Market Intelligence Study Tour to

Shanghai China – Combination Research

Travel Grant and Industry

Dr Jo-anne Freeman

University of the Sunshine Coast

Project No. 2010/713

Copyright Australian Seafood CRC and University of the Sunshine Coast 2010

This work is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owners. Neither may information be stored electronically in any form whatsoever without such permission.

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Debrief of Export Market intelligence PlatformNote: this report is based on 2 pilot studies executed in Seoul, South Korea 2009 and Shanghai, China 2010

Complete by Dr Joanne Freeman, University of the Sunshine Coast

5 May 2010

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Table of Contents Page No.

1. Introduction 1

2. Focus of the Project 2

3. Research Justification 33.1 Contribution of SME to Australia’s Export Performance 33.2 Capability Development 43.3 Reducing Export Risk 5

4. Pilot Study 1: Seoul, South Korea 64.1 Field Research 64.2 Snapshop of Pilot Study 1 (full report available through CRC) 10

5. Pilot Study 2: Shanghai, China 115.1 Field Research 125.2 Participants’ Reflection 17

6. Industry Capacity Building (outputs) 26

7. Communication and Sharing of Knowledge 27

8. Recommendations for Future Market Intelligence Projects 28

Tables

Table 1 South Korea Research Teams 6Table 2 Trader Data Collection Locations (Sth Korea) 7Table 3 Interviews and Meetings (Sth Korea) 7Table 4 China Research Team 11Table 5 One-on-one Meetings (China) 13Table 6 Retail Outlets (China) 14Table 7 Trade Dta Collection Locations (China) 14

Figures

Figure 1 Trader Survey (Sth Korea) 8Figure 2 Consumer Survey (Sth Korea) 9Figure 3 Trader Survey (China) 15

Pictures

Picture 1 Jonas Woolford at Shanghai Oriental International Fisheries Market 17Picture 2 Collecting data at Tong Chung Aquatic Product Market 18Picture 3 Meeting at Austrade, Shanghai 19Picture 4 Meeting at Lans Club organised by The Grey Group 20

Appendices

Sunshine Coast Daily Sunday 6 September 2009Sunshine Coast Daily Monday 19 October 2009

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1. Introduction

Due to the importance of export to the seafood industry, CRC members identified an export market intelligence project as a priority project. The project engages the University of the Sunshine Coast, an industry leadership group (CRC members) and CRC industry participants to generate industry led research. Through the recruitment of 3rd year, international business students (note: only students that have maintained a high level of attainment throughout their university studies are accepted into the program) and industry participants as primary data collectors, the project will not only develop a new generation of potential seafood industry personnel into the industry but will also extend the knowledge and experience of the seafood industry. Furthermore, the project will provide CRC members the forum to develop other export market related skills through the expert leadership group.

2. Focus of the Project

The largest percentage of Australia’s seafood is directed towards the Asian region with Hong Kong being the largest market and worth approximately $AUD447 million, (a major percentage of this trade ends up in China) followed by Japan (AUD305 million), United States (AUD115 million), China (AUD59 million) and Taiwan (AUD50 million). Of the sectors within the industry, prawns, abalone, rock lobster and tuna are the main export earners (ABARE 2007). In line with CRC’s priority focus on Asia and particularly the China initiative, this project is therefore supporting current CRC projects but more importantly adds further value by providing the following outputs to the CRC members:

(i) A CRC industry export leadership group will be created that consists of experienced CRC export participants along with additional members from new emerging exporting businesses. The formation of this group will provide the platform for continual professional development opportunities for CRC members. Furthermore, the leadership group will be working in collaboration with the University of the Sunshine to determine priority markets for the whole of industry.

(ii). Consolidated secondary market intelligence that highlights general market characteristics and demographics, an overview of the export market seafood industry incorporating the general structure, trade and production statistics and other related information.

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(iii) Interpretable export market intelligence reports through in-depth field research involving the University of the Sunshine Coast working collaboratively with CRC industry participants. The reports not only include informative primary data collected in the market but also provide recommendations and strategies for future CRC seafood exporters.

Essentially the overall aim of the Export Market Intelligence project is to not only identify export opportunities for CRC members but to provide export intelligence and strategies to reduce the risk of doing business in a globally competitive environment.

3. Research Justification

3.1 Contribution of SME to Australia’s Export Performance Export provides a way to assist nations improve their balance of payment, trade deficit, employment rate and overall standard of living. However, due to the rapid globalisation of markets, the pace of technological change and the decline of government imposed barriers, it is becoming increasingly difficult for Australian small to medium (SMEs) seafood businesses to isolate themselves from export markets and foreign competition (Andersson, Gabrielsson & Wictor 2004; Fillis 2007). In fact, Balabanis, Theodosiou and Katsikea (2004, p. 353) states “virtually all firms, irrespective of size, industry or national origin, are now confronted with the consequences of this new commercial reality, and have realised that choosing not to participate in global markets may no longer be an option”. As the SME sector is a major contributor to the overall performance of the Australian economy and indeed the global economy the practical implication of research that enhances SME performance is critical. The significance of SMEs in job creation, technological innovation, and economic rejuvenation is generally recognised among economists, management theorists, and policy makers (Westhead et al. 2002; Westhead, Wright & Ucbasaran 2004; Yeoh 1994). By exporting a proportion of their sales abroad, SMEs can reduce the dependence and saturation and/or shrinkage of the domestic market (Leonidou 1998). Seafood business managers can thus adopt exporting as a strategy to increase corporate growth, production capacity and financial performance, strengthen their competitive advantage and ensure company survival in a highly globalised marketplace (Julian & Ali 2009; O'Cass & Julian 2003).

