Scottish Government’s Country Plan for China and International Framework
Item 3 is the Scottish Government’s country plan for China and the international framework. Jamie McGrigor is the star of the show today.
It seems to be my day.
Jamie attended Marine Harvest Scotland as part of the committee’s inquiry into the Scottish Government’s country plan. He doubled up that day, going to the foreign languages primary school in the morning and visiting the business in the afternoon. That was a good use of resources, Jamie.
That was the idea.
Would you like to give us an overview of your visit to the company?
Yes. I was grateful to Marine Harvest for sending such a senior person to see me. We had an excellent meeting and, afterwards, I visited the processing factory and saw what was being done. Marine Harvest is a very big employer in Fort William. I had not visited a salmon processing factory for several years, and the improvement in the quality of the fish over that time was extraordinary—I speak as a former fish farmer, although that was a long time ago. It was very good to see that.
Everybody has a summary note of the discussion that took place. Marine Harvest was the first Scottish farmed salmon company to export to China. It is also the largest exporter in the Scottish industry. Marine Harvest is helped very much by the fact that it has two offices in China—one in Beijing and one in Shanghai.
In 2011-12, the value of Marine Harvest’s sales to China was approximately £20 million. Marine Harvest has a Chinese logo. I was told that that was incredibly important, because “marine harvest” means absolutely nothing in Chinese. I do not quite know how to explain it, as I do not speak Mandarin, but it appears that the phrase does not mean anything. Therefore, it was necessary to rethink what the company would be called. It adopted a Chinese logo, which incorporates a recognisable Chinese character that is pronounced in the same way as “delicious”. That seemed a sensible thing to do. The words “good”, “beauty” and “dignity” are also incorporated in the meaning. That branding is used for marketing and communications within the Chinese market.
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In the Chinese market, the preferred size profile is larger fish. For some reason, the Chinese like bigger fish, which suits everyone. As a result of AGD—amoebic gill disease—which came in recently, Marine Harvest made no sales to China in the fourth quarter of 2012, because of heavily reduced volumes. Exports have begun again in 2013. Approximately 370 tonnes have been sent to China so far in 2013. The company’s aim is to increase sales volumes year on year.
The Marine Harvest representative asked me, “Do you want me to moan?”, to which I replied, “No, I don’t want you to moan.” She seemed to be very happy with Scottish Development International, although she mentioned that Marine Harvest was in a far better position than other Scottish salmon companies, partly because it already had expertise in China. The fact that it had an office there was extremely important. In addition, the location of the processing factory makes it easy for lorries to come and pick up the fish. The shelf life of fresh farmed salmon is about two weeks, as long as it is kept at the right temperature in an icebox. All Marine Harvest’s fish are processed in one processing factory. They are picked up, taken to Heathrow and flown out, which means that they can be in China in a very short time. The quality is immaculate.
If I compare Marine Harvest with the Scottish Salmon Company, which I also visited for the committee, Marine Harvest’s advantages include the fact that it can get the product out of the country easily and the fact that it already had links in China. In addition, it is a far bigger company that operates on more of a worldwide level. Its office in China deals not just with Scottish salmon but with fish of all sorts from all over the world. The fact that it already had links in place was extremely important.
Apart from that, the company representative was very grateful to the committee and said that she would be delighted to see any of us at any point in the future. After a long discussion, I proceeded on my way.
Are there any questions?
Yes. You mentioned that the company had not been able to sell into China in the fourth quarter of 2012; you also said that there was a preference for big fish in the Chinese market. Was that to do with not having the capacity to sell in, or was it because the fish were smaller as a result of amoebic gill disease?
I should have made that point. AGD is rather like emphysema or chronic obstructive pulmonary disease in salmon. It starves the fish of oxygen, so when they get to a certain stage, they start to die. There is nothing wrong with the flesh of the fish—the disease is caused by a little parasite in the gills, which simply prevents the fish from breathing properly. That meant that the fish had to be culled earlier, so they were smaller, and the Chinese market does not like smaller fish. That is why Marine Harvest stopped the volume exports.
It is now exporting again and it hopes that the AGD, which seems to have been a result of increased water temperatures, will not be present this year; it is just keeping its fingers crossed.
The company seems to be fairly happy. I was looking for problems, but there did not seem to be any. It did not even complain about there being too much red tape and that sort of thing.
That was a positive visit.
There is a wee note at the back of the sheet about flawed and incorrect export data from Her Majesty’s Revenue and Customs. What was the issue?
What are you referring to? Is that in my report on the visit?
Aye. Was the problem about export data and documentation and other such issues?
Yes. Marine Harvest said that it sometimes has problems with HMRC. The Marine Harvest representative was not explicit about what those are. I asked whether it would help if it could export direct from Scotland. I was told that it would in a way but that, in another way, it would not, because the lorry drivers are so used to the Heathrow system, which is so good. Perhaps we could follow up on that, because I am not certain. The Marine Harvest representative said that there is a bit of a problem but passed over it.
An advantage of sending fish down south is that many of the lorries that come up north end up going back empty but, if they take a product back, that is helpful not only for exports but for internal, national use of the fish industry. There are fringe benefits to fresh fish products going to London. It is not about HMRC being more helpful or better equipped to deal with that; it is about how the industry operates. There are advantages in that for us and the industry. However, I am sure that we could look at exploring ways to encourage industry to export directly from Scotland. That would save at least a day, if not more. We could consider how to help industry in that way. I am sure that HMRC would be more than happy to support us.
That raises one more point about the visit. Marine Harvest said that a huge advantage in being based in Fort William is that it is close to the fish health inspectors. They would come at a moment’s notice, sometimes even during holidays, and do their best to help the company. Marine Harvest would arrange cover with the inspectors because they have to stamp the fish before they leave the plant.
Marine Harvest said that the disadvantage for some remoter fish farms is that they must wait ages for the inspectors to come. If we look at that, we can perhaps help other fish farms. It made strongly the point that Fort William seems to be a good centre to be in from the business perspective.
The labelling on the boxes is amazing. You can not only see what cage on which site the fish came from but tell which individual had packed that box of fish. The traceability was good.