Less shrimp this Chinese New Year?

February 2, 2021

2020 was a year of unprecedented challenges for the shrimp sector. With lockdowns ongoing and capacity of the food service industry around the world reduced, challenges continue for many market and sourcing countries.

China, ground zero of the COVID-19 virus, was first hit by the crisis, strongly impacting China’s positive trend as a shrimp importer. By 2019,* China had become a promising market and world leader in shrimp imports with 651,618 tonnes of shrimp imported, surpassing its 2018 imports by more than 233%. While Chinese demand was relatively strong in the first quarter of 2020, it quickly dwindled, reflected in import volumes and export prices. By August, import prices had dropped to their lowest point ($5.3/kg) – $0.88/kg less than at the start of the year.

Seafood TIP’s latest China trade update shows Chinese imports of warmwater shrimp reaching 43,951 tonnes in December 2020. While this was an improvement on previous months, imports were still 50% less than in the same period in 2019. In 2020, China imported a total of 545,509 tonnes of warmwater shrimp; 106,108 tonnes or 16% less than in 2019. China’s main supplier of head-on shell-on (HOSO) shrimp, Ecuador, suffered greatly in 2020, with export prices reaching an all-time low of $4.83/kg in December 2020, just two months before Chinese New Year. With less Chinese demand for the New Year due to the ongoing COVID-19 crisis,

China, ground zero of the COVID-19 virus, was first hit by the crisis, strongly impacting China’s positive trend as a shrimp importer.

Ecuadorian exports in December 2020 dropped by 36% compared to 2019. (For a detailed analysis of Ecuador’s 2020 shrimp exports, continue reading here.)

Shrimp at the centre of the table during Chinese New Year

The figures mentioned above represent the drastic change in Chinese demand for Pacific white shrimp (L. vannamei). In the weeks before the Chinese New Year (this year falling on 12 February in 2021), import prices typically rise as demand spikes for the festivities. Holidays in mainland China usually start on New Year’s Eve and last for a week.

Shrimp plays an important part in Chinese food culture with preferences differing per region. The rule of thumb is that the further north you go, the larger they prefer their shrimp. Beijingers like big shrimp with strong and salty flavours while the Shanghainese prefer their shrimp not too heavy on the taste buds. 

*In 2018 and in the first half of 2019, considerable volumes of shrimp were being routed through Vietnam. However, these volumes are not reflected in the official data supplied by Chinese customs.

Despite these different preferences, the Chinese unite as a nation during Chinese New Year to show their love for shrimp. Every New Year’s meal has standard dishes and shrimp is considered to bring good luck: the character for shrimp sounds like ha in Cantonese and xia  (虾) in Mandarin, meaning laughter, and, what’s more, its red colour is also considered to bring good fortune.

During Chinese New Year, it’s a must to serve large shrimp, at least as big as 16 count per kg. The bigger and better the shrimp are, the more you are believed to respect your guests. 

What has changed this year?

This year shows a stark contrast with previous Chinese New Year celebrations. A year has passed since the first recorded case of COVID-19 in Wuhan, China. Like the rest of the world, China has undergone various stages of lockdowns, as well as closures of borders and the food service industry. The crisis in China is far from over. In recent weeks, the country (particularly provinces around Beijing) has been experiencing one of its worst flare-ups of cases  since the difficulties experienced last summer, forcing the government to increase measures.

The ShrimpTails  team has closely monitored the situation from both the demand and production side. We’ve summarized the major trends affecting demand for the upcoming Chinese New Year.

Shrimp is considered to bring good luck: the character for shrimp sounds like ha in Cantonese and xia  (虾 ) in Mandarin, meaning laughter, and, what’s more, its red colour is also considered to bring good fortune.