More specifically to the Australian seafood industry, improving the export performance of seafood businesses in regional locations has become an area of emerging importance to governments and researchers alike (Department of Transport and Regional Services 2003; MacGregor & Varazalic 2005). It has been argued that the solution to reinvigorating the

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economy in regional locations is to stimulate the growth of existing small businesses through exporting (Larsson, Hedelin & Garling 2003; Vatne 1995). Regional SMEs are growing more slowly than metropolitan SMEs and on average are half as profitable as their metropolitan counterparts (Department of Transport and Regional Services 2003). In addition, people living in metropolitan areas on average enjoy higher incomes than people living in the regions and this gap is increasing (Lloyd, Harding & Hellwig 2001). Yet regional business contributes 50 percent to the nations export income which implies that SME exporters have the potential to become a major contributor in developing regional economies (MacGregor & Varazalic 2005). Regional Australia can only survive with strong, growing businesses that in turn create strong, energetic regional communities and SMEs have been identified as the wealth generators and job providers for regional Australia (Department of Transport and Regional Services 2003).

Exporting therefore is fundamental to sustaining and developing Australia’s regional locations as exporting has the potential to provide jobs, income, infrastructure and production facilities which in turn provides flow on benefits specific to these locations (Department of Foreign Affairs and Trade 2002). In Australia, the federal, state and territory governments, all play important roles in determining the business environment affecting SMEs, as well delivering programs and services to assist businesses to grow and prosper. Growing the Australian exporting community including the SME seafood export sector will in effect help more Australian businesses grow, benefit from knowledge transfers and ultimately become more internationally competitive. As a result the spillover effect will contribute to improving employment, productivity and the standard of living. It is important therefore that strategies developed and facilitated by policy makers (such as the Seafood CRC initiative) can be both improved and better directed through the identification of appropriate projects that can in fact effectively assist the seafood SME community (eg The Export Market Intelligence Platform).

3.2 Capability DevelopmentArguably, experience and knowledge (information capability) are critical factors for firms engaging in exporting where competitive practices are generally more sophisticated than those employed domestically (De Toni & Nassimbeni 2001; Manolova et al. 2002). Nakos, Brouthers and Brouthers (1998) assert that knowledge and experience gained from international business generates business opportunities as managers with extensive foreign knowledge and experience can draw on their network to expand abroad. Therefore firms with reasonably high levels of information capability knowledge and experience possess a more comprehensive understanding of export market forces and are more likely to achieve higher export performance levels than others (Wolff & Pett 2006). Information capability has been accepted in the literature as a critical component in making effective and efficient export market decisions (Leonidou & Theodosiou 2004; Toften 2005). In fact, Eisenhardt and Martin (2000) and Keh, Nguyen and Ng (2007) claim manipulation of information

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capability is critical for sustained competitive advantage. In fact, the accumulation of specific market information has the ability to increase a firm’s international competitive advantage (Goll, Johnson & Rasheed 2007; Loane & Bell 2006; Srivastava, Shervani & Fahey 1998).

However, increasingly, exporters consistently rate lack of information as a major barrier to entering new markets (Diamantopoulos et al. 2003; Kropp, Lindsay & Shoham 2006; Leonidou 2004). In many instances exporting firms face challenges in identifying export opportunities, conducting research into foreign markets and interpreting such information (Rundh 2003). Market research activities imply that information acquisition is a precondition for SMEs to make rational market entry decisions to achieve high export performance (Wolff & Pett 2006). Due to many SMEs’ haphazard approach to export market information acquisition and use, the firm’s risk to exporting increases as decisions are often based on purely gut feeling and/or personal experience as opposed to informative decision making (Fung, Chen & Yip 2007).

3.3 Reducing Export RiskReducing export risk would therefore increase a firm’s willingness to allocate more resources to developing export markets which create positions of advantage over time (Gripsrud, Solberg & Ulvnes 2006). To that end, relevant, accurate and timely information is a vital capability that enables SMEs to respond to changing export markets (Katsikeas & Morgan 1994). Having the capabilities necessary to access market intelligence in more diverse and turbulent environments helps minimise unfamiliarity with export markets and to a greater extent helps to decrease uncertainty in the export venture (Gumede & Rasmussen 2002; Jones & Crick 2004; Shoham, Rose & Kropp 2005). Consequently, information is an important capability in order to deliver consistently high quality products and services as well as creating superior customer value (Balabanis 2001; Key, Nguyen & Ng 2007; Trabold 2002).

In fact in a more recent study by the researcher (Freeman 2009), which focused on the challenges of SME exporters, which included seafood exporters, international market knowledge was found to be crucial for firms to be successful in export market activities. Firms accumulate knowledge of foreign markets through experience (such as market visits) (Cavusgil & Zou 1994; Li & Ogunmokum 2001). Therefore the better the understanding of an export market, the more an SME can develop planning activities that suits the characteristics of the market, which in turn will be more likely to boost overall export performance. There is strong consensus across the literature and in the SME community acknowledging that increased market intelligence is becoming critical for SMEs operating in export markets due to the increasing level of uncertainty and complexity that exist across national boundaries (Hart, S. & Tzokas 1999; Lim, Sharkey & Kim 1996; Toften 2005). Since lack of knowledge of the changing conditions prevailing in export markets has been

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identified, efforts must be made to develop relevant, comprehensive and useful market intelligence tools readily available to SME businesses.

Previous research and supported by the results of the study by Freeman (2009), established that superior export performance is influenced by a firm’s ability to monitor and make adjustments when required, to the conditions in the export market environment. First firms need to be provided with current in-market and industry information and second, specific opportunities in export markets could be presented which include, industry events, networking opportunities, trade missions, trade shows and also outbound and inbound market visits. Consequently, SMEs need more relevant assistance from government agencies to provide them with the necessary export market related information which includes market knowledge and identification of appropriate networking associations and updates regarding the business activities and opportunities available in specific targeted export markets.

4. Pilot Study 1: Seoul, South Korea

All costs for Pilot Study 1 were funded by the University of the Sunshine Coast and the research teams.

The first pilot study was run as part of an existing course within the International Business Program. The pilot study required the submission of a team report that investigated, through secondary and primary sources, the export potential of Australian seafood products into South Korea. This pilot project was designed to give students an opportunity to undertake practical export research for the Australian seafood industry along with testing the viability of collecting, analysing and reporting quality research outcomes that provide valuable insight into the Korean market for CRC members. The research team consisted of 14 research students and the Research Leader, Dr Joanne Freeman (see Table 1).

