(IntraFish) The labor situation in China is just one of the problems for whitefish processing plants this year, sources told IntraFish. Whitefish processing plants in China are being hit by rising labor costs, but this is not the main problem, said a China-based executive.
“For the factories I know, I didn’t see much trouble with labor situation -- the labor force is sufficient so far while wages are only increased a bit,” said Daniel Lin, an executive who has set up his own company, Ocean Kingdom Seafood, to supply wild-caught frozen at sea fish to the processing industry and wholesalers.
The biggest “headache” for whitefish plants in China is “weak markets and financial stress,” Lin told IntraFish.
“For factories I do business with -- I sell raw materials to them and buy fillets back -- selling terms now changed to letter of credit (L/C) at 90 days, whereas previously it was L/C 30days or up to 60 days.”
Changing to 90 days means it takes them longer to pay, so that they can have more liquidity to run their business, said Lin.
“This year’s life for Chinese whitefish processing plants will be tough,” he said. “I am only optimistic about the Middle East and Africa markets -- these countries’ economies are strong, thanks to their strong resource and commodity exports.”
However, it is clear that the labor situation is a problem for plants in China.
"Regard the labor cost in China, it’s the same story for the past two to three years," said Xiaohui Luo, operations manager with Chang International, which operates plants in Qingdao, China.
"I think the cost will go higher, but by how much I don’t know. However I think the bigger factor is there may not be enough workers willing to work in this industry even if they can get a little higher pay than some other industries," he told IntraFish
"Obviously plants will not break the bank to pay the workers. The lack of workers could have a bigger impact on the overall productivity from Chinese plants, on all items not only for whitefish species," he said.
Seafood processing companies with plants in China might see the tightening labor situation as reason to leave the country, sources told IntraFish.
China seafood processor Yantai Longwin saw an estimated 20 percent drop in worker numbers over the past year, said its managing director Eric Wang.
Some factories might already have plans to move their operations to Vietnam and Cambodia if the situation persists, said Alvin Loy, director of Singapore-based Fish International Sourcing House, which has a processing facility in China.
While incentives such as providing free food and lodging could ensure that workers stay, Loy told IntraFish that if the labor shortage situation worsens in the next few years, the Chinese government even might have to allow foreign workers to come into the country.
Foreign companies which operate joint venture plants in China, such as High Liner Foods and Royal Greenland, are looking at setting up plants in Vietnam.
Toyota Tsusho Foods, the food division of the Japanese giant, recently announced it is moving its seafood processing to The Philippines.