Taiwan Today

's colorful koi are leading the ornamental fish industry in a whole new direction--overseas.

When a handful of fish food is tossed into the air, a school of colorful koi, a variety of carp long kept in water gardens in for ornamental purposes, look like shooting fireworks as they jump from the surface of a pond. Koi of various sizes and ages, often referred to by aficionados as "swimming jewels," are separated into 20 of the ponds at Sing Chang Koi Farm, a breeding operation founded around , . This family-run ornamental fish business has sold at least 5,000 koi overseas--mostly in Europe and the Americas--per month since 2006, with outstanding individual fish fetching as much as NT$1 million (US$30,300), according to Chung Ying-ying, Sing Chang's general manager.

With a tropical climate and benefiting from the Kuroshio Current, a strong ocean current off the east coast of the island that provides a natural supply of tropical fish, 's fish breeders enjoy a natural advantage. The island's ornamental fish industry rose to its peak between 1986 and 1995, when local breeding skills had reached a high stage of development and the economy was booming. Also, 's breeding techniques--including specially developed fish food, management methods tailored to different stages of breeding as well as selective breeding--far surpassed those found in most countries in Southeast Asia, according to Huang Chi-yang, an assistant professor in the Department of Agriculture at .

Six years ago, however, Sing Chang was watching its domestic sales shrink, as its once-promising business, which had previously seen revenue of around NT$3 million (US$90,700) per month, seemed to be fading. Chung Ying-che, Ying-ying's father and still the owner of the business, says he and his wife didn't know much about marketing when they decided to begin breeding koi around 1970. Even worse, once they got started, they soon found that their sales agents were deliberately mixing their koi with inferior fish bred by other companies, which sometimes resulted in customer complaints.

However, Sing Chang and the industry as a whole have been staging a comeback in recent years. According to the Taiwan Ornamental Fish Association, the total export value of Taiwan's ornamental fish has increased by 35 percent over the past five years, from NT$74.6 million (US$2.3 million) to NT$1 billion (US$30.3 million) annually. For Sing Chang, though, the revival has taken a great deal of effort. At her father's urging, Chung Ying-ying quit her previous job as an art teacher in 2003 to help with managing the family business. As she started out with little knowledge of rearing fish, her father suggested that she begin studying books on breeding techniques, water quality management, and the prevention and treatment of disease. "I also had to learn how to catch fish in an efficient way," she recalls. "Sometimes I even had to wear waders and go out into the water with a net to catch them. People told me that I looked like a frog when I was wearing those waders!"

Chung Ying-ying began analyzing the market and discovered that there was more money to be made in exports, as most of 's domestically bred ornamental fish are shipped to the , , Hong Kong and . 's exports of ornamental fish reached roughly 215 tons in 2008, accounting for 1 percent of the global market, according to the Taiwan Ornamental Fish Association.

Showtime

To learn about the export market, Chung Ying-ying began attending trade shows in the , , , the and . She was not the only Taiwanese fish breeder to do so, however, as over the years the government has helped many local operators attend such shows to make contacts and learn about topics such as which species are currently popular on the international market, according to Chang Fu-lung, an associate research fellow at the Fisheries Agency under the Council of Agriculture.

Chung Ying-ying made a startling discovery at the Holland Koi Show in 2003. "I saw that a so-called "trash fish" that cost only NT$40 [US$1.21] in could sell for an amazing 45 euros [US$60] there," she says. "That's why when I took over running this company from my father, I decided to promote our fish in overseas markets. My father knew how to breed quality fish, but our previous international sales agents hadn't worked out very well. Basically, I decided to take on the sales role myself."

Thus, with the assistance of Christian Stampf of Moto International Co. Ltd., her Japan-based marketing consultant, Chung Ying-ying shifted the operation's focus toward the European and US markets in 2003. However, to enter the European market, Sing Chang was forced to make some major changes in its quality control and marketing strategies. " has higher standards for fish quality and quarantine documents," she says, adding that the European market requires the provision of valid health certificates. "To meet these requirements, we had to establish a standard operating procedure for selecting and breeding fish in terms of their size, quality and species," she says. "But when we finally put this system in place, we could begin producing the right products for the market, not wasting our time breeding unsuitable, unwanted fish."

