Will Nestlé’s challenger be Chinese?

Posted on December 4, 2013 by Peter Peverelli

Nestlé is still the world’s leading food company, but for how long? It is very active in China, but China’s own giant COFCO is occupying Nestlé’s markets too, one by one, step by step. COFCO Group has signed import agreements worth more than USD 10 billion at the 2023 China International Import Expo.

The increasing Chinese appetite for high end foreign products is not a new issue. The economic problems in Europe and North America now seem to push China even faster in the position of top region for investment, and in both directions: inward and outward. The two giants, Beijing based COFCO (China Oils & Foodstuffs Corporation) and Bright from Shanghai, continue their race in acquiring foreign companies. Unlike many of their Western counterparts, they have the money to spend and they are the top food makers for more than 1.3 billion domestic consumers. COFCO claims to provide food products to one-fourth of the world’s population, around 1.8 billion customers. COFCO rose to the 121th position in the World Top 500 companies of 2016.

COFCO’s revenue amounted to RMB 216.12 billion ($32 billion) in the first half of 2017, up 7% year-on-year. Its net profit in the same period also reached RMB 5.51 billion, surging 112% from the same period a year earlier.

Moreover, while most Chinese overseas investors are constrained by lack of financing, COFCO has received large infusions of credit from Chinese policy banks. These include a RMB 30 bln line of credit from the Agricultural Development Bank of China for investment in grain-related projects in 2011; RMB 30 bln in financing over 5 years from the China Development Bank; and another commitment in 2016 from the Agricultural Development Bank to finance projects related to food security, food safety, and agricultural modernization.

Simultaneously, we see multinationals like the two Colas, Nestlé, Unilever, etc., increase their stake in their respective Chinese markets. These corporations as well have no choice. If they do not invest now, there will not be enough of the pie left for them. Nestlé is very frank in admitting that it finds it harder than before to keep its market share in China, let alone increasing it. And in our current troubled world, losing market share in growing market like China equals losing market share worldwide.

COFCO has become a genuine powerhouse. Following Donald Trump’s announcement about putting high import duties on imported steel and aluminium, COFCO’s President Patrick Yu alluded in an interview that he, as the world’s largest importer of soybeans, was able to harm the US by stopping to source that product from the US.

Nestlé

Nestlé was one of the earliest multinational investors in China with an infant formula plant in Heilongjiang in the 1980s. The company is now active in the country with most of its product groups, like coffee, biscuits, or breakfast cereals.

After 13 years of talks, Nestlé was formally invited into China in 1987 by the government of Heilongjiang province. Nestlé opened a plant to produce powdered milk and infant formula there in Acheng in 1990, but quickly realized that the local rail and road infrastructure was inadequate and inhibited the collection of milk and delivery of finished products. Rather than make do with the local infrastructure, Nestlé embarked on an ambitious plan to establish its own distribution network, known as milk roads, between 27 villages in the region and factory collection points, called chilling centers. Farmers brought their milk— often on bicycles or carts—to the centers where it was weighed and analyzed.

Unlike the government, Nestlé paid the farmers promptly. Suddenly the farmers had an incentive to produce milk, and many bought a second cow, increasing the cow population in the district by 3000, to 9000, in 18 months. Area managers then organized a delivery system that used dedicated vans to deliver the milk to Nestlé’s factory. Although at first glance this might seem to be a very costly solution; Nestlé calculated that the long-term benefits would be substantial. Nestlé’s strategy is similar to that undertaken by many European and American companies during the first waves of industrialisation in those countries. Companies often had to invest in infrastructure that we now take for granted to get production off the ground. Once the infrastructure was in place in China, Nestlé’s production took off. In 1990, 316 mt of powdered milk and infant formula were produced. By 1994, output exceeded 10,000 mt, and the company decided to triple capacity. Based on this experience, Nestlé decided to build another two powdered milk factories in China and was aiming to generate sales of USD 700 million by 2000. Nestlé already operates three “milk districts” in China, in Shuangcheng (Heilongjiang), Laixi (Shandong) and Hulunbeier (Inner Mongolia).

Nestlé has signed an agreement with a local government in north China’s Inner Mongolia region to build a 2,000 cow dairy farm in the area. The company says the farm will be “a transitional solution between small and individual farmers and a large modern farm”. Nestlé rarely invests in its own dairy production, preferring instead to develop supply chains with local farms or to import powdered milk on the global market. Its moves in China follow those of New Zealand’s Fonterra, the world’s largest milk producer and a major supplier of powdered milk to Nestlé.

