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High Tuna Operating Costs Hit Profits Of Chinese Fishing Firm

A steep increase in its tuna operating expenses has strongly impacted Shanghai Kaichuang Marine International’s profits. Being one of China’s leading tuna fishing firms, the company announced net profits of USD 10.7 million for the first six months of this year, a drop of 34 percent.
Tuna accounted for a dominant 83.8 percent of its total sales, but tuna production saw a massive rise of 64.8 percent in costs. This resulted in margins being pushed down by 11.9 percent.
Revenues were up 5.6 percent compared to the same period of 2012. High operating costs was the company’s reasoning behind its dramatic decline in profits. These were up a significant 21.5 percent year-on-year at USD 65.5 million. Higher fuel and labor costs were thought to result in squeezed profits.
However, similarly to China’s other deep-water fishing companies, Kaichuang receives generous subsidies for fuel and vessels from the local government, with whom it enjoys a close relationship.
Shanghai Kaichuang Marine International is a Chinese offshore catch fisheries company engaged in several fish activities including tuna fishing and processing. The company sells tuna under its brand ‘Longmen’.
Kaichuang’s sale of a tuna fishing vessel this year that was purchased earlier in 2007 was also thought to impact on its first half of the year profits. The transaction resulted in a loss of USD 2.8 million.
Traditionally the company relies heavily on foreign tuna buyers, but the first six months of 2013 shows the reporting of a move to increased domestic sales of tuna raw material. This was up a considerable 78.7 percent from 2012, and accounted for 42 percent of total sales.
Spurred by the ambition to be the leading global shipbuilder, a deep-water fishing fleet has emerged in China. The countries first large-scale tuna purse seiner was built at a local shipyard and is operated by Kaichuang. The vessel, Jin Hui 8, was designed by the Dalian Fishing Vessel Company and has a fish hold capacity of approximately 1,100 tons.

Despite the Chinese tuna market being small, it is continuously expanding due to the growing of popularity of Japanese style sushi and sashimi dining.

Tuna purse seiner “Jin Hui-8”, designed by the Dalian Fishing Vessel Company, is 75 meters in length and 12.8 meters in width, with a hold capacity of approximately 1,100 tons