Russian processors coming forward with policy to defeat Chinese competition

November 10, 2006 17:36

The Russian fish processors believe they could put up a good case of competition with China subject to the federal government’s far-sighted dealing with the problems of the industry.

Though it is largely felt that the Russian plants may be unable to compete with the Chinese regarding frozen pollock fillets, it should be quite feasible to outdo the rivals in the field of some other whitefish species.

Europe has a long standing tradition of eating such whitefish as cod and plaice and the relative shortage of the resources have led to rather high prices. In this context the Russians have good opportunities to supply this market and should not yield to the advance of the Chinese in the area, Sergey Malkin, CEO of Homyakovsky Hladokombinat Fish Plant based in Tula near Moscow and exporting under GULFISH label told EXPERT magazine.

For European buyers it would be easier to deal with the Russians rather than Chinese for several reasons, he explained.

The Chinese have recently built many factories versus a stagnating raw material base and a big European buyer of cod products now has to deal with several smaller plants to collect the required lot of let us say one thousand tonnes.

Besides, the shipment to EU from China takes 45 days by sea and coupled with the fact that the Chinese are very tough negotiators it will normally take at least three months to make a contract and secure arrival of the first consignments.

On the contrary, while dealing with the Russian Homyakovsky Hladokombinat Plant, for example, the buyer will see the ordered truckload arriving just three days upon the date of the deal.

Chilled fillets

The company believes that the European market of chilled fillets offers a special potential for the Russian producers because it is impossible to supply chilled fish from China.

It takes some four to five days to ship frozen fish from Moscow to Europe with one driver in the reefer van while chilled fish could take only a couple of days with two drivers.

Incidentally, the Russian market is also ready for chilled fillets, but few players are engaged in this business yet.

In Europe chilled fillets are sold pre-packed thus extending their shelf-life. And it is an interesting possibility for the Russian plants as well because the fast growing Russian chains are also showing great interest in chilled fillets.

Grey methods

On the domestic market the Russian value-added processors must compete with imported seafood first of all on quality with the consumer mature enough to pay for it.

Meanwhile, according to the report, the quality may be sometimes unpredictable.

For example, some importers may employ the so-called grey methods to bring in APO fillets to pack them in Russia as cod fillets. On the other hand, the Chinese plants will pack fillets in any way ordered by the customer, the report claimed.

Wild

Yet another Russian advantage has to do with the fact that the country has good stocks of wild fish, which is regarded by consumers as more valuable and eco-clean than their farmed counterparts.

With relatively plentiful supply of wild fish, Russia could have a strong selling point offering the whitefish products at competitive prices as compared to manufacturers from areas with limited or depleted whitefish stocks.

Support

The Russian processors are also urging the government to install support measures such as low or zero export duties on value-added seafood while the export duties on material should be increased from 5% up to 20% or more in case of some rare species.

On the domestic market it is necessary to implement protective custom barriers for highly processed imported seafood.

In this way it would be possible for Russia to switch over from the market of raw material to the end product market thus by 2008 doubling the value of the industry’s gross output to USD5.2 billion even on the same catch or more subject to catch increase.

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