In China, Nestlé has collaborated with public and private organizations in opening breastfeeding rooms (the number was 3,297 mid 2019). This is an important expression of its global commitment to support breastfeeding, which it also protects by implementing a leading policy to market breast milk substitutes (BMS) responsibly.

Nestlé is also keen on developing products particularly suiting the Chinese market. A find example is ‘milk powder for elderly’, enriched with medium-chain triglycerides (MCT). It is marketed with the slogan ‘gas station for the brain.’

Since 2010, Nestlé has formed a bottled water venture with Yunnan Dashan Drinks Co. and bought controlling stakes in candy maker Hsu Fu Chi International and Yinlu Foods Group, producer of congee, saqima and a peanut-milk beverage. Through the alliances, Nestlé has tripled its China headcount to 47,000 employees. With 31 factories across the country, 90% of the products it sells in China are made there.

Nestlé plans to build R&D centers at facilities owned by Hsu Fu Chi and Yinlu, where researchers will focus on ready-to- drink beverages and baked goods. The Swiss company already has a research center with Totole, a Chinese bouillon maker in Shanghai in which Nestlé has an 80% stake. Another facility in Beijing focuses on nutrition and food technology.

COFCO

Still, an intriguing thought for us to dwell upon every now and then is this: how many years are we away from the moment that Nestlé will start feeling competition from COFCO in Europe? For Nestlé, actually, this is not an issue to dwell upon, but to act on, by increasing its investment in COFCO’s home land.

COFCO, formed through a series of mergers of state food and animal husbandry companies in the 1950s, has successfully transformed itself to a top national player in the food industry. E.g., COFCO controls 90% of China’s wheat imports. Nowadays, COFCO claims to provide food products to one-fourth of the world’s population, around 1.8 billion customers.

COFCO plans to build new warehouses and processing facilities in countries including Myanmar, Kazakhstan, Ukraine and Indonesia to enhance its ability to acquire global food resources. COFCO has already purchased and built ports, logistics companies and storehouses in the world’s main grain-producing areas such as Australia, South America and the Black Sea region. Wan Zaotian, COFCO’s vice-president, said China has become the world’s largest market for food trade. Supported by the Belt and Road Initiative, food trade between China and its partners is expected to grow rapidly. It is critical for the group to build efficient global supply and logistics networks.

In 2011, COFCO took control of Australian sugar producer Tully Sugar Ltd, but it lost a bid for Proserpine Cooperative Sugar Milling Association, another Australian company, in November of that year.

In the wine sector, COFCO bought Chateau Viaud in Bordeaux, France, in February 2011 after investing USD 18 mln on a large swathe of Bisquertt, one of the Chile’s most upmarket brands in 2010.

To put the competitive relationship between the world’s top food giant and China’s domestic one, I have compiled a simplified table of the major food groups and Nestlé and COFCO’s participation in each industry.

(-: not applicable; +: a broad range of products)

COFCO’s foreign-oriented activities since the publication of this blog:

14/1/2014: COFCO is said to be on speaking terms with China’s second largest meat processor Jinluo Group to acquire the latter.

28/2/2014: COFCO to buy 51% of Dutch grain trader Nidera. The Nidera purchase gives Cofco a strong platform to produce grain in Brazil, Argentina and Central Europe. All regulatory approvals to close the transaction whereby an investment consortium led by COFCO, consisting of Hopu Investment, Temasek, IFC, Standard and Chartered Private Equity, has acquired 51% of Nidera have been obtained in October 2014.

4/3/2014: COFCO has acquired Noble’s agribusiness arm. With Noble’s agribusiness COFCO has gained grain elevators in Argentina and sugar mills in Brazil, as well as oilseed crushing plants in China, Ukraine and South Africa.

29/4/2014: COFCO is setting up a huge vegetable oil plant in the port city of Tianjin.

6/6/2014: COFCO Meat attracts a capital injection from a consortium of investors composed of KKR, Baring Private Equity Asia, HOPU, and Boyu.

8/10/2014: COFCO unveiled plans for an initial public offering (IPO), in a move that would allow it to compete with leading U.S. agribusinesses, according to several news reports. The planned IPO would include assets recently acquired Nidera and Noble. COFCO said its goal with the acquisitions was to connect large grain production areas, including those in South America and the Black Sea region to Asia. These investments are meant to will allow COFCO to compete with the traditional big-four trading houses from the west that are collectively known as ABCD: Archer Daniels Midland, Bunge Ltd, Cargill Inc and Louis Dreyfus Commodities BV as rising incomes drive up food demand in China.