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Table 1 South Korea Research TeamsSeafood Sector Research TeamsSouthern and Western Rock Lobster Chelsey Parish

Thalia Van den BoogaardLee KyeonghunMetin Sulimani

Abalone Marion GironnetBen ManningRachael Mackay

Tuna Firas ZeinMathilde WadouxMoea TherouxNatalia Tintori Costa

Yellowtail Kingfish Annika LuscombePaul Von dohrenJames Elsayed

Research Leader Dr Joanne Freeman

4.1 Field ResearchThe results from the pilot study are based on both primary data, which was collected in South Korea (Korea) and secondary research findings. Primary data was gathered through the use of surveys conducted in fish markets (Refer to Table 2), and meetings with high-end hotels and restaurants in Seoul and Incheon. Data was also gathered through one-on-one meetings with government agencies in Seoul which included, Austrade, Korea Trade-Investment Promotion Agency (KOTRA), Trade Queensland and Korean Maritime Institute (Refer to Table 3). Finally data was also collected from seafood consumers in order to elicit market perceptions ad choices regarding seafood purchases. Refer to Figure 1 for Trader Survey and Figure 2 for Consumer Survey.

Table 2 Trader Data Collection Locations

Date Location

15 September 2009 Namdaemun markets

17/18 September 2009 Noryanjin fish markets

19 September 2009 Garak markets

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Table 3 Interviews and Meetings

Interviews and Meetings

Date Name Position Company

16 September 2009 Mr. T. C. Jeoung Executive ChefMiyabi Restaurant, Sheraton Hotel, Incheon

15 September 2009 Mr. J. S. Sin Executive Chef

Under the Sea, Seoul (large seafood buffet restaurant)

15 September 2009 Unknown Executive ChefThe Pacific Hotel, Seoul (4 star hotel)

22 September 2009 Mr. C. R. Park Executive ChefSejong Hotel, Seoul (5 star hotel)

21 September 2009 Dr. Joo Team LeaderKorean Maritime Institute

15 September 2009 Ms. Young Yu Trade Commissioner

Australian Trade Commission (AUSTRADE)

15 September 2009 Ms. Myung-Hwa Lee Business Development Manager

Australian Trade Commission (AUSTRADE)

17 September 2009 Ms J Bae Importer Aqualink

18 September 2009 Mr. Todd Sample Manager, Public Relations Team

Korean Trade-Investment Promotion Agency (KOTRA)

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Have you ever traded Australian seafood products? Yes No

If yes, what types of Australian seafood products have you traded?If no, is there any specific reason you have not traded Australian seafood products?Please state the name of the country where you purchase most of your seafood products?Who do you buy your seafood products from?

How much seafood product do you import? In percentage term.What seafood products sell the best?

What comes to mind when you think about Australian seafood? Probe for positive and negatives responses. Also ask the trader what he thinks about your specific product (do they think there is any potential in South Korea)

Who do you sell your seafood products to? Please % Percentage of Sales Direct to retail buyerDirect to food services buyerDirect to consumerDirect to another wholesalerOther (please specify)

When purchasing seafood products please indicate the importance of the product attributes you look for? Please note “7” is very important.

Rating of Attributes Not at all Very Important Important

1 2 3 4 5 6 7Good value for moneyQualityGood food safety recordConsistent product supplyCaught/Grown in pristine clean watersResponsive suppliersDifferent/Exotic speciesAvailable liveAvailable frozenAvailable chilledRecognised brand or country of originOther (specify)

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CONFIDENTIAL QUESTIONNAIRE Understanding the South Korean Seafood

Industry

Head Researcher: Joanne FreemanLecturer International BusinessUniversity of the Sunshine CoastEmail: jfreeman@usc.edu.au

Figure 1 Trader Survey

Have you ever eaten Australian seafood products? Yes No Don’t Know

What types of seafood products do you usually purchase?

Do you know what county the seafood products you purchase come from? If yes, please state.

How many times a week do you eat seafood?

How many people live in your home?

Where do you purchase most of your seafood products from?

How do you prefer to purchase your seafood products?Please indicate with a “”.

Fillets Whole Fish

Fresh Frozen Live Other form

Which age bracket do you belong to?Please indicate with a “”.

18 – 35 36 – 50 Over 50

When purchasing seafood products please indicate the importance of the product attributes you look for?Please note “7” is very important.

Rating of AttributesNot at all VeryImportant Important

1 2 3 4 5 6 7Good value for moneyQualityConsistent product supplyAvailable liveAvailable frozenAvailable chilledTasteSizeRecognised brand or country of originDifferent/Exotic speciesOther (specify)

What comes to mind when you think about Australian seafood? Probe for positive and negatives responses. Also ask the consumer what they think about your specific product (would they consider buying the product?)

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Head Researcher: Joanne FreemanLecturer International BusinessUniversity of the Sunshine CoastEmail: jfreeman@usc.edu.au

CONFIDENTIAL QUESTIONNAIRE Understanding the South Korean Seafood

Industry

Figure 2 Consumer Survey

4.2 Snapshop of Pilot Study 1 (full report available through CRC)

Through detailed analysis of the South Korean seafood industry, including production, trade, distribution, pricing and market trends, the pilot study identified the export potential of Australian seafood into South Korea (Korea). Specifically this pilot study focused on the export potential of Abalone, Western and Southern Rock Lobster, Tuna and Yellowtail Kingfish. Korea is an attractive export destination for Australian seafood exporters due to its stable growth, liberal trade focus, modern infrastructure, and the pending completion of the Australia-Korea free trade agreement which will provide further incentive with the removal of the 10-20 percent tariff currently applied to Australian seafood products. The Korean seafood market is one of the largest in the world, with Koreans being the largest consumers of seafood per capita in the world. High levels of seafood consumption due to health consciousness and the growth of an affluent middle class further enhance the potential of the Korean market.

From the field research it was determined that the Korean seafood industry is complex in its structure, with many parties involved in the seafood distribution process. The market in Korea is competitive with both domestic and imported products saturating the market. However there are still many developing trends for Australian seafood. A prevailing theme throughout the research was the substantial lack of awareness of Australian seafood. At the same time however, there were indications that some species could create their own “niche” within Korea with the appropriate promotional efforts.

