On The Demand Of Chinese Shrimp In Its Major Export Markets And Intra-Market Integration

Shrimp is one of China's dominant agricultural exports, accounting for 13.5% in the total revenue of its aquatic export. The United States, Japan, the European Union and Korea are the four major shrimp import markets in the world, and are also the main export markets for Chinese shrimp. In recent years, China faces greater difficulty to export shrimp to the US market because of US dollar deflation and the introduction of practice against dumpling and excessive residual medicine; Japan reduces shrimp import demand because of its slower economy growth; To support its national industries, Korea set up more trade barriers to restrain foreign shrimp from entering its market and, as a result, China has greater in difficulty developing Asian shrimp market; In the EU market, although EU began to relieve restrictions on the import of Chinese shrimp in July 2004, the market has becoming increasingly competitive since then because more and more major world suppliers entered this market. These market dynamics have provided huge difficulties to Chinese shrimp exporters, but, at the same time, they make it more necessary than ever to provide theoretical support and guidance to these exporters.In view of these dynamics, this dissertation, based upon past research results in this field and with the aid of modern econometric instruments, applies classical demand theory, Differentiated Import Demand Models, and Spatial Market Integration theory and method, both at local market and inter-market level, to analyze data from FAO, UN Comtrade, NOAA's NMFS, USITC, TSOMOF, Eurostat and KITA to explore the demand rules of Chinese shrimp in its major export markets.When analyzing local market demand, this dissertation starts by analyzing the trend of per capita shrimp consumption for the import countries and the composition of market offerings, and then demonstrates the importance of shrimp to consumers in these countries and market opportunities for shrimp exporters. Then, it analyzes the composition of shrimp importers, and the evolution of market shares and market concentration to identify the competition dynamics in the shrimp import markets and relative competition performance of major competitors. Then, with the aid of EViews and SAS and according to the fitness between the monthly data for import countries and the Source Differentiated Import Demand Models (Rotterdam Model, CBS Model, first difference AIDS Model, NBR Model and the General Model), which is represented by likelihood ratio (combined with Barten's model choice criteria and the fitness indexes of demand systems), the suitability of the models is tested to determine the best model for empirical research. The chosen models are then fitted and expenditure elasticities for different sources and varieties, own price elasticities and cross price elasticities are calculated. Finally, research results are summarized and commented in order to characterize the major import markets for Chinese shrimp and the substitution effects between competitors.When analyzing inter-market spatial integration, this dissertation analyzes trade data and major wholesales market data of import markets to identify the degree of inter-market integration by Johansen co-integration test, both at aggregate and separate level, in order to test whether there exist common trends in prices between different markets and the dynamics of price transition.The research results shows that the US demand for shrimp tend to stabilize and Chinese shrimp has limited influence in this market because of its lack of variety, which is represented by expenditure inelasticity, unity own price elasticity and cross price elasticity and the fact that shrimps from Thailand, Ecuador and Vietnam have significant substitution effect on Chinese shrimp. Japanese demand for shrimp has been saturated. Although Japanese consumers prefer Chinese shrimp product to those of India, Thailand, Indonesia and Vietnam, as far as frozen shrimp is concerned, Chinese product is in an inferior position. There exist considerable potential for growth in the UN market, but the existence of huge preference variety of its member countries poses difficulty in developing this market. Spanish demand for Chinese frozen shrimps&prawns is inelastic and the substitution effect of Argentina, Ecuador, Morocco, and Colombia's shrimp on Chinese is insignificant. In Korea, consumers are changing their preferences. They prefer Vietnamese frozen shrimps&prawns to Chinese as shown by the fact that they present expenditure inelasticity for Chinese shrimp but nearly unity elasticity for Vietnamese shrimp. In addition, because China export different product to Korea than Vietnam and Thailand, the substitution effects between them are insignificant. As far as inter-market integration is concerned, long-run price integration relation does exist among the US, Japanese, Korea and the UN shrimp markets, and the degree and direction of this integration relationship are closely related to factors such as origin, specification and trading volume.Finally, measures are proposed as theoretical support for Chinese shrimp exporting companies in their efforts to enhance their international market shares and competitiveness.