LI's K&B Seafood finds new selling opportunities in China

K&B Seafood Inc. co-owners Tom Kehoe and Roger Boccio, wholesalers of oysters, lobsters and other shellfish, are working hard to grow their new business exporting to China.

Since November, the principals of the East Northport business have visited China twice to establish trade with food distributors. Now the company ships a ton of oysters and other shellfish to Hong Kong every week, and China shipments make up about 10 percent to 15 percent of the company's total sales.

"Oysters opened the door for us," said Kehoe, whose orders from China now include everything from clams to Boston lobsters. Overall, foreign sales are about a quarter of the company's $7 million in annual revenue. K&B began shipping to China in December. Only six years ago the company's foreign sales were negligible.

Recently, its business in China assumed even greater importance when the company lost access to its largest customer, in Moscow, after Russia banned imports of American foods as tensions over Ukraine escalated.

K&B's growing exports to China show that Long Island companies -- particularly those in the agriculture trade -- have opportunities to sell to a country known for exporting goods to the United States.

China is the United States' biggest importer of agricultural products, a category that includes seafood, buying $29.3 billion in goods in 2013, up 3 percent from 2012, according to the United States Department of Agriculture.

About one-fifth of all U.S. agricultural exports now go to China, and of that, $1.1 billion comes from exports of fishery products.

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Exports to China have traditionally come from the Pacific, but Northeastern distributors have an opportunity, said Ralph Bean, director of the USDA's Agricultural Trade Office in Beijing.

"It is difficult to overstate the extent to which seafood is seen as an important high-end food for the Chinese," Bean said. "The potential is definitely there for Northeast seafood."

Chinese demand for oysters is growing at a rate of almost 20 percent each year, with domestic production able to account for only 30 percent of the demand, according to Globefish, an international fish trade research division of the United Nations' Food and Agriculture Organization.

Increasing demand for foreign oysters is due, in part, to concerns over food safety and regulation in China.

"With the economic development rising and the internal migration from rural to urban, you have this much larger section of the population that is interested and enabled to eat more high-quality food," said Philip Jarrell, director of the USDA's Agricultural Trade Office in Shenyang.

When Kehoe and Boccio, both residents of Northport, founded K&B in 1992, China was far from their minds.

The business partners first met at a church retreat in 1991. Kehoe was running his own small seafood wholesaling business and needed financial counsel. Boccio, an accountant, offered his services, and the duo went into business together, creating a new company.

K&B buys an assortment of seafood -- its biggest product is oysters -- from fisheries and farms on Long Island and across North America, and ships them to restaurants and other wholesalers throughout the United States.

Behind the business' unassuming storefront, employees hustle through the storage, cleaning and prep area on the ground floor from early morning to late night.

Inside, the cold air carries the unmistakable scent of live oysters and other fresh catches of the day. K&B's 20 employees sort, pack and ship 15 to 20 tons of shellfish each week. Seaflight Logistics Inc., a freight forwarding company also owned by Kehoe and Boccio, makes longer-distance deliveries.

"It really never stops," Kehoe said. "The food business, whether it's meat, produce or fish, kind of goes around the clock."

Several years ago, Kehoe and Boccio wanted to take their distribution operation abroad to break into less competitive markets with greater potential for growth.

Following a lead from other distributors, they found a buyer in Thailand in 2009. The year after, they began selling to Moscow. They also made intermittent shipments to China.

But the company decided to dive deeply into that market by attending the 2013 China Fisheries & Seafood Expo Show in Dalian, a seaport in the northeastern province of Liaoning.

The industry trade show, which brings tens of thousands of buyers and sellers of seafood from nearly 100 countries together each year, gave K&B its first taste of the Chinese seafood market.

"In the beginning, it was very intimidating," said Boccio, who, like his business partner, had never visited the country before. "The moment I was off the plane, I knew I wasn't home."

Knowing nothing about China's geography and lacking any grasp of the language, the principals contracted a third-party marketing firm to handle the arrangement of business meetings and translation. The partners left with a notebookful of business cards -- and their first of several clients.

"They're growing and they need us, and they need our food production," Boccio said. "As time went by, that solidified in my mind."

Foreign trade is not without challenges, from understanding cultural business practices to ensuring payment.

A mistake that many business owners make when trying to break into China is looking at the country as a homogeneous market without regional differences in tastes and buying habits, said Jarrell of the USDA.

There are more than 100 cities with populations exceeding 1 million each, so narrowing a company's geographic focus is key.

"It can be very daunting," said Susan Sadocha, acting director for the Long Island U.S. Export Assistance Center, an organization that helps local businesses expand their international presence. "You need to go and visit your target market."

After K&B's initial visit last year, Kehoe returned to China in May with 27 other companies as part of an industry trade mission organized by the USDA, making stops in Dalian, Shenyang and Shanghai. He embarked for China again on Aug. 23.

To further capitalize on its relations with Chinese buyers, K&B is in the early stages of diversifying its logistics company to help other companies ship to China.

In the meantime, the wholesaler is staying in close contact with its Chinese buyers through late-night weekly emails and phone calls in an attempt to bridge the 12-hour time difference.

"The market is so big and their demand for good products is so crazy now that we see ourselves helping other U.S. companies export and do distribution into China," Kehoe said.