The Australian seafood industry has the opportunity to raise its profile within Korea to become a leading supplier of premium seafood. Results from primary research conducted in Korean during September 2009 along with secondary research have indicated that potential opportunities exist for Australian seafood products. The main challenge for the Australian seafood industry is the general lack of awareness of Australian seafood amongst both Korean seafood traders and consumers. As a consequence, a comprehensive educational promotion campaign to educate consumers, similar to the Aussie Beef campaign, is recommended. Given that the results are encouraging, premium product positioning could be supported by promoting and supplying premium grade product only, adopting a differential pricing strategy and limiting distribution to high end restaurants and department stores.Finally Australian seafood exporters, especially the first time exporter, should engage a Korean importing and distribution company with experience in sales and promotion of gourmet seafood who has established relationships with high end restaurants and department stores.

Refer to Appendix 1 and 2 for media coverage of Field Study 1.

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5. Pilot Study 2: Shanghai, China

All costs for Pilot Study 2 were funded by the University of the Sunshine Coast, the research teams Seafood Services Australia and a CRC industry travel bursary.

The second pilot study was further enhanced with the inclusion of industry representatives

from 3 different seafood sectors. The industry representatives formed part of the 3 research

teams that were established for the market intelligence field trip (see Table 4). Once again

the study was lead by Dr Joanne Freeman with Seafood Services Australia providing the

services of Simon Liu as the China expert and translator. The aim of the second pilot study

was to build upon the learnings from the first pilot study in collaboration with industry

representatives to develop an industry led market intelligence project. By collaborating

and working with industry participants and Seafood Services Australia in the export

market, the market intelligence collected was thereby specific to industry needs and

focused on the future needs of the Australian seafood industry.

The field trip was conducted over a 2 week period and the 3 research teams (Refer to Table

4) were expected to accomplish (at the very minimum) the activities set out in the semi

structured itinerary provided before arriving in China.

Table 4 China Research Teams

Seafood Sector Research TeamsSouthern Rock Lobster Darcy Brooke

Thalia Van den BoogaardLee KyeonghunWilliam Ferguson

Abalone Gregory GrunertBen ManningHayley StoreyJonas Woolford

Pacific Oysters Robyn MahoodEmma BartonDaniela SwartzChristine HoldenJames Calvert

Research Leader Dr Joanne FreemanChina Expert/Translator Simon Liu

Of course once on the ground further meetings and seminars were coordinated. Generally

though the following activities were completed:

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1. Multiple visits to the 4 main Shanghai/Pudong seafood wet markets where surveys were conducted to collect data specifically relating to distribution, product attributes, seafood preferences and perception of Australian seafood. The research team achieved a very acceptable response rate with 190 surveys completed. The prominent seafood markets in Shanghai are:

(i) Tong Chuan Aquatic Product Market(ii) Shanghai Oriental International Fisheries Market(iii) Jiangyan Aquatic Product Market(iv) Shannon Piyuqiao Market

2. Prearranged meetings/seminars with Austrade, Trade Queensland and The Grey Group. These meetings provided the research teams with a general overview of China along with a more in-depth insight into the Chinese seafood industry, consumer trends, cooking styles and product forms.

3. Observational research conducted at prominent retail chains such as Metro, Carrefour and City Supermarket. The research teams were able to identify competitive products, forms and prices. The Metro and Carrefour retail chains were found to be more appropriately positioned to stock Australian seafood.

4. Meetings with chefs at high end restaurants and hotel chains. Note: it was found that the most effective technique to achieve a reasonably high success rate was to cold calling taking into account the dining and preparation times.

5. Meetings with identified distributors and wholesalers. Note: relevant companies/individuals were identified as a direct result from conducting trader surveys in the wet markets.

5.1 Field Research

Once again the results from Pilot Study 2 were based on both secondary (collected prior to the research market field trip) and primary data captured in and around Shanghai and Pudong, China. Data was also collected via one-on-one meetings with government agencies and other related agencies in Shanghai such as, Austrade, Trade Queensland and The Grey Group who are currently working with the Australian Abalone Council in China. Primary data was also gathered through the use of surveys and interviews conducted at fish markets, high-end hotels and restaurants and retail outlets in Shanghai. Refer to Table 5 for details of one-on-one meetings held over the duration of the field trip, Table 6 for details and locations of retail outlets investigated and finally, Table 7 for location and dates that data was collected at seafood markets.

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Table 5 One-on-one meetings

Date Name Position Company29/3/10 Stella Chai Business Development

Manager, Austrade ShanghaiAustrade

30/3/10 Zijian Zhang Trade Commissioner Trade Queensland, China30/3/10 Martin Eigenmann Food and Beverage Manager Sofitel

30/3/10 Gilbert Steiner Executive Chef Sofitel

30/3/10 Roy Dibyendu Chef De Cuisine Tables The Portman Ritz-Carlton31/3/10 Shanghaibing Tian Trader- Dried Product Tong Chuan Aquatic Product Market

31/3/10 Wu Qiang General Manager Fuga Restaurant

2/4/10 Maik Damm Executive Chef Binjiang One Snow Bar, Pudong

5/4/10 Zijian Zhang Trade Commissioner Trade Queensland

5/4/10 Gus Gu Manager – Canned and dried abalone trader

Sahnghai Penguin Trading Development co.ltd. (Franchisee of Tas Live Abalone)

6/4/10 Chrisa Head Waitress Really Good Seafood Restaurant

6/4/10 Hamish Pollit Executive Chef M on the Bund

6/4/10 Axel Harmand Food and Beverage Manager The Legham

6/4/10 Min Long Dai Manager - Dried Abalone trader Shanghaitian lan seafood Business (Tong Chuan market: dried product wholesaler)

6/4/10 Canny Lam Purchasing officer Shangri-La Pudong

7/4/10 Emmanuel Souliere Executive Chef Hilton Shanghai

7/4/10 Shawn Lei Manager Lans Club

7/4/10 Naveen Rao Chief Strategy and Planning Officer

Grey Group

7/4/10 John Deng Consumer Insight Manager Grey Group

7/4/10 Stewart Szeto Project Director Grey Group

7/4/10 Sylvia Sui Account Director Grey Group

8/4/10 Calvin Chan General Manager Zen Chinese cuisine Xintqindi Shanghai Orange Moonsha Tappanyaki moonsha.net