10/11/2014: COFCO has signed an agreement with New Zealand Government-owned food safety firm AsureQuality and PricewaterhouseCoopers (PwC) to enhance the country’s food safety and quality.

Oct. 2015: COFCO announces plans to construct two warehouses (100,000 MT capacity each) in Russia’s Mikhailovsky priority development territory in southern Primorsky Krai.

22/12/2015: Embattled commodities trader Noble Group has reached an agreement to sell its 49% stake in Noble Agri to COFCO International for $750 million. With this move, COFCO will pose an even bigger challenge to ABCD (see 8/10/2014 above).

October 2016: COFCO signs an agreement with Australia’s Monash University. Under the deal, Monash University’s new Food Innovation Centre – and Australian food businesses – will now have access to the COFCO research arm’s resources, in-depth knowledge of Chinese consumers and regulatory expertise to fast-track supply opportunities for exporters. The university said the new centre would enable businesses to expand and target export markets, including China.

19/10/2016: Cofco Meat Holdings Ltd, a pork producer part-owned by KKR & Co, is seeking to raise as much as $333 million in a Hong Kong initial public offering.

8/11/2016: COFCO launches a power drink called Big Bang in cooperation with Refresco (Netherlands) to compete with Red Bull and similar beverages.

18/2/2017: New Zealand’s AgResearch has signed a collaboration arrangement in Beijing with the Nutrition and Health Research Institute of COFCO and with the College of Food Science and Nutritional Engineering of China Agriculture University (CAU). They would explore opportunities to work together formally in the name of a “joint international research center for food science to promote international exchange, research and productivity, with a particular focus on further enhancing a China-New Zealand relationship.”

May 2017: Loch Lomond Group, based in Alexandria in Scotland, has entered into a partnership with COFCO for the distribution in China of their whiskies, including Loch Lomond, Glen Scotia and Littlemill.According to the Scotch Whisky Association, the value of exports to China increased 0.5% to 41 million pounds in 2016.

June 2017: DGB Pty Ltd, South Africa’s largest independent wine, spirits and craft beer producer, announces an exclusive distribution agreement with COFCO. COFCO will, in the initial phase, exclusively import DGB brands Boschendal and Tall Horse, with the expectation to later expand the portfolio with other brands from the DGB wine stable.

15/8/2017: COFCO partners with the Illinois-based farm cooperative Growmark Inc. they will jointly own and operate a truck, rail and barge terminal in Cahokia, Illinois, on the Mississippi River, the main pipeline that supplies exporters along the US Gulf Coast with corn and soybeans. The facility can receive about 180,000 bushels (4572.24 mt) of corn per hour, delivered by truck and rail, and can load two river barges simultaneously at a rate of about 60,000 bushels per hour.

Feb. 2018: Cofco International Ltd., the trading arm of China’s largest food company, is building a soft commodities hub in Dubai. About 10 employees will trade sugar, coffee and cotton.

Summer 2018: Cofco launches an energy drink of its own, jointly developed with Refresco (The Netherlands), marketed under the Big Bang brand.

July 2019: COFCO International, the Geneva-based global trading arm of COFCO has signed a $2.1-billion credit a sustainability-linked loan for a commodity trader.

July 2020: COFCO International releases plans to achieve full traceability of its direct soy suppliers in Brazil by 2023.

Nestlés activities in China since the publication of this blog:

8/5/2014: Nestlé announces intent to invest in coffee growing in Pu’er (Yunnan).

9/5/2014: fertiliser producer China Green Agriculture has entered a cooperation agreement with Nestlé (China) Co., Ltd. to jointly develop a direct sales program, as a mutual effort to supply the Company’s fertilizer products to coffee bean farmers in China.

16/6/2014: The University of Wisconsin-Madison, US, will develop the curriculum for a $400m Nestlé dairy training center in China.

17/6/2014: Nestlé has officially inaugurated its latest Chinese research and development facility in Dongguan (Guangdong). The R&D facility will support its partnership with Hsu Fu Chi and focus on research in confectionery and ice cream.

