Claws and effects: rewriting our Chinese lobster tale
China’s most desirable seafood has been hit by an economic trend that looks set to outlive this Year of the Snake: weak consumer confidence and price deflation. It has ominous implications for Australia’s budget coffers.
It has only taken a month for Australian live lobster exporters to realise business in China has changed in the four years they were banned from the country – and not in a good way.
China’s most desirable seafood has been hit by an economic trend set to long outlive this Year of the Snake: weak consumer confidence and price deflation.
The lobster industry’s “new normal” looks likely to shave around $250m a year off what was an almost $800m Australian export business back in 2019, the last full year before Beijing blacklisted the product in an attempt to cause domestic political pain for the Morrison government.
“It’s a consumption problem,” lobster importer Huang Zhen told The Australian at Beijing’s biggest wholesale seafood market.
That problem is being felt across China’s economy, which has been crimped by a historic slump in its property sector that has lowered the price of iron ore, Australia’s most lucrative export, and lead to a reverse wealth effect among Chinese consumers.
It is a phenomenon much bigger than the lobster trade, with ominous implications for Australia’s budget coffers. It contributed to a 9 per cent tumbling in Australian exports to China in 2024, which has some analysts asking whether Australia’s biggest trading relationship has peaked.
Beijing ended its four-year lobster blacklisting on Boxing Day. Hours later, planes of live Australian lobster were on their way to Shanghai, Guangzhou, Shenzhen and Beijing.
The timing was terrific. It allowed the Australian industry to sell their highly prized catch in the lead up to China’s Lunar New Year holiday, which began on Tuesday and runs into February. It is the time of peak premium lobster consumption in China, by far the biggest market for the category in the world.
“The first week or two, we sold a lot of lobsters at good prices,” South Australian lobster exporter Andrew Ferguson told The Australian. “Then it stopped dead.”
Orders picked up again in recent days but with much more haggling over prices than Australia’s industry anticipated.
“The new normal is going to be lower prices than we were expecting,” said Mr Ferguson, who runs his family-owned business, Ferguson Australia, out of Adelaide.
It’s still a big improvement on the past four years.
Live lobsters are being sold for about $100-120/kg after ranging from $70-80/kg, or lower, without the China market.
Yet it is a major reset from the fat years before the pandemic when Australian live lobster – called Aolong in China and famous for its dragon-like appearance – traded for $150-170/kg.
A visit to Beijing’s Jingshan wholesale seafood market, the capital’s largest, shows the ongoing popularity of the Australian product, even if the prices it is commanding are well down from the boom years.
The wholesale business owner Mr Huang said airborne shipments had been arriving daily to his business since the December 26 reopening.
“It’s good to have Australian lobster back,” said Mr Huang.
“It’s good for our business and good for Chinese buyers of premium lobster.”
As he spoke to The Australian over green tea on the top floor of his shop, his team below were unpacking styrofoam boxes of live lobsters, four to a box, that had flown out of Melbourne the previous evening, bound from Beijing Capital International Airport and then on to his wholesale shop in the city’s south.
His industrious team inspected the cargo for proof of life, sorted the majority who were writhing and alive into tanks from which they would soon be sold to Beijing’s premier seafood restaurants.
The recently deceased were put into a bucket and would be sold at a lower price to local seafood retailers.
Before the return of the Australian cargo, Mr Huang was paying $150/kg for New Zealand lobster. He has now almost entirely replaced them with Australian lobster, which he can buy for $100-$120/kg. The price of the Kiwi produce has fallen as their four-year near monopoly of the top end of the market has ended. “They are fighting each other,” he says of his two Tasman suppliers.
Live Australian and New Zealand lobsters are the most expensive seafood sold in China, with almost all of the trade done around China’s four main holidays: Chinese New Year, the Labour Day holiday, the Mid-Autumn Festival and Golden Week (which includes National Day).
The almost fortnight-long New Year festival is the most important.
Wholesale businesses such as Mr Huang’s family-owned operation have been running 24 hours a day in the month leading up to the holiday and will continue to do so until it finishes after February 12.
Yet even with the return of the Australian catch, he said his business was nowhere near its old highs.
“It’s less than half of the amount in 2019 when the economy was in a normal state,” he told The Australian.
It is not for a shortage of hype. Anthony Albanese and Trade Minister Don Farrell spruiked the trade for months before Boxing Day and have continued throughout the Australian summer.
Austrade officials have been hosting lobster tasting events around China and working with Chinese social media influencers.
Chinese media have reported on the first plane arrivals carrying the live Australian cargo into major markets in Shanghai, Guangzhou, Beijing, Xiamen and Qingdao.
China’s ambassador to Australia, Xiao Qian, even joined in the promotion over the weekend.
“Australian rock lobster is of high quality and is loved by consumers from all over the world,” Mr Xiao told the China Daily.
Yet all that political support can’t change the economic fundamentals.
Australian live lobster is far too expensive for most people in China. It is rarely eaten by families, except at extremely lavish weddings or celebrations thrown by the country’s financial elite.
Much of it is eaten at banquets held by a small class of wealthy business people to show respect to important customers and clients. Most of those business people have just finished one of China’s toughest years in decades.
Another source of demand from the boom years has been lost to President Xi Jinping’s war on corruption. No longer will Chinese officials dare accept such showy food at meals with business people looking for favours. (That same crackdown has contributed to a more than halving of China’s wine market, a trend Australian winemakers have experienced since they had punitive tariffs removed last year.)
China’s entrepreneurial centres are the strongest markets for premium live lobster. “In Guangdong or Shanghai, the market is better than in Beijing,” Fan Xubin, head of Beijing-based seafood consultancy Seabridge Marketing told The Australian.
Research by Seabridge, using Chinese Customs data, shows China’s live rock lobster market has fallen a third from $1.4bn in 2019 to $957m in 2023.
Those sales included a startling growth in imports from Vietnam, which many experts in China believe were smuggled catch from Australia.
During the black-listed era, Australian live lobsters were also illegally smuggled into mainland China through Hong Kong and Taiwan, redistributing profits from Australian fishermen to criminal syndicates and corrupt officials.
Over the same period, China’s imports of cheaper, live claw lobsters almost doubled from $720m to $1.3bn. The biggest beneficiaries were exports from Australian allies the US and Canada.
The dominance of Five Eyes crustaceans shows Chinese gourmands do not care about their government’s geopolitical relations when it comes to selecting what to eat for lunch or dinner.
Similarly, the past four years have demonstrated Five Eyes fishermen will eagerly exploit a market opportunity created by another’s ban.
That same dynamic took place in a host of agricultural products banned by Beijing, despite some talk among allies about taking collective action to respond to Chinese coercion.
While the return of the Australian trade to China is less stellar than had been hoped for, the industry is still grateful for the improvement.
“It’s a lot better than the smuggled trade,” said Mr Ferguson, the Adelaide-based lobster exporter.
While China’s consumers have tempered their most conspicuous consumption, other Chinese consumer trends look likely to benefit the Australian seafood industry.
An increasing focus on healthy foods among middle-class consumers in China’s most developed cities contributed to a surge in imports of Australian salmon and tuna while live lobsters were banned.
Chinese seafood imports are currently the second largest in the world, worth almost $25 billion. Mr Fan, the Beijing analyst, has forecast that China will overtake America in the years ahead to become the biggest.
And he told The Australian that with a bit of savvy marketing, Australia’s total seafood exports to China could double in value. In 2024, Australia was the 16th biggest seafood exporter to China, selling just over $400m.
But after the reset of Australia’s most lucrative seafood export to China, even getting close to its 2019 peak of $1.1bn looks a huge stretch.
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