9/4/10 Xue Chung Fa Marine Loong Da WholesalersShanghai branch

Tong Chuan Aquatic Product Market

9/4/10 Qiu Zhiqin Seafood Sales Manager Fish HD From Metro Jinjiang Cash and Carry Co., LTD. 1425 Zhenbei Road, Putuo District Putuo Shanghai

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Table 6 Retail Outlets

Date Retail Outlet Location30/3/10 City Shop Shanghai City Supermarket Co., Ltd. (near The Portman Ritz-Carlton

Hotel) The Portman Ritz-Carlton, B1 Shanghai Centre, 1376 Nanjing Xi Lu,

30/3/10 Orient Department Store Shanghai Orient Shopping Center8 Caoxibei Lu, Shanghai

30/3/10 SUGO Jiu Guang Department Store (City Plaza), 2/F, 1618 Nanjing W.Rd

6/4/10 Metro Metro store 1: 1425 Zhenbei Road, Putuo District Putuo Shanghai

6/4/10 Metro Metro store 2: 418 Guangyue Road, Hongkliou, Shanghai

6/4/10 Carrefour 268 South Shui Cheng Road, Gubei Shanghai

7/4/10 Carrefour 185 Fangdian Road, Pudong Xinqu

Table 7 Trader Data Collection Locations

Shanghai/Pudong Seafood Wet MarketsDate Location Purpose 31 March 2010 Tong Chung Aquatic Product Market Observation research and

survey testing1 April 2010 Tong Chung Aquatic Product Market Trader Surveys2 April 2010 Shanghai Oriental International Fisheries Market Trader Surveys6 April 2010 Tong Chung Aquatic Product Market Trader Surveys7 April 2010 Tong Chung Aquatic Product Market Trader Surveys7 April 2010 Jiangyang Aquatic Product Market Trader Surveys8 April 2010 Shannong Piyuqiao Market Trader Surveys

As can been seen in Figure 3, the Trader Survey was modified and further developed as a result of findings collected in Pilot Study 1. The research teams were able to collect more extensive data to include country of origin effect, knowledge of Australian seafood, perceptions of Australian seafood, usage of seafood purchase and intention to purchase.

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How long have you been a seafood trader? __________

Have you ever traded Australian seafood products in the past 1 or 2 years? Yes No

1．If yes, what types of Australian seafood products have you traded? Please indicate ()

Abalone Oyster Rock Lobster

Prawns Crab Fish (type)

Other

2．If no, is there any specific reason you have not traded Australian seafood products?3．Please state the name of the country where you purchase most of your seafood products.4．How much seafood product (in percentage terms of your total stock) do you import? 5．What seafood products (either domestic or imported) sell the best?

Even though you may not have traded Australian seafood before, I am hoping you could share some of your thoughts about Australian seafood to help us with our research.

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6．When purchasing seafood is obtaining good value for money of great importance?7．When purchasing seafood is obtaining premium quality of great importance?8．When purchasing seafood is food safety of great importance?9．When purchasing seafood is consistent product supply of great importance?10．When purchasing seafood is the availability of a variety of species of great importance?11．When purchasing seafood is the environment from where the product is caught or farmed of great importance?12．Do you believe that Australian seafood offers the best value for money compared to other foreign seafood?13．Do you believe that Australian seafood offers the most premium quality compared to other foreign seafood?14．Do you believe that Australian seafood offers the best food safety record compared to other foreign seafood?15．Do you believe that Australian seafood has the most consistent product supply compared to other foreign seafood?16．Do you believe that Australian seafood has the most variety of species compared to other foreign seafood?17．Do you believe that Australian seafood comes from the most pristine clean green environment compared to other foreign seafood?18．When your customers buy seafood as a gift, do you believe they would prefer to buy Australian seafood than Chinese seafood?

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ANONYMOUS QUESTIONNAIRE Understanding the Chinese

Seafood Industry

Lead Researcher: Joanne FreemanLecturer, International BusinessUniversity of the Sunshine CoastEmail: jfreeman@usc.edu.au

Figure 3 Trader Survey

19．When your customers buy seafood as a gift, do you believe they would prefer to buy Australian seafood to other foreign seafood?20．When your customers buy seafood for consumption, do you believe they would prefer Australian seafood to Chinese seafood?21．When your customers buy seafood for consumption, do you believe they would prefer Australian seafood to other foreign seafood?22．When your customers buy seafood it is important for them to know what country the product is from.23．When you buy seafood for your store it is important for you to know what country the product is from.24．Do you believe you have a lot of knowledge about what seafood is available from Australia?25．Do you believe that Australian seafood is difficult to source?26．Do you believe you have a lot of knowledge about what seafood is available from other countries?27．Do you believe you have a lot of knowledge about what seafood is available from China?28．If your customers ask you, would you recommend they buy Australian seafood?29．If your customers ask you, would you discourage them from buying Australian seafood?30．Do you intend to purchase Australian seafood in the future?

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5.2 Participants’ Reflections of Pilot Study 2

James Calvert. I would like to pass on my appreciation to all the students which were involved on the trip, they all conducted themselves very well and what an impressive young group they are. If this is the future for our and other industries, then we are in good hands. There were a few stand out students that would need little training to adapt themselves to business.

I personally had a great experience and now have a better understanding of the multi complex supply chain which is Shanghai. Out of the trip I have a couple of very positive leads and contacts which I am hoping will eventuate into future business. I am looking forward to coming up to QLD for the presentation and to catch up with all that were involved and maybe share a coffee or two ….

Jonas Woolford. This research tour has been extremely beneficial for my learning and the information gained by the delegation is extremely important to the Australian seafood industry. The students conducted themselves most professionally and I believe it is working relationships such as this will see some of them continue in the seafood industry. This can only be a plus for the future of Australian seafood to expand the scope and include up and coming trained professionals.