15/10/2014: Nestle opens China Dairy Farming Institute; Nestlé has inaugurated a “dairy farming institute” in Shuangcheng ( near Harbin, Heilongjiang) as part of ongoing efforts to foster the development of sustainable dairy production in the market in order to secure the supply of raw milk. The project involves an investment of CHF30 mln and is one of its biggest dairy investments in China. GEA Group will contribute its expertise to this institute. From February 2015 onwards, some 17 different courses about milking will be taught with direct involvement of the GEA Farm Technologies Academy.

20/11/2014: Nestlé Research Centre Beijing organizes a joint symposium with The 25th Great Wall International Congress of Cardiology (GW-ICC). The symposium focuses on nutritional approaches for cardiovascular and metabolic health.

8/5/2015: Nestlé China helps building a school in the earthquake stricken region of Sichuan. The company deftly combined the opening of the school with the “Food Safety Week into Campus” launched by the State Food and Drug Administration.

18/5/2015: Chinese Nutrition Society’s “12th National Nutritional Science Conference” was recently held in Beijing May 2015. Nestlé organized a “Start Healthy Stay Healthy” forum during the conference, inviting leading experts to deliver keynote speeches revolving around the latest developments in maternal and child nutrition research.

4/8/2015: Nestlé has invested RMB 50 mln in improving the cold storage facility of its ice cream plant in Guangzhou. The new installation is more environment friendly and will facilitate Nestlé serving the regional market better.

8/6/2016: Nestlé and Alibaba have launched a digital commerce and marketing campaign. It will feature 154 products from 30 brands, 67 of which will be introduced to Chinese consumers for the first time.

12/9/2016: National Institute of Nutrition and Health and Nestlé Research Center partner as sponsors for a symposium on nutrition and eating behaviours in Chinese children and adolescents. For the first time in China, findings from the Kids Nutrition and Health Study (KNHS) were presented at a national symposium held on September 11, 2016 in Xian.

29/12/2017: Nestlé announces plans to sell its dairy factory in Hulunbuir (Inner Mongolia), as part of the company’s efforts to reduce its local output of raw milk powder.

16/5/2018: Nestlé announces a partnership with technology company Xiaomi to support health through technology and explore digital nutrition.

May 2018: Nestlé has finalised the move of its industrial milk powder production from Hulunbuir in Inner Mongolia to Saishang Dairy in Ningxia.

Nov. 2018: Nestlé announces the first product developed by its incubator team in China which had been launched earlier in the year. Xingshan is a new brand of ready-to-drink herbal drinks and soups made with traditional Chinese ingredients, for busy urban professionals.

22/3/2019: Nestlé China unveils a new Research & Development center in Beijing and a system technology hub in Shenzhen to accelerate its trend-based innovation in China.

Nov. 2019: Nestlé inaugurated its first Gerber NutriPuffs cereal snacks plant in Shuangcheng (Heilongjiang), with an investment of around RMB 100 mln.

April 2020: Nestlé is exploring options for the potential divestment of Yinlu Food.

May 20,2020: Nestlé announces it will invest more than 100 mln Swiss Francs in the Tianjin Economic-Technological Development Area (TEDA). This includes a significant capacity expansion of Nestlé’s existing pet food plant. The investment will also see Nestlé’s first production facility in Asia for plant-based products. In addition, there will be an upgrade of the production of Nestlé Chengzhen Wafer and Nestlé will further develop its Tianjin Nestlé Quality Assurance Centre.

Aug. 2020: Nestlé announces that it will invest in Tiantu Capital, a Chinese venture capitalist specialised in the food industry. A salient detail is that one of Tiantu’s latest investments is in Saturnbird Coffee, a Chinese innovator in the instant coffee sector.

Sept. 2020: Nestlé China has announced that it intends to invest CHF 53 mln in sustainable agriculture and production in Heilongjiang with an initial focus on organic grains.

Dec. 2020:Nestlé has made its official plant-based food debut in China with the launch of Harvest Gourmet, its nutritious plant-based food brand.

Dec. 2020: Nestlé has launched a milk product for adults (50+) in China, consisting of ingredients to support bone health, muscle strength and joint functionality.

Other opinion

Interestingly, in a recent article, a Chinese insider is wondering whether Dali Group will become the ‘Chinese Nestlé’. We will hold that thought and see.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success.

Exploring Babao Porridge: Tradition Meets Convenience

Posted on November 25, 2013 by Peter Peverelli

Babao Porridge (Babaozhou, Babaofan), a sweet rice porridge stuffed with dates, lotus seeds and other fruits, is an extremely interesting example of a traditional product revived by industrial production. The concept of babao is used in more traditional foods, e.g. zongzi, filled steamed rice cubes wrapped in leaves, which are introduced in a separate post of this blog.

