Chinese demand for New Zealand rock lobster has driven up prices by almost four-fold in a little over ten years, in a testament to Chinese middle-class’ buying power and the value of the China-New Zealand free trade agreement (FTA).
A kilo of New Zealand rock lobster now fetches up to $80 fob, compared with just $23 in 2004, an increase of 285%, according to an Undercurrent News analysis of trade data and industry sources.
The increase has driven buyers from other countries from the market; last year China imported 99% New Zealand rock lobster exports (HS Code 030621), up from 70% in 2001, according to International Trade Center (ITC).
The Chinese craze for New Zealand rock lobster — and lobster generally — is driven primarily by its popularity as a luxury item during Chinese New Year and other festive occasions.
Indeed, with New Zealand rock lobster catches managed under strict quota guidelines, the price hike and buying dominance by China is a cautionary tale for buyers of wild seafood in scarce supply, when the seafood in question finds favor among Chinese consumers.
Around 2,800 metric tons of NZ rock lobster are caught each year from along the New Zealand coastline, comprising primarily jasus edwardsii, also known as southern rock lobster or spiny red rock lobster. The lobster is mostly shipped live and internationally by airfreight.
In the early 2000s, Japan was a relatively big importer, importing 500-550t annually, according to ITC. Since 2010, Japan has imported little to no rock lobster from New Zealand.
Malaysia and Singapore were, relative to their populations, also significant buyers of lobster, importing 20-30ts each year in the early 2000s. Last year, the two countries imported just 3-5t between them.
Yet, while importers from other countries may be smarting, New Zealand lobster quota owners and exporters are raking in massive profits; last year, New Zealand rock lobster exports to China (excluding Hong Kong) were worth $220.6 million, about 20% of the value of all New Zealand seafood exports, according to ITC.
Seafood New Zealand, a trade organization, has said the country is on course to double the value of New Zealand’s seafood exports by 2025 to around $2.5 billion, with China likely playing an important part towards in achieving that.
Is New Zealand’s lobster industry investing too much faith in the Chinese market? Daryl Sykes, chief executive of NZ Rock Lobster Industry Council, acknowledged the New Zealand lobster industry is “highly reliant” on China, but he did not deem this a problem.
“The New Zealand industry is very respectful and appreciative of the China market,” he told Undercurrent. “There is no doubt that as a primary producer we are highly reliant upon China for our economic wellbeing but relationships are such that the value chain is being maintained satisfactorily for NZ as an exporter and China as importer. There are very strong personal and professional relationships forged between the two countries.”
He acknowledged that other countries now only import very small quantities of lobster from New Zealand, but he said the catching and export sectors “will always seek to maximize the value of the landed catches”.
“The Chinese economy is strong and consumers are prepared to pay premium prices for premium seafood products,” he said.
Although not a game changer, the FTA deal with China has been “very useful”, he said. Agreed between the two countries in 2008, the FTA saw a staggered reduction of tariffs until all New Zealand seafood exports to China became tariff free in 2012. Previously, rock lobster tariffs were 15%.
“The FTA has been very useful to the New Zealand lobster exporters but was not essential to their position and reputation in the China market. What matters now is that the FTA enables more efficient transport of live product and the consolidation of business relationships with wholesalers and consumers in mainland China,” he said.
Export statistics paint a more compelling picture of its impact, although mainly as an incentive to shift trade from Hong Kong directly to mainland China — a sure sign smugglers were using the route to avoid paying Chinese customs duties and sales tax.
In 2008, China officially imported just two tons of New Zealand rock lobster, while Hong Kong imported 2,824t. With the FTA in place, trade flows shifted and last year China imported 3,149t, while Hong Kong imported just 23t.
“From 2010 onward you can see a significant surge in growth of exports to China as the reduction in tariffs made direct supply to customers commercially viable,” said Alastair Macfarlane of Seafood New Zealand.
Sykes reckoned this shift was more down to available airfreight routes, though. “Historical problems with lack of airfreight space into China meant that a large quantity of NZ lobsters had to be shipped to Hong Kong (and elsewhere within Asia) and then transported across to mainland China.
“Airfreight capacity has increased markedly in response to the wider trade between New Zealand and China and a burgeoning tourism industry serving the Chinese wanting to explore New Zealand,” he added.
Certainly, brand New Zealand has helped Chinese become especially enamored with rock lobster from the country, too.
According to Chinese market research firm CBNData, which is owned by the reputable Chinese business newspaper First Financial Daily, freshness, direct shipment, distance from pollution and natural harvest were identified as the most sought-after qualities by Chinese consumers buying imported food products online.
Naturally, the four main exporters — Fiordland Lobster Co Ltd, Ngai Tahu Seafoods Ltd, Moana New Zealand, and L&B Taspac — all draw heavily on images of pristine coastlines and single-prop boats alone in empty seas in branding – a stark contrast to China’s often polluted and busy urban environs.
“New Zealand rock lobster is a premium quality cold water seafood product with appearance, color and oceanic origin, all of which make a number of important cultural connections with the Chinese,” said Sykes.
A spokesman for New Zealand Seafood added: “There are many reasons for the growth and success of New Zealand seafood exports, in China and elsewhere, including New Zealand’s reputation as being environmentally friendly and having a sustainable fishing industry. New Zealand’s reputation as a source of safe, quality seafood ensures there is always high demand for our product, and China, in particular, places much value on food safety.”