Falsely labeled crabs upset the market

Mark-up for genuine Yangchenghu crustaceans can be as much as 700%

Li Yiqi, a businessman in Ma'anshan, Anhui province, planned to buy some sought-after Yangchenghu hairy crabs as gifts for his friends and family members for the Mid-Autumn Festival this year. However, he did not put the plan into operation.

"I was told there are many fake Yangchenghu crabs. It is very hard to verify the authenticity, although all crabs traders claim their crabs are authentic," said Li. "It would have made me feel bad if I had paid the price for authentic Yangchenghu crabs but received fake ones".

Yangcheng is a freshwater lake northeast of Suzhou in Jiangsu province. Hairy crabs from there are known as the best and tastiest crabs in China because of their good living environment and high nutritional value.

For many Chinese gourmands, especially those in Shanghai, Jiangsu province and Zhejiang province, eating Yangchenghu (or Yangcheng Lake) hairy crabs has become a must in autumn. With the increasing brand awareness, cities including Beijing have also reported increasing demand for the delicacy in recent years.

The end of October is the best season to enjoy crabs, when Chinese gourmands will gather around Bacheng township, Weiting township and Lianhua Island in the Yangcheng Lake area.

The statistics from Suzhou Yangcheng Lake Crab Association show the output for the crabs will be around 2,200 tons in 2012. The crabs will be distributed around China according to local demand with large cities receiving a higher proportion.

The increasing demand has led to Yangchenghu crabs being traded at higher prices than others in the market. In Shanghai, a pair of authentic Yangchenghu crabs can be sold for more than 100 yuan ($15.75), the heavier the more expensive. Crabs not native to Yangcheng Lake are often sold for less than 10 yuan each.

However, buyers' preferences for genuine Yangchenghu crabs is not being met with increasing quality and a better pricing system. Almost every year there is news about falsely labeled crabs being sold.

This year, some vendors in East China's Fujian province were reported to be selling falsely labeled crabs even before the authentic crabs were officially on sale from Sept 22.

In other cases, some traders purchase crabs from other regions such as Anhui and Shandong provinces in East China and then put the crabs into Yangcheng Lake for a few days before selling them.

The crabs will be traded at the same price as authentic crabs and buyers will be told the crabs are from the lake. Industry insiders said it is the best way to generate quick profits in a short time. Even worse, some traders just sell falsely labeled crabs without transporting them to Yangcheng Lake.

For some crabs traders, selling falsely labeled crabs generates higher and quicker profits. Insiders said the profit margin will be around 50 percent.

"If we tell buyers those crabs are from Yangcheng Lake, the best price is 600 yuan a kilogram. But if we say the crabs are from other breeding bases, the same crabs will be worth about 80 yuan in the ordinary market," said a trader in Gaochun county, Nanjing, who declined to give his name. He has traded falsely labeled Yangchenghu crabs for years in the capital city of Jiangsu province.

In addition, some crabs traded at extremely low prices online also make people uncertain as to what is the true value of Yangchenghu hairy crabs.

Industry experts said the fake products not only have a negative impact on customers' confidence, but also give the wrong signal to local crab breeders.

"If fake crabs continue to be traded in the market, it will not only have a detrimental effect on the reputation of Yangchenghu crabs, but Yangcheng Lake crab breeders will also be confused about which is right direction for developing the industry," said Zhang Guodong, general manager of Suzhou Yangchengyuhuo Biological Breeding Cooperative. The cooperative is a crab breeding and trading expertise association in the Yangcheng Lake area with 133.33 hectares of water area. The main clients for the cooperative are companies.

To curb the problem, the local government, together with the industry association, has been trying to prevent falsely labeled crabs from entering the country's market over the past decade.

In 2006, the Bureau of Quality and Technical Supervision in Suzhou began distributing authentic brand rings to Yangcheng Lake crab breeders and required all authentic traded crabs to have the rings attached. There will be a code on the ring that allows customers to verify the authenticity from the official website.

In addition, the local industry association often provides training courses to local breeders to emphasize the importance of protecting the reputation of Yangchenghu crabs.

"In the courses, we tell the breeders what should be done and what is prohibited. They know punishment will be given out if they do something wrong," said Yang Weilong, chairman of Suzhou Yangcheng Lake Crab Association.

However, it seems the actions do not effectively prevent falsely labeled crabs from entering the market. It has even been reported that some people are selling the authentic trade rings to dealers in falsely labeled crabs.

There is a rumor that all Yangcheng Lake crabs had been pre-ordered by large corporations, implying there would be no authentic crabs in the retail market, although the rumor was denied by the local industry association.

Yang said that it is hard to prevent falsely labeled crabs from entering the local market because of the huge number of individual dealers. He said the current legal loopholes leave room for dealers in fake crabs.

"There must be systematic and detailed laws and regulations to stop falsely labeled crabs from entering the market," said Yang. "Meanwhile, every administrative department including association and quality supervision authorities should have a clear role and know exactly what should be done".

Despite the falsely labeled crabs causing disorder and confusion in the market, crab business operators are still confident about the market.

"Currently, many customers only know crabs from Yangcheng Lake are good, but they cannot tell which brand is better. I think it is a time for companies to develop their own brands and establish brand loyalty among customers," said Zhang from Suzhou Yangchengyuhuo Biological Breeding Cooperative. "As in any other industry, a confused pricing system and lack of industry standards to regulate the market are part of the essential development that must be experienced by the crab industry".

To broaden brand awareness, Zhang has increased the amount he spends on advertising. He also launched an online trading platform to attract Internet shoppers.

Zhang said he planned to release the total output of crabs at the beginning of the crab season and will update the figures to notify people how many crabs are available for sale.

"Creating trust is the most important thing in supporting a company's growth," said Zhang.

For many crab traders, an online trading platform has become an important shop window for their products.

Currently, there are more than 100 companies and individuals trading Yangchenghu crabs at Taobao.com, one of the largest online trading platforms in China. The top trader sold 6,900 boxes of crabs in one month, each containing eight crabs.

Yihaodian.com, the online trading unit of US retailing giant Wal-Mart in China, said the weekly sales revenue from crab trading has so far amounted to millions of yuan in 2012 and will increase by the end of October. The end of October is the best time to enjoy crabs because the male crabs will be fat and female crabs will have thick roe.

In August, the Suzhou Yangcheng Lake Crab Association reached an agreement with leading e-commerce platform operator 360buy.com allowing it to become the first authorized online store to trade authentic Yangchenghu crabs.

Yang Weilong said it is essential for crab trading companies to seek expansion through an online platform.

"E-commerce has emerged as a formidable distribution channel and demonstrated a strong capacity for expansion," said Yang.

Zhang from Suzhou Yangchengyuhuo Biological Breeding Cooperative said having an online store is an effective way to reducing rental and labor costs.