Present day Babao Porridge is derived from a southern type of porridge called Laba Porridge. La refers to the La month, the last month of the lunar calendar and ba (‘eight’) to the eighth day of that month. On the 8^th day of the lunar 12^th month people used to prepare a porridge using eight or more ingredients to celebrate the end of the year. Another story explains the custom as a Buddhist tradition.

Laba porridge was first cooked as a sacrifice for ancestors and gods during Laba Festival as a part of winter worship. In an agricultural society, the 12th month or layue (腊月) was a time when families consumed some of their stores from the harvest season. Cooking a porridge with rich and varied ingredients is a way to celebrate a prosperous harvest for the year, in hopes of a better one to follow.

Just like Christmas overtaking the ancient Roman holiday of Saturnalia, when Buddhism arrived in China, it stamped its own influence on this local tradition. For Buddhists, Laba Festival is also Buddha’s Enlightenment Day.

The legend says that Shakyamuni, after 6 years of seeking enlightenment by living frugally, once sat down under a tree, dead tired. A woman herding cows saw him and prepared a simple porridge for him using course cereals and wild fruits. Shakyamuni was so revived from eating a bowl of that porridge, that he immediately gained enlightenment. From that day on, Buddhist Temples prepared a similar type of porridge on the 8^th of each 12^th month.

With the increasing pace of life, modern Chinese are less and less willing to spend several hours a day in the kitchen. This includes less frequently prepared foods like Babao Porridge.

The basic production process is easy enough. The raw materials are mixed and cooked, cooled and then packed in cans, similar to those used to pack soft drinks. In this way, the porridge can be easily consumed as a convenient food, while travelling, as a snack during office work, etc. A plastic spoon is usually attached to the can, so the traveller does need to pack a metal spoon from the kitchen either.

Buddhist monestaries have to abide by the law as well, so more and more temples are producing laba porridge in a semi-industrialised clean way, to ensure that the faithful do not have to pay dearly for enjoying a bowl of laba porridge with food poisening. On the way, it earns the monestary a lot more income as well.

Formulation

The most essential aspect of the production of Babao Porridge is the combination of emulsifiers and thickeners. Babao Porridge consists of a viscous liquid part and solid parts. Manufacturers need to formulate the product in such a way, that the solid parts are more or less evenly distributed over the liquid part upon opening of the can.

A number of Chinese manufacturers of emulsifiers and thickeners supply products specially formulated for Babao Porridge. Some sources propagate CMC as the most appropriate thickener for this application.

A combination of CMC and a low calorie high intensity sweetener to replace the sugar will not only provide an authentic mouthfeel, but also decrease the caloric value.

Industrial recipes for so called ‘low calorie Babao Porridge,’ proposed by manufacturers of ingredients use sticky rice as the macro-ingredient, where part of the rice can be replaced with pumpkin. Various combinations of fruits (dates are most popular) and nuts (including peanuts) are added. Frequently suggested micro-ingredients and additives: pumpkin powder, xylitol, oligoxylose, CMC, konjac powder, and EDTA.

As a result of all the recent food safety problems, Chinese consumers have become more aware of ingredients and started asking if one food really needs so different ingredients. A recent article (24/9/2014) criticises the use of xanthan in one brand of Babao Porridge. Xanthan is known in the porridge industry under the nickname zhoubao, literally: ‘porridge treasure’. The reporter believes it is a means to hide the lack of skills of the manufacturer to produce a proper porridge.

Top brands

The following brands are recognised as China’s top brands for Babao porridge

Yinlu

The Yinlu Food Group was established in Xiamen (Fujian) in 1985 as producer of canned food and beverages. It is still one of China’s top producers of protein drinks. It now operates production units in Shandong, Hubei, Anhui and Sichuan. Nestlé has acquired a controlling stake in Yinlu, nut has announced that it intends to sell that stake again early 2020.

Wahaha

The Wahaha Group was established in Hangzhou (Zhejiang) in 1987 as a private company operated by a school, producing tonic for school children. The founder and CEO, Mr. Zong Qinghou, is currently one of China’s richest entrepreneurs. Wahaha has 150 subsidiaries in all regions of China, employing 30,000 people. It ranks among China’s top 500 companies in 2014 It is a relatively new player in this market, but has rapidly risen to this position. The range includes a babao porridge sweetened with xylitol. Wahaha has started a new campaign for its canned porridge range in January 2015, stressing that the company is being loyal to the Chinese tradition of porridge making. The following picture says that Wahaha’s Babao Porridge ‘tastes just like mother used to cook it’

Wahaha has launched another type of nutritious Babao Porridge mid 2018, under the Qingzhi brand.

