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SCMP Reporter

The mainland eel farming industry is bracing for a slowdown in demand from Japan due to the economic downturn there.

 The shortfall is expected to be filled by rapid growth in the European and mainland domestic markets, according to Grand Kosly Holdings.

 The company president's assistant, Wang Lin-jia, said eels were one of the most popular items in the Japanese diet and forecast slow but positive growth in demand for eel imports 'in the low single digits'.

 Demand from the mainland, the United States and Europe, however, was growing at a much faster double-digit rate as a result of improving income in mainland households and the increasing awareness in Europe about the health benefits of eels.

 Grand Kosly was set up in 1993 and operates six eel farms in Guangdong.

 The company produced about 6,000 tonnes of eels last year, growth of more than 10 per cent from the previous year.

 Mr Wang said the boom days of eel farming in the mainland were over, but the business, if managed properly, was still highly profitable.

 Grand Kosly's gross margin at the moment is about 20 per cent. The industry's margin had once reached a peak of as much as 100 per cent during 1991-1994 when demand was rampant from both Japan and the mainland's domestic market.

 Mr Wang said the buoyancy during those years was a result of the relaxed credit policy in the mainland, making it very easy to borrow from banks to finance the industry, which is very capital intensive.

 The 'eel mania' in the mainland started to decline in 1994 as the central government implemented the austerity measures.



Eel farmers pin hopes on European market as demand slumps in Japan