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The news that Thomas Fishbone, the CEO of OceanFresh, one of New Zealand’s largest seafood companies, had been dreading could not have come at a worse time. The Ministry of Agriculture and Forestry (MAF) had approved the importing of Vietnamese farmed fish (aquaculture) for sale on the domestic market. Even more worrying for Thomas was that MAF might soon approve the importation of Chinese farmed fish as part of New Zealand’s obligation under the recently signed Free Trade Agreement with China. Slumping back into his chair, Thomas thought about the impact of even more imported farmed fish on the domestic market. It was difficult to compete when this fish was sold for less than half the price of locally caught seafood. Price-conscious consumers could not tell the difference between locally caught fish and farmed fish. An increase in imports of cheap farmed fish would further stress the company’s cash flow.
During the past year, OceanFresh had experienced a 10 per cent drop in sales, which impacted on already declining margins and a stressed balance sheet. The company had little room to move in the face of this new affront to its competitiveness. Furthermore, there was no immediate sign of improvement on the horizon. A second affront facing the company was the increasing move by OceanFresh’s competitors to process New Zealand-caught fish offshore. Increasingly, their competitors were shipping fish to be processed in developing countries in Asia, to take advantage of lower production costs. The processed fish was then exported to European and American markets, and even back to New Zealand.
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