Ingredients:

Koji, plant sterols, sugar, glutenous rice, barley kernels, red beans, maltitol, black rice, peanuts, red kidney beans, hulless barley, tremella, lecithin, sucrose ester, fatty acids, sodium tri-polyphosphate, acesulfame-k, EDTA-2Na, sucralose, water

Qinqi

Based in Guangzhou (Guangdong), Qinqi was the first in China to launch Babao porridge in cans, which created the market for ready to drink Babao porridge. Although no longer the number one brand, Qinqi still bears the honorary name ‘porridge king’.

Qinqin

This brand is owned by the Xinxin Food Group, established in Yangzhou (Jiangsu) in 1991, by a local factory and a Taiwan investor. It produces a range of convenience foods, including Babao porridge.

Tongfu

The name of the producer, Tongfu Bowl Porridge Co., Ltd., betrays that it is dedicated to producing exactly that: porridge in (plastic) bowls. Tongfu was the first to introduce this type of packaging in China. It is considerably lighter than the canned version. It is located in Wuhu (Anhui)

Corona was good for Babao porridge

Babao porridge sales went through the ceiling during the first quarter of 2020, when the entire Chinese nation went into quarantine at home. It turned out to be the ideal corona food, besides instant noodles and other packed fast foods.

More nutritious and high end

Babao porridge entered the high end sector in 2022, when Huangxiaozhu launched its series of zero sugar low fat nutritious babao porridge. Flavours included coconut-water chestnut and and black sesame – taro. The packaging was also inspired by the ongoing nationalist trend (guochao).

What on earth are . . . mantou?

Posted on November 19, 2013 by Peter Peverelli

In plain English, mantou is steamed bread.

Chinese steamed bread is a fermented wheat flour product that is cooked by steaming. It is big business. Insiders claim that steamed bread is good for approximately 60% of the total flour consumption in Northern China and 20% – 30% in Southern China.

Mantou can be eaten alongside dishes, or dipped in various sauces (like furu, a type of fermented bean curd). Stale mantou are often fried, as a whole or in slices.

The preparation process is similar to that of western-style bread, but the final product is steamed, not baked in an oven, so there are some differences in appearance and shape. Steamed bread is white and has a soft, shiny surface. The common types of steamed bread weight about 30 – 120 gr.

You can find a video about mantou making here.

The following table shows a typical formulation of Northern and Southern steamed bread (unit: %).

This basic recipe can be varied by adding a number of ingredients: soy flour, milk powder, colorants, etc.

A major trend is the beginning of industrial production of steamed bread. Until recently, steamed bread was made exclusively at home. With increase of the pace of life in urban China, Chinese city dwellers spend less and less time in the kitchen and cumbersome processes like preparing steamed bread are the first to be ‘outsourced’ to professionals, like local cooking shops or workshop like factories that sell their products to street vendors and local shops.

There are even machines that can produce mantou in a continuous process.

Here is a video showing the industrial production of mantou.

Formulation

A tough technical and logistic problem for companies in developing steamed bread production on a national scale is that it is difficult to keep fresh during long storage and transportation. Major steamed bread producers have appeared in many Chinese cities during recent years (e.g. Sanshui Food in Beijing, Zhengrong in Zhengzhou (Henan) and Ganqishi in Hangzhou (Zhejiang)), but these mainly supply outlets in their own home region.

Here is a picture of the ingredients and nutrition information of Sinian’s ‘milk flavoured mantou‘

A logistic problem for companies in developing steamed bread production on a national scale is that it is difficult to keep fresh during long storage and transportation. Major steamed bread producers have appeared in many Chinese cities during recent years, but these mainly supply outlets in their own home region.

Healthy food

Some Chinese nutrition professionals are promoting mantou as a health snack food, because it is low in salt, sugar and fat. They definitely have a point, as long as you eat them fresh. Due to their high water content, mantou are an attractive medium for the aspergillus flavus mold that produces the carcinogen aflatoxin.

