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Cambodia's imports of Japanese beef are ending up in China

Southeast Asia has become the way to get around China's ban on wagyu

Slices of Kobe beef meat pictured in plate as arrange steaks in a restaurant on January 18, 2017 in Kobe, Japan.   © Getty Images

PHNOM PENH Cambodia's imports of wagyu beef from Japan have shot up in recent years. But it is likely not on the menu of even the most exclusive restaurants in Phnom Penh.

There is growing evidence that the country has become a staging post on a "beef laundering" route set up to satisfy affluent meat lovers in China, where Japanese beef is banned.

"Japanese beef? No way!" said Heang Channy, a butcher at a market in the Cambodian capital. "That can't be true," she laughed on hearing that her country is now the world's largest importer of frozen Japanese beef.

Japanese Finance Ministry statistics show that exports of frozen beef to Cambodia in 2017 surged 50% on the year to 544 tons, making the Southeast Asian country the top importer for seven straight years. But there is little sign of growing, or indeed any, wagyu consumption.

Neither a supermarket run by Japanese retail giant Aeon nor local chains Lucky Supermarket and Thai Huot Market sell Japanese beef.

A handful of high-end Japanese restaurants and Western steakhouses serve it, but at $40-50 for a 100-gram cut, nearly 40 times the price of local beef, it is hard to see the delicacy being common in most Cambodian households.

Japanese beef is rarely seen for sale in Cambodia, even at an Aeon mall, the first Japanese-run shopping center in Phnom Penh.   © AP

According to Ly Lavil, chairman of the Cambodia Livestock Raisers Association, average annual beef consumption per person is 3kg, and he was surprised to learn about the volume being imported from Japan.

So where does it all go after passing through Cambodian customs?

Marbled wagyu has become highly sought after all over the world, a phenomenon fueled by stories of cattle being fed beer and massaged to produce tender cuts.

In China, top-quality meat can fetch several hundred dollars per kilogram. But importing Japanese beef has been banned since 2001, after an outbreak of bovine spongiform encephalopathy, or BSE.

That, however, does not stop restaurants serving it if asked, according to a Japanese businessperson who used to live in China.

In January, Chinese news website reported that customs officials had seized 178.5kg of black wagyu being smuggled from Japan through an airport in Fuzhou, Fujian Province. On average, between 30kg and 40kg of the frozen meat has been seized at the airport every year since 2015.

Cuts small enough to hide in a suitcase, though, make for inefficient smuggling. To bring in large volumes, it is easier to falsify the country of origin by moving it through a third country.

Cambodia has close political and economic ties with both Japan and China, and is "almost certainly" where the beef passes through, said an official of a Japanese meat trading company.

The Chinese Communist Party's official newspaper, the People's Daily, reported that in June 2015, a group of smugglers was caught by Shanghai authorities and officials had seized 13 tons of beef.

The group had exported beef from Japan to Cambodia, before replacing the labels and transporting it to a freezer warehouse in Chiang Rai in northern Thailand. The meat was then packed together with jackfruit and mangosteen, labeled "fruit" and shipped to China's Yunnan Province. From Kunming Airport, the cargo, now labeled "ham," was delivered to major cities including Shanghai, Guangzhou and Hangzhou.

Up until 2010, the top export destination for Japanese beef was Vietnam. But after Hanoi also suspended beef imports in the spring of 2010 in response to the BSE outbreak, Cambodia shot up the rankings, despite having previously imported negligible amounts of frozen beef.

Laos also has seen its import total rise. Mongolia's imports surged in 2013. All three countries provide easy access to and have business links with China.

Vietnam resumed imports in 2014, but with a supply route seemingly well established, Cambodia's imports continue to grow.

The government of Cambodian Prime Minister Hun Sen relies heavily on China for economic growth and has accepted investment and loans from Chinese state-run banks and enterprises to implement real estate, infrastructure and casino projects.

The Cambodia National Rescue Party, the country's largest opposition group, was dissolved in November, clearing the path for Hun Sen as he prepares for general elections later this year. With China's backing, the prime minister appears to be intent on staying in power.

The Chinese government may nominally be trying to crack down on Japanese beef smuggling, but eliminating it completely will not be easy as customers are said to include senior government officials and high-profile businesspeople.

The illicit trade in prime beef that few Cambodians know about could also be a sign of weakening rule of law under an increasingly autocratic regime.

Nikkei senior staff writer Kazuki Kagaya in Tokyo contributed to this report.

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