquatic products processing enterprises involved in tilapia processing in China but the scale of them in tilapia processing is usually small. Tilapia is only one of many products, representing only one small portion of their business. Restricted by the transportation radius of fresh tilapia and the culture period, processing enterprises face high costs and high risks if they process only tilapia. In those situations, processors cannot make full use of the product lines and the profit will follow movements of the international tilapia price. Small scale and the low degree of specialization make the enterprises lack motivation and ability to add value to tilapia by building a brand. On the other hand, the cost of international brand operation is usually too high for small businesses to pay. Under current conditions, quality-driven sales approaches such as bulk buying and OEM sale can reduce the trade cost effectively. This can help the enterprises of tilapia in China make more money in the short term but it is not a sustainable development path for the future. Why don’t the large number of small-scale tilapia processing enterprises join with each other to extend sales channels and operate brands to improve profit? The current industrial organization of tilapia in China is very loose. Members only cooperate in the fields of information exchange and technical communication. Because of the great quantity of tilapia, it is quite difficult for them to build industry alliances to cooperate more closely. Based on the previous discussion, we conclude that the low prices of Chinese tilapia in the international market should not be attributed to poor product quality. The price of tilapia from China is cost-driven and there is rare added value of products reflected in price. Because of the small production scale, low specialization level, minimal industry alliances and high cost of international brand operation, there is insufficient motivation and ability for tilapia processing enterprises to extend product lines and sales channels and to build brands independently or by cooperation. Thus, the tilapia industry in China still has a long way to go. Notes Jianzhen Lu, Jiangsu Academic of Agricultural Science, Nanjing, China. Xu Xiang, Nanjing Agricultural University, Nanjing, China FIGURE 7. Cumulative growth rates in the prices of tilapia and main capital goods in China from 2002 to 2012. Data from the US Department of Agriculture and the National Bureau of Statistics of P.R. China. FIGURE 8. The mix of product forms of tilapia exported from China from 2010 to 2012. Data from the US Department of Agriculture and the National Bureau of Statistics of P.R. China. The low prices of Chinese tilapia in the international market should not be attributed to poor product quality. The price of tilapia from China is cost-driven and there is rare added value of products reflected in price.
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