Influencing factors in Norway's fresh salmon export to China

Abstract

With the governments long term vision of restructuring Norway to a competitive, low carbon footprint society, a vision labeled “Green Compet- itiveness”, how to replace oil becomes a key concern. The government has singled out marine aquaculture as the example to emulate. The growth of the industry depends on markets with growth potential and, with its size and rapid growth, China is particularly attractive. The objective of the study is the attainment of a broad view for success- ful strategies to realize the vision of “Green Competitiveness”, particularly in relation to the Norway-China fresh salmon trade. To the best of my knowledge, previous, related research either address other issues or, with depth, lack scope. The key research question is: what are factors that de- termine the success of Norwegian salmon exports to China in the period from January 2000 to August 2017. The study includes variables for well known interactions related to China’s import demand - income, price and substitute price, exchange rate as well as sanctions against the trade. An autoregressive distributed lag (ARDL) model is built, and ordinary least squares (OLS) estimation method is applied to the model. The findings indicate, within a 95% confidence interval, that Norwegian fresh salmon, in the Chinese marketplace, is elastic with respect to income by a cumulative factor of 1.09, and price inelastic by a factor of −0.27. These are characteristics of a luxury product, with a degree of perceived uniqueness, making it hard to replace. Substitute price increases have a positive effect (0.88) on the import demand within a 90% confidence inter- val. The study also found an overall limited effect of exchange rate, which supports the findings of Xie et al. (2008). As expected, sanctions against trade exerts strong negative influence on demand, with a demand curve shift of 80.33 units. The implication of these findings is that any strategy to maintain and strengthen the position of Norwegian salmon in China, will do well to bol- ster a luxury and uniqueness narrative for the national brand of Norwegian salmon and “Seafood from Norway”.