Mainland slips on fishy plan to boost cross-strait business

For Asia Times Online www.atimes.com

TAIPEI – Milkfish, or Chanos chanos, was chosen by the governments in Beijing and Taipei to make a historic mark on cross-strait relations. Produced in Taiwan’s economically disadvantaged south to be sold in the mainland’s first-tier cities, the one-meter-long delicacy was meant to build bridges of friendship.

Unfortunately, the political cast appears not to have a clue as to what mainland palates are after. The delicacy’s light and and fluffy texture, treasured in Taiwan, is is being shunned by consumers in Beijing and Shanghai, leading the carcasses to pass their sell-by dates in supermarkets. Shipping goes on nonetheless.
Milkfish is rich in omega-3 fatty acid, has a lot of protein and is easily digestible. It has secured a strong foothold in the cuisines of Southeast Asia and Taiwan over hundreds of years, but is virtually unknown to mainland China.

This was meant to change after Beijing, as part of an initiative to win hearts and minds in traditionally mainland-wary southern Taiwan, began purchasing milkfish from the farming community of Syuejia last year.

The villagers were given a generous guarantee purchase price by the Chinese, an order worth NT$135 million (US$4.57 million) was placed, and the first shipment of 24 tonnes of milkfish crossed the Taiwan Strait on August 25. It did so without tariffs, as milkfish, unprocessed and whole or as frozen fillets, is on the “early harvest” list of tariff-free items set out under the Economic Cooperation Framework Agreement (ECFA) Taipei and Beijing signed in 2010.

Among political scientists, it is contested whether the deal has met its ends. Taiwan’s Beijing-friendly Kuomintang (KMT) emerged as the winner in the presidential and legislative elections held in mid-January, but the electoral district where the mainland buyers purchased the milkfish seemingly stuck to voting for the opposition anti-unification Democratic Progressive Party (DPP).

From a trader’s perspective, by contrast, the outcome of the whole deal couldn’t be much clearer: it is a flop, as only a small portion of what Shanghai Fisheries General Corp, which on the mainland side brokered the deal, ordered is believed to have ended up on mainland dinner tables.

A closer look at the ware reveals that this outcome is hardly surprising.

  • A major turn-off to Chinese consumers is how it’s called. The first character in the milkfish’s Chinese name is “louse”, the second one “eye” and the third one “fish”. To eliminate the adverse associations mainland consumers surely harbor, the mainland’s Taiwan Affairs Office (TAO), which is the agency responsible for cross-strait policies, together with Shanghai Fisheries, thought up the name “champion fish”, a move that has failed to do the trick.
  • Milkfish comes with an enormous number of bones – a total of between 196 and 208. Milkfish is popular in the Philippines, where its called Bangus, and indicating how difficult it is to get the bones out, there are dozens of Filipino web sites dealing with the issue. Whoever intends buying a milkfish will likely change his or her mind after reading blog entries like “How to Debone Bangus”:

    Make a shallow slit along the dent between the muscle segments of the ventral side and mid-portion of the body to the tip of the muscle in the tail. The spines on the tail portion are very much attached to the muscle tendon, making it difficult to remove. For training and seminars, contact: [etc]

  • It has a distinctive taste that somewhat reminds of moldy soil.

    Du Yu, chief executive officer of the Chen-Li Task Force for Agricultural Reform, got further into the meat of what is wrong with the cross-strait milkfish deal in an interview with Asia Times Online.

    Du, who has done extensive research on the issue, said that to show goodwill to the Taiwanese, the mainland initially carried out emergency procurements of agricultural products during gluts.

    “But as there were too many intermediaries involved, the farmers didn’t earn, and packaging and shipment had to be done in a hurry,” he said. “All this haste meant fish entered the [mainland] Chinese market without grading, in turn damaging the reputation of Taiwanese farming products on the whole.”

    Then, more research done, regular supply contracts were arranged, such as the ones agreed with Syuejia’s milkfish producers, Du said.

    “However, for the milkfish this didn’t really work, either. Price fluctuations on the Chinese market mess up sales, procurements, shipping amount and timing, which in turn makes the quality suffer and eventually leads to trade conflicts.”

    In Du’s eyes, the Taiwanese government failed to use its brains on the issue. According to him, there was no consumer marketing research before the milkfish were thrown into mainland supermarkets, nor were sophisticated promotion campaigns, of the sort Norway deploys to support its salmon exports, put in motion.

    Norway runs an office in Hong Kong that, together with its embassy in Beijing, promotes its salmon sales to mainland China by engaging upscale restaurants there along with celebrity chefs, among other high-profile measures.

    The government in Beijing has so far absorbed the financial losses the cross-strait milkfish deal brings about and is expected to continue doing so at least in the short term to woo the Taiwanese, Du believes.

    But a brutal crash course in political risk the Norwegians underwent with their mainland salmon venture could be a lesson to Taiwan’s policymakers and milkfish producers.

    After Norway’s Nobel Committee awarded its 2010 peace prize to jailed Chinese dissident Liu Xiaobo, a furious Beijing imposed retaliatory measures, causing imports of Norwegian salmon to drop by 70% during the first four months of 2011.

    To spare Taiwan’s milkfish producers from such possible turns and twists, the government in Taipei should open international markets and do something for production and the distribution network in Taiwan, where 80% of the domestically produced milkfish is sold, Du said. The rest is up to Taiwan’s biotech sector, Du said.

    “Biotech research and development should address the milkfish’s two major problems: the many small bones and the earthy flavor.”

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