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Picture 1: Jonas Woolford at Shanghai Oriental International Fisheries MarketBeing part of the delegation to Shanghai,

China for me was a very worthwhile experience.  It gave me the opportunity to learn more not only about abalone but seafood in general in the Shanghai market. It was a pleasure to work with the motivated, professional, young team from the University of the Sunshine Coast, Dr Joanne Freeman, Simon Liu, James Calvert and William Ferguson. It was encouraging to hear that some of the students after completing their studies in International Business are keen to pursue careers in the Australian Seafood Industry.

Emma Barton. Thoroughly enjoyed my ENTIRE trip to Shanghai. It was an amazing two weeks that resulted in great deal of personal reflection regarding career direction/development. Secondly, it was the most satisfying way to get under the skin of Shanghai to see what really makes its' seafood industry swim! My first introduction to the Far East and by far the best way to see, live and feel a country is undoubtedly mixing it with the locals and getting all nitty gritty in the fish markets. Traipsing around the stinky markets and dancing our interpretive Chinglish with the locals, desperate to get some, ANY information about trading seafood... or more importantly Aussie seafood. Without an interpreter, there was a lot of interpretive dance and gentle coaxing for the traders to continue to the next question so we could walk away with surveys full of rich data. Trying, testing and tiring, it was SO worth getting down and dirty in the markets and I wouldn't have it any other way to collect the information we needed or to see the underbelly of the country. 

Picture 2: Collecting data at Tong Chung Aquatic Product Market

Collaborating with the industry guys was great too. We especially enjoyed our time with James Calvert (Tas Prime Oyster farm general manager), a wealth of information at our fingertips, which took the guesswork out of our observational research. We later developed a strategy were the industry rep. would approach restaurant chefs or purchasing managers with his business card explaining he was from Australia researching seafood trade opportunities rather than approach from the "we are students from Uni" angle. We were received more openly and any original gatekeepers dissolved into insignificance. Excellent.  I just wish we had more time with the industry guys before the trip began, so we

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were all on the same page to 'plan' what we each needed to gain from the trip. The injection of information from Grey Group's 'Eye on Asia' had me sitting on the edge of my seat the entire presentation! Was I the only one so excited about the prospects of China and our partnership with the emerging giant? Austrade and Trade Queensland presentations were also invaluable. Highly recommend government and Grey Group presentations for future research tours.

Picture 3: Meeting at Austrade, Shanghai

It was a very successful two weeks in Shanghai. Very satisfied with the grass-roots experience we gained from visiting the markets, restaurants and retailers and talking about the ins and outs of the 'direct' side of the industry with the 'Boss Lady' from Tong Chuan Markets. Overall, all students worked well together to produce a final outcome guided especially well by James Calvert and Jonas Woolford. Jonas was a wealth of information in Shanghai, really approachable and judging from his current industry involvement in SA, he really is an emerging entrepreneur and will do impressive things for our industry. Three of the four oyster girls have planned to visit James' oyster farm; James' is more than willing to further develop our understanding of the Australian oyster industry and general farming, harvesting and exportation of our seafood. The intention of our visit was to offer more depth of information to the final report to be produced and presented to industry.  I would highly recommend both industry reps for future trips as their expert knowledge, export experience and efforts to work with students were evident.

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The research tour was an absolute eye-opener. Opened my eyes to an industry I had never considered before but am now very excited and genuinely interested in. It's more dynamic than I imagined.

Picture 4: Meeting at Lans Club, Shanghai organised by The Grey Group

As my focus for Shanghai was pacific oysters, it's going to tricky but I can really see a challenge for creating a demand for pristine Australian oysters and a need to inject them into the Asian market. The hurdles are the on-going FTA negotiations and high tariffs (as echoed by traders and restaurateurs).  As a marketing and public relations undergrad, those much sought after Chinese-Australian trade relationships will need to be nurtured and market strategies developed to educate Chinese palettes, create the demand and export our seafood via the 'correct' channels. An exciting, dynamic and sustainable challenge. 

On a final note, thanks to Jo for her hard work, early mornings and general back and forth organisation of a bunch of tired, flu-fighting, gastro-dodging, room-changing students for her efforts and constant planning. I would LOVE to do it next year with you Jo! And thank you also CRC, for the bursary and most of all, giving me an introduction to a country and industry, which I would never have considered. I thoroughly enjoyed my ENTIRE time there.  It was a great taste of flavours to come from such an emerging nation. It's now my plan to get on board and work towards seeing our product further penetrate the Asian market over the next five years. 

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Robyn Mahood. The research trip to Shanghai was invaluable to every student’s future international business career. It increased our knowledge and especially the interest in the Seafood industry. It gave us information that we would be unable to get in any other way. We were able to communicate with people in the industry in Shanghai: suppliers, wholesalers and chefs in 4 and 5 star restaurants. The value of that experience for a student is precious. I was surprised to see how many chefs in 4 and 5 star restaurants would take the time to talk to us. We would walk in, ask to talk to them and within minutes, we would be in a meeting or have an appointment for the next day. It was interesting to see firsthand how different the Chinese market is from the Australian market regarding distribution channels and availability of products. Oysters are available in most supermarkets, fish markets and fish stores in Australia where as in China, we had to search for them and found them very rarely. I was surprised to see how many traders were hesitant to fill out our surveys. The traders seemed to want to talk to us about their products and the industry, but they didn’t want anything documented. It would have been good in this case to have more translators with us to be able to communicate and document what they were expressing. Having Chinese university students that wanted to practice their English, for example, would have been very helpful in the process.

We had a good meeting with a wholesaler in one of the fish markets and it was good to see the behaviour we learned in our cultural management courses. The most surprising find was the dominance of the grey market in the seafood industry. The traders and wholesalers at the fish markets and the chefs in the restaurants had no problem talking about it. It was interesting to find out as well that the chefs in a majority of the restaurants in hotel chains weren’t Chinese. A different cultural approach was necessary to establish a working relationship with the European chefs and management. We made some valuable contacts on this trip as well. James Calvert was our oyster representative and he helped us in any way he could to understand the industry. He treated us as equals and we have kept in contact with him since the trip. He gave us important information on the industry and how his operation works as he has been in the industry for over 20 years. The other industry representatives familiarised us with the abalone and lobster industries as well. The combined knowledge gave us an insight into the Australian seafood industry as a whole.