The international koi shows have also helped the company develop a good reputation in the global market, as Sing Chang conducts stringent health examinations to ensure that it transports and displays only fish that are in top condition. "This eases customers' concerns because it demonstrates our operation's professionalism and shows that they can trust the quality of our products," Chung Ying-ying says. "We're careful about how we transport the fish and we spend a lot on it--one show costs us about NT$200,000 (US$6,060) just for transporting them."

Chung Ying-ying also takes pains to decorate Sing Chang's booths with elements of Eastern culture. For example, she always places a tea table in the center of her display area and wears a qipao, a traditional Chinese dress, while serving Alishan's special oolong tea to visitors. To add to the Asian atmosphere, she covers the floor with tatami mats and displays koi oil paintings and small ornamental bamboo houses and bridges, while bonsai trees help create a sense of stillness that provides a nice backdrop for the koi as they swim about their tanks. "Our Eastern cultural atmosphere seems to really attract the crowds," she says. "The fish we bring usually sell out pretty quickly."

On a Roll

By 2006, four years after Chung Ying-ying began to attend the trade shows, her marketing efforts finally began to pay off and large orders placed by international customers began coming more frequently. "Clients from , the , and , among others, started purchasing our products without meeting us even once," the manager says. Such overseas sales have grown to account for 80 percent of Sing Chang's income, and the company has enjoyed revenue of around NT$10 million (US$303,000) each year since 2006.

Through using the Internet in the company's marketing efforts, Sing Chang is able to precisely target prospective clients. All of the information on the company's website is intended for wholesalers and is available in Mandarin Chinese, English, Dutch and German. "We are not focusing on individual customers, but rather on wholesale business with agents, major koi retailers and garden centers," Chung Ying-ying says. "We provide the information they need on our website, such as the shipping fees. We also provide a platform for buyers to request and acquire health certificates for the fish." This approach has been effective in boosting sales, prompting experts such as Hsu Shih-hsun, a professor in the Department of Agricultural Economics at , to describe Sing Chang's operation as "a new direction for 's precision agriculture"

Horizontal alliances are another of Sing Chang's strategies for developing its market channels. For example, the company teams up with the Aquatic Business Division of Taiwan's Uni-President Enterprises Corp. to rent trade show booths where they cooperate to design a space to feature their products. "Customers who see our healthy fish are convinced that they are eating good quality fish food," Chung Ying-ying says.

Sing Chang's innovative business strategies provide a good example for an industry in transition. "'s ornamental fish breeders have been seeking new directions over the past five years," says Huang Chi-yang of . "In the past, they mostly concentrated on breeding large amounts of fish to satisfy the domestic market. But now the export market has become the focus." Huang says that while fish breeders' efforts alone were sufficient to succeed in the local market in the past, "to break into the international market they require aid from the government."

"The government is going to start a program to help operators apply for ISO 9002 certification next year," Chang Fu-lung of the Fisheries Agency points out. "This certification will assure international buyers that the fish they purchase will have a low death rate." While currently only one domestic operator, Taikong Corp., has received ISO 9002 certification, the Fisheries Agency is now also aiding two fish farms in southern to apply for the certification, and more are expected to do so as the government's program gathers momentum.

Chang says the government also offers subsidies for items such as electrical fees for operators holding an Aquaculture Registration Certificate. The certificate, established in 1994, is part of a system designed to manage 's aquaculture industry. To apply for this five-year certificate, farm operators must present valid documents, including one for water rights registration, which proves their legal use of water. Breeders who hold the certificate have been entitled to a reduction of their electrical bills, subsidized by the government, since a two-stage increase in electrical fees went into effect in 2008. However, the subsidy has not been well publicized, with the result that not all local ornamental fish operators are aware of it.

Benefits of Registration

"Most of them do not have an Aquaculture Registration Certificate," Chang says of the operators. "Therefore they are not eligible for discounts on electricity, and that's why their export products have a more difficult time competing on price."