Special improvers

Industrial production of mantou is still in its infancy, but the R&D in this topic has already led to the appearance of specially formulated steamed bread improvers. As these improvers include enzymes, this is one of core trends to be monitored by suppliers of enzymes. Enzymes used in various commercial products (also see my blog on dumplings) are: a-amylase, hemicellulase (xylanase), lipase and glucose-oxidase for improving the dough handling properties and a larger volume yield. A Chinese food technology site provides the following recipe for a specially formulated flour improver for mantou:

Ingredient	parts
Calcium stearoyl lactate	30-50
Monoglyceride	10-20
Vitamin C	6-10
Fungal alpha-amylase	0.6-1.2
Xylanase	2-3
Alkaline buffer	12.5-18.75

Regional varieties

Huifang Food (Hebei) has recently launched an industrially produced local type of mantou called qiangmian mantou. The production process adds additional flour to the dough, which gives the end-product an extra shiny finish. This development indicates that the industrial production of steamed bread in China has entered a new stage.

In Jilin, an importer of Russian flour is promoting it as the best raw material for the production of mantou. According to that supplier, Russian wheat has a longer growing period, the soil is of higher quality and the flour is better processed. I have not yet been able to verify this myself.

Mantou are especially popular in Qingdao (Shandong). Wanggezhuang Street in that city is lined with mantou sellers. One of these even won a gold award at an international culinary competition in Paris in July 2016.

Mantou for dessert

Chinese cuisine does not really have desserts, but serving a sweet dish at the end of a meal is getting more and more popular in China.A special type of mantou is eaten as such a dessert. They are deep fried and served with a dip of sweetened condensed milk. This dish has been invented in Guangdong with obvious Western influences (compare my blog about traditional Chinese dairy products).

Potato mantou – a revolution in Chinese staple food

The China Academy for Agricultural Sciences and Haileda Food (Beijing) have jointly developed a type mantou that consists for 30% of potato. The product was launched on June 1, 2015. This is yet another step in the process of changing the potato into a major staple of Chinese cuisine (see my post on potatoes). The researchers have announced that they reached the next step in this R&D project, increasing the percentage of potato to 55% on June 8, 2016. Other potato products will also be developed, like: noodles, or bread.

Focus company: Maixiangyuan

Maixiangyuan Food Co., Ltd. In Shandong is an interesting company in the industrial production of mantou. It can produce 38 types of mantou and has a production capacity of 25 mt per day. When the company was founded in 2009, it mainly hired people who had lost their job in obsolescent industries, thus giving them an income again. Maixiangyuan is the only industrial manufacturer of mantou that does not use any chemical additives. Its mantou are produced using an in-house developed process based on the traditional recipe. It has 12 machines for producing mantou and bread and 15 food trucks to sell their products directly to consumers. Besides mantou and bread, Maixiangyuan also produces baozi (stuffed steamed buns) and zongzi. The company operates 6 shops of its own and sells through another 600 retailers in surrounding cities and Ji’an, Shandong’s capital. It is China’s only mantou manufacturer with a green certification, and the first to get listed on the stock exchange in 2015. Maixiangyuan has also invested in wheat growing and other related activities, with the aim to control the entire value chain.

Mantou shares

Zhongyin Beverages (Henan) has been operating a mantou and baozi chain for a number of years. They are especially popular in Shanghai. Zhongyin’s turnover was RMB 990 mln in 2018 and rumour has it that a considerable part of it is derived from steam buns, with our without stuffing. The company announced that it intended to get listed in 2019.

Filled mantou

Once mantou entered the ranks of manufactured food, the door opened to designing new types of mantou, in particular those filled with all kinds of stuff. Chinese like that and most bread sold in Chinese convenience stores has some kind of filling. This picture shows a product of Yima Gongfang, filled with several types of staple food like sweet potato. In fact, the product contains more such staples, while the mantou part has been reduced to a skin holding all fillings together.

What on earth is . . . jiang?

Posted on November 15, 2013 by Peter Peverelli

Jiang is one of the most basic types of traditional Chinese condiments; yet it is not very well known outside East Asia.

Jiang was probably the predecessor of soy sauce, which is called jiangyou (jiang oil) in Chinese. While soy sauce is liquid, jiang is a paste.

The production process of jiang also resembles that of soy sauce. The main ingredients are soybeans and a starch source: rice, wheat, etc. The starch source is hydrolyzed with a mould, resulting in a very basic type of koji (qu) that is also used for the production of traditional Chinese liquors (baijiu) or the Japanese sake.