Overall the experience was invaluable. Every international business student should have this experience. You get practical experience seeing the markets come alive. There is no better way to learn then getting thrown into the deep end.

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Greg Grunot. The Chinese market was markedly complicated, imperviousness to rejection appears to be key, with gatekeepers at every restaurant, hotel or market we attempted to survey making the process very difficult. Challenges I’m sure we should have expected. Our (3) industry representatives provided invaluable knowledge, notably Jonas Woolford, his contribution to our research task was invaluable. Research proved the market for abalone is prominent, although, numerous factors and challenges require accommodation; issues to be outlined within our report. Ultimately, one can describe our research trip to Shanghai as enlightening at the least, the opportunity to undertake some applied market research provided numerous challenges, surprises and experiences; on the whole however I can say it has been the most enjoyable course I've undertaken. The transition from coursework to applied fieldwork was a shock at the very least, although a shock I think every undergraduate needs to step up to the next level. Dealing with traders, conducting interviews, attending meetings and conducting surveys are all skills I'm sure will benefit our professional development.

Thalia Van den Boogaard. I was impressed with the way we were treated at the meetings, we would get drinks and biscuits and they seemed to have put in an effort to make a presentation for us. All our questions were answered seriously and we were able to learn from each other sometimes. I felt like we were treated like equals which made for a very good atmosphere.  The China market is very much about connections and honouring those. You can not just come in and expect people to change their suppliers. It is very important to have a consistent supply with a good price tag. It is very hard to get into China the official way, most comes through the grey channel and people do not want to talk about their suppliers or where their stock comes from. I think that once you get in and establish relationships and maintain those relationships you will be able to supply for a long time.

Christine Holden. The opportunity of going to China to research the Chinese seafood industry was a fantastic experience, to actually participate in primary research and apply it to a university assignment. It was of great help to actually have meetings set up with Austrade and other businesses in China to learn about the industry, also having a representative from the industry from Australia was very helpful to tell us their knowledge and educate us about seafood.

I am very grateful to be able to participate in the international study tour and to learn about the Australian and Chinese seafood industries. This is an amazing experience for university students to be able to undertake research not only for a university assignment but to be used in industry as well. 

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Daniela Swartz. The meetings we joined, were interesting and very helpful to get a basic understanding of the Chinese culture, habits and the relationship system. The work at the local fish markets probably was a new but interesting experience for both, us and the Chinese. For us, to see the markets, how everything works, to see the fish stall and how they offer and sell the fish and to communicate with funny gestures how the traders should fill in the surveys. I guess for the Chinese people, because they saw blond funny looking westerners with normal sneakers walking around the fish market to collect these surveys. But I think both sides had a lot of fun, and everyone was friendly and patient and even though people were busy with selling, they sat down with us, offered us tea and answered every question.

It was incredible how everything within the Chinese market was connected to each other. It was very hard to establish a good connection and conversation with the Chinese business men or traders without having the so essential guanxi relationship. We were rejected several times, because we came to most of the restaurants or hotels as total strangers without having appointments and it was hard to get to speak to the executives. However, even though we did not have guanxi, our team was very successful collecting all necessary information and even initial throwbacks did not lead us to surrender. My personal overall impression of this study tour is excellent. We had a great team, not only the students from USC, also the industry representatives were fabulous. They were a great help for us to collect the information and to help us out with specific product knowledge to e.g. identify species. The country China, with the friendly people, the breathtaking nature, sights and the wonderful and interesting culture was one of the most incredible countries I have been to and the study tour was one of the most valuable experiences I gained in my life so far.

Darcy Brook. The opportunity of going to China to research the Chinese seafood industry was fantastic. China provided me with a very unique and exciting opportunity to explore a new culture. There were several cultural differences that I previously did not know about and were confronted with while doing the market research in both the wet markets and high-end hotels and restaurants. The wet markets were increasingly exciting as each return trip provided us with very different information in both surveys and observational research. The most interesting aspect of the visits would be the difference in health and safety guidelines in contrast with Australia. The fact that the lack of refrigeration and hygienic practises were lacking showed either two factors, they move an extremely high amount of product in one day or the Chinese possess incredibly resilient immune systems. The high-end restaurants and hotels were obviously quite different, portraying a very affluent lifestyle. Information was hard to get as the 'cold call' worked on occasions but did also provide several rejections highlighting the importance of the Chinese concept of 'guanxi' in certain cases.

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Lee Kyeonghun. The experience in China was valuable time in my life. That was my second field trip for researching seafood industry after Korea. So I was fully aware of what I had to do before going out in the field, and what I had to research after getting there. I made my own direction that comparing the knowledge I got on the internet to the information newly gained in the China seafood industry, and based on those I believed I could provide the best strategies and recommendations for exporting Southern Rock Lobster to China. Just as in Korean seafood market, and just as I thought, the China seafood market has also truly big problem, which is the grey channel. (In Korea the biggest issue was Canadian lobster with claws.). I really impressed from this trip. I got to know lots of things in a short period of time, such as what the Chinese people are like, how they react to the foreign people etc. They are really collectivists, much more than Koreans. China is just one team, even though more than 1.5 billion reside there. 'Guanxi' is not enough to explain every aspect of their behaviour. What a great trip it is.  How do you learn those without staying there for 2 years or longer. We learned what tourists never could learn. Having the presence of the industry representatives was also very helpful, as in many cases at the wet markets several different species were able to be identified by the industry reps to help with primary research data. This was able to help my group (Southern Rock Lobster) identify several different competitors within the Chinese markets which ranged from Mexico to tropical (Indonesian) lobster. Information was also passed on through their own experiences with exporting to other countries and the requirements needed. Communication is also continuing for the completion of the final report for the overall trip. Thank you very much for this opportunity!

Hayley Storey. I really enjoyed the trip to China; it was a great experience for me personally and academically. My experiences in China have broadened my horizons and I feel privileged to have had the opportunity to experience a new culture and gain “real” industry experience. I would recommend the course to anyone considering a career in export management. Some of my experiences include working with industry members; their insights into the market and product knowledge were invaluable. During the trip I was able to attend several meetings conducted through a translator which proved to be a great learning experience. I was also a member of a team which conducted primary research and gathered data through surveying traders at several wet markets. The skills I gained in negotiating the language barrier and successfully obtaining data will no doubt prove useful in the future. The meetings we had with Austrade, Trade QLD, Grey Group and various traders were helpful and informative and we gained a lot of useful information from them.

