Chile Salmon Spat Delivers a Moral for China Foreign Ventures

Chinese overseas investments in agriculture are small compared with real estate or energy, but they’ve accelerated in the past decade as China pushes companies to go global

Workers filet salmon at a processing plant in Puerto Montt, Chile.
By James Attwood and Hallie Gu
April 13, 2023 | 08:11 AM

Bloomberg — Four years after paying about $900 million for Chilean salmon farms, Legend Holdings Corp. wants its money back in a case that underscores the pitfalls for China’s push into global food markets.

In an arbitration process in Chile, Legend unit Joyvio Food Co. is seeking full repayment plus damages for its 2019 purchase of Australis Seafoods. Joyvio alleges the previous owner — local businessman Isidoro Quiroga — hid the fact that the company was in breach of salmon production limits.

Quiroga countered last week with a libel suit that alleges Joyvio and its board, including Chairman Shaopeng Chen, were fully aware of the overproduction, which was an industry-wide practice among Chilean farms until enforcement began in 2021. As other producers brought themselves into line with the limits, Joyvio-controlled Australis chose to continue producing in excess, Quiroga’s defense team alleges.

Chinese overseas investments in agriculture are small compared with real estate or energy. But they’ve accelerated in the past decade as China pushes companies to go global and Beijing focuses on food security and more control over imports and supply chains. Many Chinese food-related projects have faced difficulties due in part to global inexperience. COFCO struggled to integrate its acquisition of Dutch grain trader Nidera, and Noble Agri, a unit of embattled Noble Group. Joyvio’s imbroglio in Chile also underscores such challenges.

Foreign Direct Investment In Chile Hits Highest Level Since 2014

“It’s a bitter pill for Chinese investors in Chile, and a lesson learned the hard way,” said Francisco Urdinez, director of the project Millenium Nucleus on the Impacts of China in LAC, who specializes in Sino-Latin American relations.

The case in Chile is playing out at a time when Joyvio is trying to recover from a fourth straight annual loss. In an end-January filing in China, the company attributed its woes to disruptions related to the pandemic and the war in Ukraine, such as pricier feed. Last week, it said 2022′s 1.1 billion yuan ($160 million) loss was due partly to currency swings and rising interest rates.

Yet Australis, its Chilean subsidiary, reported a profit of 120 million yuan, up 49% from the year earlier, thanks to recovering salmon demand and a bigger-than-expected increase in prices.


Joyvio says it’s now fully compliant in Chile and has reached an agreement with the regulator that will see it avoid fines for previous overproduction, according to a filing in late March.

Chile’s emergence as the top salmon exporter after Norway has been hindered by lax supervision that’s led to a series of environmental incidents. For all foreign investors, not just Chinese, that poses financial risks and highlights the need for companies to bring environmental, social and governance considerations deeper into overseas project planning.

But Chile has been strengthening oversight over the past decade to clean up the industry, meaning a decision to enforce production limits shouldn’t have come as a big surprise. While Chinese firms have traditionally relied on host country rules for environmental protection, Beijing wants companies to take more ownership. Where local standards are insufficient, the government urged businesses to implement higher green standards in their overseas ventures.