1. Joe Jacobson International Program Director November 2, 2012 Alaska Seafood in China

2. What is the Alaska Seafood Marketing Institute? Partnership of public and private sectors Public corporation that fosters effective alignment with industry marketing efforts Governor-appointed Board of Directors: five processors, two commercial harvesters. Alaska’s official seafood promotion arm, supports Alaska seafood industry through promotion of Alaska seafood products, education and research in the U.S. and key overseas markets including China.

3. Alaska waters produce more than 50% of U.S. seafood Total Alaska exports in 2010: $2.35 billion The seafood industry is the State of Alaska’s largest employer

4. ASMI Mission: Increase the economic value of the Alaska seafood resource

6. China Seafood Market Overview China is world’s largest aquatic product producer 2011 total aquatic production forecast at 53.6 MMT Future growth driven by aquaculture Major species: carp, tilapia, pangasius (catfish), shrimp/prawns

7. China Seafood Market Overview 2010 seawater aquatic production (aquaculture) estimated at 14.5 MMT 2010 freshwater aquatic production (aquaculture) estimated at 23.5 MMT Total aquaculture production=38 MMT (72% of total aquatic production)

8. China Seafood Market Overview Wild capture fishery production stagnant or in decline, unlikely to increase Salt water catch (2010) = 12.4 MMT Freshwater catch (2010) = 2.1 MMT Total: 14.5 MMT (28% of total production)

9. Major Production/Processing Regions (2009) Shandong—7.536 MMT Guangdong—7.026 MMT Fujian—5.675 MMT Jiangsu—4.432 MMT Zhejiang—4.403 MMT Laioning—4.006 MMT Hubei—3.339 MMT Guangxi—2.623 MMT

11. China Seafood Market Overview Huge middle class with greater disposable income Per-capita aquatic consumption increasing… 14.7 KG/year (2009) RMB’s steady appreciation against the dollar makes AK products more competitive Average wholesale price for aquatic products increased 10% YOY in 2010; salt-water products increased 14%

12. Market Trends and Opportunities  Hypermarket and Restaurant Growth –75% of seafood consumed at home –As income grows, the amount of food purchased at supermarkets (especially processed food) increases significantly –Young people (18-34 years) dine out much more frequently and are more likely to purchase fast/convenience foods

13. Consumer Expenditures on Food (U.S. $Billion) Between 2003 and 2007, consumer expenditures on food jumped to more than 36.7% of total expenditures (Projected to double by 2020!). Source: Global Insight’s Global Consumer Markets Service

14. Per-Capita Annual Seafood Expenditure, Urban Residents, by Region (2009) Fujian—954 RMB/year Shanghai—728 RMB/year Zhejiang—623 RMB/year Hainan—619 RMB/year Guangdong—594 RMB/year National Average—301 RMB/year (Beijing = 246 RMB/year)

17. Major Products Exported to China/H.K. (2010) MTValue (000) Snow Crab3,401 $ 28,786 Chum Fr/Fz19,385 $ 63,682 Pink Fr/Fz 39,349 $ 113,175 Sockeye Fr/Fz5,346 $ 25,002 Cod25,373 $ 68,186 Pollock Fillet12,479 $ 31,008 Pollock13,620 $ 26,562 Sole66,041 $ 81,565 Other Flatfish22,305 $ 35,673 NSPF 7,271 $ 18,043

18. Processing Sector (Export) Aquatic export processing = 33% of total aquatic product export market value Processing sector grew strongly in 2010 (10- 15%) However, processors challenged by: Rising production costs Labor shortages Raw material fluctuations Slow global growth

19. Processing Sector (Domestic) Domestic processing sector growing quickly As foreign market growth slows, companies turning inward to focus on China Even those with a background in aquaculture interested in importing wild-caught seafood from around the world (including Alaska)

20. Major Products Exported to China/H.K. for Domestic Consumption (2010) SpeciesVolume Value Snow Crab3,401 $ 28,786 King Crab330$ 5,448 Black Cod897 $ 7,234 Salmon Roe258 $ 2,580 Halibut/Turbot2,150 $ 5,811 NSPF (Fishmeal)7,271 $ 18,043 Cod25,887 $ 69,777 Pollock Fillet12,479 $ 31,008 Pollock13,620 $ 26,562 Sole66,041 $ 81,565

21. Market Trends and Opportunities  Food Safety –Food safety is the primary concern among consumers, especially regarding domestic food products sold in the market. –Quality natural imported products are increasingly entering the market, which has spillover benefits for the marketability of Alaska Seafood products.  Health-conscious - Organic foods are quickly rising in popularity. * Organic food sales have increased by 50% at Carrefour in China between 2007/08 – Following the health trend, rising popularity of organic foods mean consumers are more receptive of healthy products such as Alaska seafood.