I would like to take this opportunity to thank Seafood CRC, USC, Joanne Freeman, the industry representatives and students who helped make this trip such a wonderful experience.

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Ben Manning. Research prior showed the relationship building (guanxi) as ever so important in China; but it appeared that getting down to business was also a priority. For example, whilst in a wholesale outlet at Tong Chuan markets, we made a significant effort by way of pleasantries to the vendor and showing great admiration of her range of abalone products in our perfect chinglish (oooh and ahhh). After about 5 minutes she produced a scrap of paper with 'what do you want?' written in English. This 'no nonsense' approach was experienced a lot, particularly when you weren't spending any money. But collecting data was surprisingly easy, particularly in the markets. Once the well weathered introduction in Chinese was presented along with a copy of a survey the crowd began to gather. Within 2 minutes a cigarette and a business card was offered, 3 to 5 surveys and pens (which were almost always returned) were dispatched, and the crowds would continue to grow around the respondents. Then we wait... and do our best to respond to the questions and comments being thrown at us in Shanghainese (laughing sounds the same in any language).

6. Industry Capacity Building (outputs)As a direct outcome of the 2 export market intelligence research studies, 5 outstanding students have expressed their interest in continuing to build their knowledge and expertise within the Australian seafood industry.

(i) Chelsey Parish is currently completing her honour’s degree within the prawn industry (wild and aquaculture). Furthermore she is waiting on confirmation of an employment opportunity within the Australian seafood industry.

(ii) Ben Manning has completed 2 market research field trips and has demonstrated a very high level of expertise and initiative specifically relating to the Abalone industry. Furthermore, Ben has been involved in various research projects in other seafood sectors. It is anticipated that Ben will enroll in a Masters by Research in 2011 focusing on the Abalone industry.

(iii) Gregory Grunert has recently been accepted into a Shanghai University to study Mandarin (intensive course work) over a 1 semester period. Gregory has expressed a keen interest to gain work experience with the Grey Group while he is in Shanghai. This initiative could be developed into an ongoing program between Seafood CRC and the Grey Group.

(iv) Daniela Schwarz as part of her final year of study with her German University needs to complete a major research project in the form of an industry internship. She as conveyed a strong interest in completing her internship within an Australian seafood organisation.

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(v) Lee Kyeonghun (originally from South Korea) has also completed 2 market research field trips and is very interested in perusing his professional career within the Australian seafood industry. Lee is hoping to continue to build his knowledge of the seafood industry along with being able to provide an Australian seafood company with his strong international background especially in the South Korean market.

Furthermore as a result of USC developing and building on their industry network and reputation 2 industry participants have requested to enroll in a masters by research at USC starting Semester 2 2010.

Anni Conn, Business Manager, Seafarm. We (USC and Anni) are still in the process of scoping out the research topic but basically she will/may be looking at what entrepreneurial traits impact on business performance within the seafood sector.

Wil Conn, Project Manager, Skills Formation Strategy – Aquaculture (Qld).Once again, we are still scoping out the research topic but Wil is interested in looking at what factors impact on the organisational culture/climate of business performance within the seafood sector.

7. Communication and Sharing of Knowledge

The 2 export market intelligence field trips were designed to provide relevant, usable current market intelligence to the Seafood CRC participants. The reports and snapshots of information will be made available through the Seafood Services Australia portal in 2010.

The University of the Sunshine Coast will also identify relevant events/workshops/conferences to conduct a series of presentations over the recommended three year timeframe of the project. For example, Dr Joanne Freeman and Chelsey Parish (successful Seafood CRC Honour’s student) will be presenting their findings from the South Korean Market Intelligence Field Trip and James Calvert and 2 research students from USC, Emma Barton and Daniela Swarz will be presenting their findings from the China Market Intelligence field Trip at Australasian Aquaculture International Conference in Hobart May 2010.

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8. Recommendations for Future Market Intelligence Projects

(i) Industry representation: having industry participants working as part of the research teams is a critical factor in the future success of the market research field trips. The industry participants provide a means to disseminate their learnings and experience in the market. Furthermore industry participants help to develop international industry capacity as globally savvy industry experts. Note: a longer timeline needs to be established prior to the each research field trip so industry and research students can develop a more cohesive working relationship. This working relationship will also provide teams with a more comprehensive understanding and appreciation of the requirements of the field trip.

(ii) Industry contribution: It is expected that industry participants bring their knowledge, expertise and initiative to the research teams. Note: a more comprehensive information pack should be developed to send to potential industry participants clearly outlining the roles expected by industry participants, student researchers and the research leader.

(iii) Appropriate industry participants: After working with the 3 industry representatives in the recent China field trip, it is recommended that the recruitment process focus on “new emerging entrepreneurs” that in fact have the interest of the industry.

(iv) Student recruitment: The 10 students that participated in the China field trip were generally of a high standard. It is recommended that a rigorous selection process continue to ensure that only high achieving internationally focused students be accepted into the program.

(v) Field study evaluation: It is recommended that all participants (industry and research students) should be given the opportunity to provide feedback on their experience and learnings along with being able to offer constructive criticism to improve future international research programs.

(vi) Operational challenges: A few operational issues were identified during the field trip, specifically in relation to the ability for teams to meet on a regular basis. It is recommended that all researchers (industry and students) should be encouraged to stay in the same accommodation.

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(vii) Finally, the research conducted to date has not focused on consumer specific research in particular looking at consumer tastes, preferences, cooking styles, consumer buying habits and changing trends. It is recommended that in-depth consumer research form part of the overall research objective in order to capture a more holistic view of the Chinese market. The researcher has liaised with a reputable international research agency, Research Now who has in place an extensive panel throughout China. Furthermore it is recommended, due to the size and the diversity of the Chinese market, the consumer research, should be conducted within 3 different geographic areas.

Appendices

Sunshine Coast Daily Sunday 6 September 2009

Sunshine Coast Daily Monday 19 October 2009

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