Doubts about imported shrimp

Due to the COVID-19 outbreak and quarantine measures, less shrimp has been consumed in restaurants and outdoor spaces over the course of the past year. In the first quarter of 2020, many restaurants were forced to close, particularly in infection hotspots. Just when the food service industry started to recover in August, COVID-19 traces were found on the outer packaging of shrimp imported from Ecuador, which led to the suspension of some Ecuadorian exports by the Chinese government. With the Chinese authorities continuing to be vigilant about sanitation and inspection, these reports were widely distributed in the state media, leading to many Chinese consumers fearing imported shrimp.

The combination of this fear and the ongoing pandemic has proved to be detrimental to shrimp imports into China. While most restaurants in China are now open (except for the Hebei and Dalian provinces) and the food service industry is slowly recovering, the overall consumption of shrimp remains low, as many cautious consumers still prefer cooking at home.

“People don’t forget easily, that’s why Pacific white shrimp has a tough time recovering. They associate imported shrimp with contamination,” Fan Xu Bing of Beijing-based Seabridge Marketing said.

Stringent sanitary measures

At the start of 2021, the Chinese government restated the need for stringent checks on imported seafood. Since November, China has required fumigation and disinfection reports attached to frozen imports. A nucleic acid test certificate must also be attached to products to ensure that they’re free from any traces of COVID-19. Chinese websites such as JD.com advertise which products adhere to these stricter conditions to increase consumer confidence.

These sanitary measures have also prolonged the clearance of imports at Chinese customs. Some sources in China claim that their shipments were being withheld or returned if they didn’t meet the strict sanitary requirements.
 

Imported shrimp
Imported shrimp showing the product has passed the nucleic acid test against COVID-19 
Source: JD.com

Local shrimp becomes a hit

With doubts about imported shrimp increasing, online retailers such as Alibaba or JD.com have shifted to selling locally produced shrimp, partnering with local producers for a direct and steady supply.

According to China Aquatic Products Processing & Marketing Alliance (CAPPMA), the online retail industry is likely to become stronger as the pandemic continues. “Purchasing habits have changed rapidly as fewer people go to the wet market for fear of infection,” Dr Cui He of CAPPMA said.

“Retailers know that consumers are worried about imported shrimp and now offer local produce as well,” Xu Bing said. While the volume of local shrimp isn’t likely to replace frozen shrimp imports, it’s something for exporters from third countries to watch out for.

The shift to locally produced shrimp has also affected demand from China. As shrimp produced in East China (Shandong) and Guangzhou is generally smaller than the typical imported shrimp, and domestic shrimp sells out fast, some importers purchase smaller shrimp to fill the gap. That’s why the most popular sizes are 40-50 and 50-60 count per kg, according to some sources.

Trends that are here to stay

The peak season for shrimp consumption would normally be only weeks away, and packers and importers would be busy preparing for Chinese New Year as well as the Lantern Festival in February. However, with the Chinese consuming conservatively and China’s trading partners experiencing difficulties in logistics, demand for the upcoming Chinese New Year will be slower.

The market does show positive signs, though, as shrimp prices from Ecuador display some upticks, and some Ecuadorian exporters still report demand, albeit incomparable to previous years.

  

While 2020 has been an extremely unpredictable year, with many uncertainties both from the Chinese market and sourcing countries, some trends are expected to stay, even after the pandemic eases. First, retail sales will likely continue to be strong as consumers prefer online purchases.

Second, shrimp will never be out of the picture, even as restaurants close again. Demand may dwindle, but the Chinese love for shrimp will carry on in other forms. Third, safe, sustainable and secure food will be of the utmost importance in the coming years, as people become more conscious of their health due to the pandemic.

Amid these changing patterns in Chinese consumption, Xu Bing stresses the need for consumer education on shrimp and other seafood. “People want information and guarantees about the products they consume, and campaigns about your product’s safety are crucial if you want to gain the customer’s confidence. When consumers know that the product is safe, they will resume buying.”

2021 will continue to be bumpy for the shrimp sector, with the threat of new mutant strains and extended lockdowns in many countries. However, the shrimp sector will also continue to evolve and adapt. Chinese New Year may be celebrated differently this year, but that doesn’t mean we can’t enjoy it!

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