Norwegian Seafood Council cheers normalization of China relations

With the recent surprise news that Norway and China have normalized their relationship following a six-year dispute caused by the Norway-based Nobel committee giving the Nobel Peace Prize to a Chinese dissident.

Following the public announcement of the Chinese détente on 19 November, Norwegian companies and trade groups are quickly making moves to capitalize on newly available opportunities in the world’s most populous country.

SeafoodSource interviewed Sigmund Bjorgo, the Norwegian Seafood Council’s China representative, on 20 December. Bjorgo told SeafoodSource that Norway’s ability to build market-share for salmon and cod among China’s middle classes got a major boost with the move. As a result, his organization has increased its 2017 marketing budget for China almost tenfold as it seeks to win back market share lost when China frustrated Norway’s access to its markets through disruptive checks and detentions of stocks on food safety grounds.

SeafoodSource: The normalization of relations took a lot of people by surprise. Did you know it was coming?

Bjorgo: This was breaking news for everyone. Only three people in the Norwegian side knew about it before the Ministry of Foreign Affairs announced it. It’s very positive news.

SeafoodSource: What does it mean in practical terms for Norwegian seafood sales to China?

Bjorgo: Now there’s huge optimism that the Chinese and Norwegian food safety authorities will meet and the situation will be normalized. For almost six years it’s been from difficult to extremely difficult… to get Norwegian salmon into the market – it’s been almost impossible the past year. Now we hope this means Norwegian salmon will get the same access as other countries’ [seafood].

SeafoodSource: How big is the Chinese market for salmon?

Bjorgo: China imported 70,000 to 80,000 tons of Atlantic salmon in 2016. Norway’s market share was about five percent. But the market share potential for Norway is two-thirds. Chile has become the top supplier to the Chinese market in frozen salmon and in recent years it has been putting in place the logistics for chilled Atlantic salmon shipments to China. The Faroe Islands and Scotland have also increased their market share in China.

Of course there will be a huge supply crunch in the first half of 2017, [and] prices are already at an all-time high. But I am confident that Norway will prioritize China and become a reliable partner in supplying China [with salmon].

SeafoodSource: Why prioritize China? If there’s a supply crunch you can sell anywhere?

Bjorgo: The Norway salmon industry has always been very positive about China. Now the market in China is medium-sized but we believe it will be giant-sized. It’s only a question of when it will be the world’s number one [market for salmon].

SeafoodSource: Given the problems with market access, how were Norwegian salmon sales in China in 2016?

Bjorgo: We had a lousy year. Up to the end of November, only 2,500 tons of Norwegian salmon were sold in China. In 2015, the figure was eight to 9,000 tons.

SeafoodSource: How big do you think sales could be in 2017 with better access?

Bjorgo: It depends on when market access happens. If before 1 January, we believe after 12 months our market share could be up to 65 percent. We could ship between 40,000 and 50,000 tons in 2017.

SeafoodSource: Will your office be getting more resources now?

Bjorgo: Yes, we have already been given an increase in marketing budget for China from NOK 1.4 million (USD 161,000, EUR 155,000) to NOK 10 million (USD 1.15 million, EUR 1.1 million).

SeafoodSource: You have made a big effort to establish Norwegian Arctic cod as a brand in China. How did cod sales go in 2016?

Bjorgo: Most of [Norway’s] cod exports to China are still going to processors, but the segment we are focused on is domestic consumption and that’s growing at 50 to 70 percent per year in volume terms, but from a low base. We sold 2,000 tons in 2015. In Qingdao [at the international fisheries expo], we saw a huge interest from Chinese industry and belief in it. Factories are more interested and want to collaborate with us on marketing.

SeafoodSource: Are you targeting the catering sector or home consumers?

Bjorgo: Mostly, we see it for consumers and that is how we positioned it. We offer the product with localized recipes and position it as a replacement fish.
SeafoodSource: Isn’t Arctic cod very expensive compared to the prices for local fish used in home cooking in China?

Bjorgo: Yes, there is a large increase in price but we see that the price they are offered to consumers at CNY 100 (USD 14.39, EUR 13.85) to 150 (USD 21.58, EUR 20.77) per kilo is competitive compared to some of the alternatives in the market. Middle-class consumers are willing to invest. The format is different; In Europe, cod is sold in loins, whereas in China we are supplying as a steak with bone and skin on. Also, we see that Chinese processors are starting to appreciate that the value chain for white fish globally will be adjusted.

SeafoodSource: Can you explain how it will be adjusted?

Bjorgo: The industry in Eastern Europe is developing and the big discussion is that volumes will be moved from [processing in] China to be nearer to consumers in the E.U. I believe that Eastern European factories may be more competitive in the future. And new technology and machinery is being used.

SeafoodSource: How much of your marketing budget in China are you now shifting to cod?

Bjorgo: The budgets are separate, but in 2016 we will have spent about four times more on marketing Arctic cod [compared to salmon].

SeafoodSource: What is the money spent on?

Bjorgo: A lot of it is spent on trade fairs. Also, together with industry, on seminars and point-of-sale material. Also market collaboration with industry. If they want samples for tastings, etcetera, we will supply them with point-of-sale materials.

SeafoodSource: You will soon be completing your time in China. What were your top two achievements during your six years as NSC China representative?

Bjorgo: We managed to sop the Ebola rumors [several Chinese online media outlets reported wrongly that Ebola could be contracted from salmon consumption] two years ago. That was the most critical issue in terms of management challenges during my time in the job. In a very short turnaround, we got a press release out and through targeting specific media in China, we were able to turn the situation around and to end the rumor.

Also the establishment of Norwegian Arctic cod as a name in China. From nothing, we managed to make Arctic cod a product acknowledged by the industry and consumer base in China.