22. Market Trends and Opportunities  HRI Growth –Restaurants Clean fast food of certified quality Quick service restaurants expanding rapidly; KFC now has over 3200+ outlets in 650+ cities, 1 new outlet per day, target of 20,000 outlets –Hotel and Catering Industry The hotel and catering industry recorded retail sales of US$18.3 billion, up 26.3% from 2007 As disposable incomes increase, Chinese consumers spend more eating out

23. Market Challenges Entrenched live or fresh fish preference Distribution network outside of first-tier cities Vast country with diverse tastes and preferences NE a reprocessing for re-export center Prominence of farmed salmon/Russian product Trade barriers IPR Infringement

24. ASMI China Activity In order to further expose Alaska seafood, encourage more traders and consumers to purchase or use the products and to increase the sales of Alaska seafood to China, ASMI China has devoted the utmost attention for these promotional effort in the Chinese Market.

25. Market Strategy Focus efforts in the four major cities of Shanghai, Beijing, Guangzhou and Hong Kong. However, ASMI will selectively expand into the most promising second and third-tier cities as opportunities present themselves, particularly in nearby satellite cities that have access to first tier cities’ distribution chains Strengthen the brand image through the promotion of the distinct natural and pure features of Alaska Seafood and proper labeling Work with processors that produce for the Chinese domestic market, including major fast-food chains and producers of frozen convenience food sold at the retail level. With changing lifestyles, prepared, pre-cooked or ready-to-eat fishery products are now in high demand

26. Some of the ASMI materials currently available in the Chinese language: Alaska Salmon Buyer’s Guide Alaska Whitefish Buyer’s Guide Alaska Seafood Fact Sheets for several species of Alaska Seafood The Nutrition Story Roe Guide (Pollock and Salmon) Alaska’s Harvest – Natural, Sustainable, Pure Alaska Seafood Suppliers’ Directory Alaska Seafood’s Sustainability Brochure

27. Consumer Sector  Working with new partners like RT-Mart, City Shop and Jenny Lou’s etc. to carry Alaska seafood through promotional activity efforts.  Price-point products like sole and pollock are being featured on a more frequent basis during the consumer promotions.

28. Consumer Sector Consumer PR and Recipe Development  Organized 3 consumer club activities (Shanghai, Beijing & Guangzhou).  Press coverage campaigns generated over 150 articles with a value of $155,000.  2 different recipe categories have been developed, with 24 recipes per category.  Posted billboards in HK and Guangzhou.  Placed advertising and advertorials in lifestyle magazines and newspapers.  Produced 4 segments of TV shows targeting audiences of 300 millions.

29. Press Coverage of Alaska Seafood

30. Trade Sector Trade Shows  HOFEX  China Fisheries and Seafood Expo Now the largest seafood show in Asia

31. Trade Sector Trade Education  Trade gatherings were held in Beijing, Guangzhou and Hong Kong.  Organized retail education seminars with retain chains like Metro in East & North China, RT-Mart in East China and Vanguard in South China to teach stores buyers how to differentiate wild Alaska seafood from farmed seafood as well as emphasize sustainability of Alaska seafood.

32. HRI Sector Food Service Promotions  Worked with high-end hotels/restaurants across China. First time cooperation with around 70% of the promotional partners.  Products being used were not only high-end Alaska seafood items like sockeye salmon, king crab, snow crab, black cod and halibut, but also pollock, cod and sole as well.  Most of the promotional partners are still using Alaska seafood after the promotions such as White Swan Hotel, Radisson Plaza Hangzhou, Dong Fang Hotel Guangzhou, Greenery Café and La Seine Restaurant Guangzhou.

33. HRI Sector Chef Seminars  Organized hands-on chef seminars (Qingdao, Beijing and Macao) and 3 normal chef seminars (HK, Dalian & Shenyang).  220 local chef participated in these events, and some hotels like Rose Hotel Shenyang, Trade Hotel Shenyang, Inter- Continental Hotel Beijing and Venetian Resort Macao have started to use Alaska seafood after the seminars.

34. HRI Sector Training School Program  Conducted training programs with five culinary schools in Shanghai, Beijing, Nanjing and Chengdu.  Over 2,200 students attended the training programs.

35. HRI Sector Chef Forum  Organized a two part chef forum (chef competition and nutrition seminar) in Guangzhou and a chef competition in Shanghai  Over 200 chefs attended both events

36. Upcoming Activities Trader Focus  Organize outbound trade mission to China focusing on new trade partners in south China..  If you want to do business in China, you need to invest time and effort in developing relationships