Summary of Key Points
Three marine farming companies headquartered in the Yellow Sea and Bohai Sea—Haodangjia, Dongfang Ocean, and Zhangzidao—although they all breed similar seafood products such as sea cucumbers and scallops, exhibit vastly different profitability levels due to differences in their farming methods, the completeness of their supply chains, and their ability to withstand environmental risks. Haodangjia has secured a leading position through its "enclosed pond cultivation with integrated supply chain" approach. Zhangzidao, despite owning the largest sea area, suffers from low efficiency and vulnerability to disasters due to its "bottom seeding" farming method. Dongfang Ocean, after restructuring, still faces issues with a broken supply chain and is in trouble. Marine farming is not as simple as relying on the ocean; the key to stable profitability lies in choosing the right approach, ensuring a seamless supply chain, and managing risks effectively.
Detailed Analysis
1. Farming Methods: Large Sea Areas Do Not Necessarily Equal High Profits; Efficiency per Acre Is Crucial
The size of the sea areas and farming methods used by the three companies significantly affect their profitability:
- Haodangjia: Uses enclosed pond cultivation, similar to "marine greenhouses." This method creates controlled environments that allow for precise water management and pest control, resulting in high stocking densities. For example, the annual yield per acre of sea cucumbers is about 50 kilograms, generating an income of 4,572 yuan (over 4,000 RMB per acre), which is much higher than its competitors.
- Dongfang Ocean: Practices open-sea farming with a "free-range" approach. The sea areas are scattered and unenclosed, relying on natural growth, leading to moderate yields and income per acre (1,034 yuan) and sea cucumber production of 25-30 kilograms, placing it in the lower-middle tier of the industry.
- Zhangzidao: Adopts a "deep-sea seeding" method, leaving the cultivation process largely to natural factors. With a massive 1.42 million-acre sea area, this approach results in only a low yield per acre of 170 yuan and less than 30 kilograms of sea cucumbers, indicating that large areas do not necessarily equate to high productivity.
Conclusion: Larger sea areas are not always more profitable; precision farming methods are more effective.
2. Supply Chains: A Complete Chain Is the Foundation for Stable Profits
Farming seafood without processing it results in minimal profits and makes companies vulnerable to disasters. A sustainable profit model involves a integrated chain from breeding to processing to sales:
- Haodangjia: Has a complete supply chain, with processing being a key profit driver. The company handles all stages—from farming to producing ready-to-eat sea cucumbers and frozen seafood products, to selling them to supermarkets, restaurants, and retailers. In 2025, the processing business accounted for 57% of its revenue, with a gross margin of 26%, providing a stable source of profit and helping to mitigate risks (e.g., by raising prices on processed products when sea cucumber prices fall).
- Zhangzidao: Began processing only after the scallop crisis in 2014. In 2025, processing revenue was 595 million yuan, with a gross margin of 21%, which barely covered the losses from its farming operations (with a farming gross margin of -0.14%).
- Dongfang Ocean: Its supply chain was disrupted after a debt crisis, leading to no stable processing channels for its seafood products. In 2025, the farming gross margin was -42.5%, meaning the more it produced, the more it lost.
Conclusion: Without processing, the value of seafood is not fully realized; a complete supply chain is essential to turning it into high-value products.
3. Environmental Risks: Natural Disasters Are a Major Threat
While land-based farming can be controlled artificially, marine farming is subject to natural hazards:
- Zhangzidao: Suffered severe losses due to disasters in 2014 when a cold snap killed 1 million acres of scallops, resulting in a loss of 1.189 billion yuan. It now relies on processing and trade to compensate for these losses.
- Haodangjia: Its enclosed ponds protect it from storms and cold waves, ensuring stable profits despite recent declines in sea cucumber prices and higher costs.
- Dongfang Ocean: Its scattered farming areas are vulnerable to fluctuations in water quality and algal blooms, leading to chronic losses.
Conclusion: The ability to withstand environmental risks is critical for marine farming success; a more controllable farming method reduces the risk of sudden setbacks.
4. Current Situations and Transformation Efforts
Each company is trying to find solutions, but with varying outcomes:
- Haodangjia: Faces weak consumer demand and rising farming costs, leading to a 41% decline in farming revenue in 2025. However, its integrated supply chain gives it a solid foundation, and it can recover as consumer demand improves.
- Zhangzidao: Is switching from scallops to sea cucumbers (with a higher gross margin of 40%) and balancing profits through processing and trade. However, without changing its farming methods, it remains at risk due to environmental factors.
- Dongfang Ocean: Tried to diversify into external diagnostic services after restructuring, but this new business contributed only 7.66% of its revenue in 2025 and did not significantly offset losses from its main seafood business.
Conclusion: Transformation should leverage existing strengths. For Dongfang Ocean, focusing on improving its marine farming supply chain would be a more effective approach than entering unrelated industries.
In Conclusion
Marine farming is not about taking chances based on market conditions; it requires a systematic approach that combines precision farming methods, a complete supply chain, and risk management. Only by choosing the right strategies can companies profitably exploit the ocean's resources. Otherwise, even the largest sea areas can become a source of losses.