Also, the Fisheries Agency allows fish farm operators with Aquaculture Registration Certificates to apply for low-cost loans under its Loan for the Fishery Industry in Guidance and Assistance of Management program, which lends from NT$1.2 million (US$36,400) to NT$4 million (US$121,200) to upgrade fish farm facilities. Furthermore, breeders who suffer losses from natural disasters are able to apply for cash subsidies and loans ranging from NT$15 million (US$454,500) to NT$1.8 billion (US$54.5 million) depending on the extent of the damage.

Local exporters also face high transportation fees compared with their international competitors. , the world's largest ornamental fish exporter with a 25 percent share of the global market, is also a main international flight hub, with eight airlines providing nonstop flights to European cities, according to the Civil Aviation Authority of Singapore. , however, has only one airline--China Airlines Ltd.--that provides nonstop flights to European cities. Nonstop flights are preferred because the shorter flight time assures a higher survival rate for the fish. "China Airlines has cheaper transportation fees but fewer European destinations," Chung Ying-ying points out. "Other airlines ask for higher transportation fees. For example, KLM, which flies to more destinations, charges almost double what China Airlines does, and they don't have nonstop flights to . Since breeders in have to pay higher transportation costs than , breeding high-priced ornamental fish like koi for export is more profitable than breeding the low-priced ones."

One market Taiwanese breeders are now paying lower transportation costs to reach is mainland China, as the recent thaw in relations between Taipei and Beijing has resulted in direct cross-strait flights and shipping. Still, Chung Ying-ying and Chang Fu-lung express reservations about tapping the mainland market. Some of 's breeders are concerned that their techniques could be copied by the operators in mainland as quickly as within a half year, Chang says. On the other hand, for koi operations that really want to cut costs, moving to the mainland may present a more enticing option. As Chung Ying-ying says, "For breeders, the question is why not just breed fish in the mainland and save the two-hour flight? Now, low-priced fish are produced in the mainland, and some of the cheaper ones from the mainland are even sold in ."

Fishy Checkups

"Another thing that weakens Tai-wan's competitiveness is the lack of enforcement for the process of acquiring international health documents for exported ornamental fish," the Fisheries Agency's Chang says. Out of the total of some 300 ornamental fish farms across , Chang says, only 55 participate in the government's health inspections of aquatic animals for export, although some of the companies do not participate because the inspections are not required for selling fish in the domestic market. The inspections have been conducted by the Bureau of Animal and Plant Health Inspection and Quarantine twice each year since 2004. Companies that pass the bureau's inspections receive a government certificate confirming that their fish are healthy and that the water in their ponds is free of disease. Chung Ying-ying says the procedure involves a government veterinarian visiting the fish farm and selecting fish from tanks designated for export shipments. The fish are then tested and health certificates issued stating the results, she says.

Chung Ying-ying echoes Chang's observation about the lack of enforcement for health certificates. "There are many local fish farms that employ their own veterinarians to do the tests and fill out the required paperwork for exporting fish, but it's illegal," she says. "Government-registered farms like us are required by law to subject every export shipment to the health checks."

To tackle the problems posed by the myriad health documents required to export fish to different countries, the government plans to assist the in southern to set up a research and development and logistics center for ornamental fish and fish fry cultivation by 2012. The center will provide health and quarantine documents for fish from area farms and disseminate information about how to pack them for international shipping, Chang Fu-lung says.

For better or for worse, Tai-wan's environment is likely to play a decisive role in the success of local ornamental fish breeders. On the one hand, 's Huang Chi-yang believes the industry has a bright future because rising water temperatures, overfishing and pollution will make some varieties of fish difficult to find in their natural habitats. "As natural resources are exploited and the environment suffers damage, it will likely cost more to acquire wild ornamental fish in the future," he says. "Thus, breeding them in an artificial environment may become more profitable."

Chung Ying-ying, on the other hand, is more optimistic about the environment, believing that Taiwan's local conditions will continue to give local ornamental fish breeders an inherent advantage. "The industries related to the land, such as agriculture and raising animals, have a long life ahead of them because the sun and the water here just can't be copied anywhere else," she says.

Write to Vicky Huang at powery18@mail.gio.gov.tw