| Alaska Forest Products Exports to China | ||||||||
Alaska’s forest products export to China in 2000, although up over the previous two years, reflects the general downward trend of the sector over the past 15 years. Dissolving wood pulp value exported annually to China ranged in value from $9 to $33 million in that decade and a half. Similarly, Alaska exported softwood logs ranging from $1.5 to $16.5 million in annual value during the same period of time. Current forest products export to China is relatively low for a variety of reasons having to do with global supply and demand. There are less Alaska forest products available for export. Global market prices remain low, encouraging even lower levels of production in Alaska. The Alaskan forest products industry is currently in a period of transition and upheaval. The current conditions in the industry necessitate a focus on the quality and unique values of Alaskan forest products and a rethinking of approaches to China. |
| Energy Exports | ||||||||||||
China became a net importer of energy in 1995 and is expected to become increasingly dependent on imports; however, it is expected to remain a net exporter of coal through the forecast period. Lack of infrastructure and distances from resources to population centers will be one of China’s greatest challenges in the immedate next few decades. Energy demands overall should grow 4-5% each year in the next 20 years, roughly four to 5 times the rate of growth in industrialized nations. China is the second largest consumer and producer of energy (both at 10% of world supply). It is unlikely that Alaska will play a role in supplying energy to China in the next few years because Alaska’s oil producers are increasingly focused on the North America market. There were no crude oil sales to China in 2000. |
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It is likely that China will be increasingly important to Alaska as an export market in the future. The State of Alaska Division of International Trade and Market Development does not have representation in China at this time. China will receive increased focus in the months and years ahead. Alaska has what China can use in the long term: energy, food, timber, and technical expertise related to environmental and oil field engineering and construction. | |||||||||||||||||||||||||||||||||
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Oil exports have stopped. Market demand and other factors have Alaska oil producers focusing on the U.S. domestic markets. Seafood
numbers in 2000 grew significantly. There were increases in both seafood
sales for human consumption and in the category of byproduct for animal
feed. Now seafood is Alaska’s primary export to China. Primarily it
is the largest seafood companies that are engaged in export to China.
But with the increasing opening of its markets, China represents opportunity
for smaller companies also.
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| Source: U.S. Department of Commerce, State Export "Origin" Database | |||||||||||||||||||||||||||||||||
| Alaska Food Exports to China | ||||||||||||||||
There is huge demand for seafood in China and several opportunities for Alaska seafood industry. Chinese consumers are eating more calories and eating more protein. In some coastal cities, per person consumption of seafood has reached 150 pounds per year. Although perhaps not well known in Alaska, one of the most well-known Alaska seafood products to be familiar to the Chinese consumer today is fish oil, sold as an aid to health. The increase in seafood exports in 2000 was significant. Although a significant portion of Alaska seafood exported to China is processed for re-export to Europe and Japan, Chinese consumption is growing. High end hotel and restaurant niche markets are key to growth in China. In cities like Shanghai and Hong Kong, Alaska seafood can find acceptance within the large populations of extremely wealthy residents and travelers. This institutional sector is an important one. It is key for Alaska to develop this high-end food service market. ASMI’s representative in China has said that there is unmet demand in the high end markets. Alaska can have more of this market if it focuses on quality China has an increasingly affluent consumer market. The growing affluence of many Chinese consumers is a plus for Alaska. An estimated 100 million Chinese have incomes between US$9,000 to US$10,000. This translates into buying power of US$40,000 to US$45,000 in the U.S. A segment of the population is becoming increasingly concerned about eating food that is nutritious and from a healthy source. China presents challenges to Alaska seafood. China remains a cost sensitive market. Although its consumers are increasingly affluent, it is important to remember that China is still a developing country. For instance, the lower-priced salmon, such as chum and pink, is more appreciated in the general consumer market while high-quality king and sockeye salmon are more limited due to higher prices. And, overall, there are other seafood such as pollock, cod, and crab which are more familiar to traditional tastes. Competition is fierce in China. Norway is the major competitor for Alaska salmon in China. The next biggest competitor is Russia. Russia is closer to China, has more convenient transportation links, and overall cheaper price. Yet, Russian product lacks quality and packaging know-how. There is a niche for Alaska’s products in venues where quality and recognizability play a part. The Alaska Seafood Marketing Institute has a seafood representative in Shanghai, China. |
| Transportation Links |
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U.S. cargo air carriers currently operate cargo service to China from Anchorage. Other Asian carriers like Korean Air and Japan Airlines also provide cargo service to China. The Chinese carriers operating via Anchorage--Air China, China Southern, China Eastern—do not yet open their cargo doors in Anchorage to provide Alaska/China nonstop air cargo service, however, they would be allowed to do so under the terms of the current US/China aviation agreement. The resource of aviation links—made possible by Alaska’s geographic position on great circle routing on the Pacific—has yet to be fully exploited. As the high end market in China for Alaska fresh and live seafood develops, the high level of cargo activity at Ted Stevens Anchorage International Airport will provide convenient access. Frequent and regularly scheduled marine transportation links across the Pacific operate via Seattle. Charters for forest products route directly from Alaska to China. |
| Technical Services in China |
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China’s need for a wide variety of technical engineering services is growing. In the environmental sector, demand is strongest for water and wastewater treatment but environmental monitoring equipment and also offers significant opportunities. As income levels rise in a huge country with acute environmental needs; China’s environmental market may grow to become the world’s largest. Demand for environmental equipment and expertise will increase in the longer term as affluent coastal cities open their coffers and tighten enforcement, provinces establish environmental funds, and multinational investors build more plants with modern pollution control facilities. In oil field support, there are opportunities for Alaska businesses to partner with China’s large oil producing entities because of the depth of expertise that Alaska’s firms have in this sector. Also, Alaskan businesses understand the special challenges that occur in providing technical services in an area unaccustomed to extensive development or in an area devoid of public infrastructure. |
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Alaska/Heilongjiang Sister State/Province Relationship |
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The State of Alaska and Heilongjiang Province established a sister state/province agreement in 1985. The two parties have promoted exchanges primarily in the area of natural resources with a focus for many years on forest products. Most recently, exchanges have occurred in the area of agriculture. Heilongjiang and Alaska are exploring what opportunities may exist for trade related to Alaska's seed potatoes. An 11-member delegation from the Heilongjiang Province Agricultural Committee visited Alaska in 2001 to meet with producers, tour fields, and visit agricultural research facilities. While in Alaska, the group visited the State of Alaska's Plant Materials Center and the University of Alaska Fairbanks Agricultural and Forestry Experiment Station, and viewed greenhouse productions facilities at the State of Alaska's Division of Agriculture Plant Materials Center on Trunk Road. |