SEAFOODNEWS.COM [Fishfirst] translated by Amy Zhong – October 6, 2017
On the afternoon of Sept. 20, Joyvio, a subsidiary of Lenovo, hosted a press conference with Qingdao Starfish in Beijing to announce its strategic investment in that company. This is another big Lenovo move developing in seafood industry. The company’s development plan began in April 2016 with the group’s announcement it was founding KB Foods with the family-owned Kailis Bros. And Joyvio announced in May that it intended to buy Starfish shares and become the company’s controlling shareholder. This signals Lenovo’s first move in the Chinese seafood market, which is growing rapidly worldwide.
Now is a great opportunity for all countries to include China in their consumption upgrading, according to Joyvio chairman Chen. And this increase in turn will promote industry development. Seafood imports have grown all over the world within the past few years. For example, China has risen to become a main importer of frozen northern prawns. This makes the prospect of the seafood industry more promising and lucrative than other agricultural products. Joyvio’s strategic investment gives the company tighter control over the industry chain of high-protein food. And its model of global resources plus Chinese consumption will also help the company’s development in the growing industry.
Several problems currently exist in Chinese agricultural industry. First, participants in the upstream sector only focus on production, but there is a lack of industrialization. Those in the midstream spend great efforts on logistics but little on intensive processing. Although the downstream part has a greater quantity of consumers, it has failed in improving management and consumers often complain about its bad environment and product quality. Its products are mostly sold through retail channels without market segmentation and professional service. Joyvio has acquired various companies that serve as a connection to these different industry sectors in order to solve problems it encounters while promoting development in this agricultural industry. It sells not only seafood but also others, like fruit and beef.
Joyvio selected Starfish in developing its seafood business for several reasons. First, Starfish has been working in the industry for many years and established comprehensive channels. It is also advantageous in processing with leaders experienced in seafood industry. More importantly, the company aims to become more competitive with safer food. It has focuses on standardization, product improvement and developing its main products, cod fish and northern prawns.
Starfish has spent 20-odd years in developing these two main products. And Joyvio intends to retain this process and promote three to five new species in the coming years. It will also provide capital support to help the company retain consumers, manage resources and market its products. After this investment, Joyvio will further its cooperation with other select upstream and downstream companies so as to become a leader in global seafood industry.
Starfish is also China’s largest northern prawn importer and leading cod processor. Its products are sold through various channels like supermarkets, e-commerce platforms and restaurants. The company has earned the revenue of 916 million yuan (~$138 million U.S.) and the net profit of 34.69 million yuan (~$5.2 million U.S.) in 2016. Its prawns and cod outrun other competitors regarding market shares.
Although most companies have shifted their attention to the domestic market, Starfish is still advantageous in its export business, said its CEO. There has been continual increase in its pollock fillet export. And the company is working hard to develop its online and offline sales channels. Meanwhile, it may attach much more importance to second-tier and third-tier cities in setting up specialty stores. This will be the focus of its development plan.
Lenovo has paid attention to the seafood market since 2011. Although many overseas seafood companies wanted to sell their commodities to Chinese consumers back then, they encountered great difficulties in the process. However, with the passage of time, more companies have achieved success in such a market. This enhances Joyvio’s confidence. And existing Chinese companies have done well in segmentation, but they are not that competitive in integration, seafood display and promotion. After noticing this, Joyvio plans to prioritize its seafood sector and become a leader in the field.
China has changed from a seafood exporter to importer. And its seafood consumption also has changed from farmed fish to wild or high-end seafood. Intensive processing has become the trend. The global seafood industry focuses on integration and it is expected to create greater wealth. Joyvio plans to become an important part in this field.
Last year seafood industry participants said a major player had arrived when Lenovo just started to enter the industry. This new entrant invoked both expectation and fear among many participants. Joyvio’s new action this year seems to influence the industry trend now. Starfish will integrate resources from upstream and downstream sectors and expand domestic sales channels. Meanwhile, it aims to raise the sales of its two main products while developing new species like Argentine red shrimps, snow crabs and Canadian lobsters. It ensures sufficient supply for Joyvio, while Joyvio supports its plan with sufficient capital. Changes are looming in this industry with such a new model of capital plus seafood.