Soybeans are soaked and boiled, after which the koji and the boiled soybeans are mixed with salt and water added. That mixture is fermented until a black salty paste is formed.

There are many types of jiang. Some are sweet, while others are fragrant because of the formation of alcohols (produced by added yeast).

Various spices can be added as well. A very famous type is the spicy doubanjiang of Pixian in Sichuan. The sweet jiang used with Peking Duck is made of wheat flour, without using soybeans.

Jiang is presently undergoing a process of modernization. Each type of jiang has its typical flavour (unique mix of the Five Flavours), smell, consistency, colour, etc. Additives are needed to guarantee a mass produced product of consistent quality. Moreover, the time and distance between production and consumption of jiang is also longer and farther than before. This calls for sufficient preservation methods.

Industrial production of jiang is an interesting new market for enzymes. The first enzymatic processes used a single enzyme: a-amylase. Some of the companies produced the enzymes in-house. Later multi-enzyme processes were adopted as well, using a mix of a- and b-amylases and neutral protease.

The following video introduces the industrial production of jiang. It is in Chinese, but food technologists will be able to get the gist.

A major trend is the development of special jiangs for specific dishes. Now you can buy ready to use Peking Duck jiang, dandan noodles jiang (a typical Sichuan type of spicy noodles), huiguo pork jiang (a spicy dish, again from Sichuan), jiang for cooking fish, etc.

You can stir fry some pickled vegetables, add a spoon of dandan noodles jiang, poor it over a bowl of cooked noodles and eat your dandan noodles.

With the proper packaging and marketing campaign introducing these modern jiangs to the Western consumer, these products could mean lucrative business for an astute entrepreneur.

Understanding China’s Infant Formula Market Dynamics

Posted on November 10, 2013 by Peter Peverelli

If you want to understand the basics of how the Chinese government creates a level playing field in business, in particular in relation with foreign products, study this post.

Developments in this business have been literally dramatic, and it is directly related to the most precious item of the majority of adult Chinese: their, until recently, only child.

Melamine

A synopsis of what had happened from 2008 up to the present day.

In the year of the first Chinese Olympics it was discovered that several brands of domestic infant formulae contained melamine, a compound that make the protein content of milk appear higher in the standard tests as conducted by dairy companies. It caused about 300,000 babies to get seriously ill, with a small number of deaths.

As a result, the market share of the domestic brands dropped even lower that it already was at that time. However, a number of smaller brands deftly used this situation to gain market share, as is clarified in the following video

Hubris

Foreign brands believed that a Golden Age had come, in which they could virtually set the market price of formulae in China. European and American brands increased their prices almost every couple of months, without naming a valid reason.

Chinese consumers were so eager to get their hands on foreign products, that Chinese on foreign trips were asked by the relatives to buy up any formulae they could get their hands on, as products there were much cheaper than in Chinese supermarkets. In countries like the UK or The Netherlands, quotas were issued for the number of packagings single customers could buy at one time.

Then the gods punished the foreign suppliers for their hubris. Fonterra came with the news that its whey powder could have been contaminated. That shocked China.

Leveling the playing field

The Chinese authorities grabbed the momentum of the falling consumer confidence in foreign formulae to start a media campaign trying to restore the reputation of domestic product.

To support this, they launched an investigation into monopolistic activities by foreign suppliers of infant formulae. A good example is the accusation against Danone that it had bribed hospital staff to feed babies first with their Dumex formula, to get them hooked on that brand. Most foreign suppliers were found guilty, and those who have not fully cooperated with the investigation, were heavily penalised.

However, a survey among young parents conducted at that time noted that the latter were still more confident in foreign formulae.

Who the were the guilty parties in all that commotion? I believe all of them.

The domestic suppliers have forfeited their favourite position with relatively low cost to produce good generic infant formulae. Instead, many of them, including the then market leader Sanlu, were attracted by the short-term opportunity of increasing their income by adding ‘protein power’ (read: melamine) to their milk. The larger Chinese producers usually control the entire value chain, from cow to formula. This means that the melamine was added right under their noses and it is hard to believe that they were not aware.

The foreigners have been too greedy. The constant price hikes increased the financial burden for young parents. Without those unreasonable price increases, the authorities would probably have left their high market shares untouched.

The international media have been biased towards the domestic companies. Chinese companies like Sanlu were heavily criticized in the Western press for trying to hide the first reports about health problems, not to spoil the national Olympic party. The same media were a lot milder towards a company like Fonterra, the then partner of Sanlu.

New system of accreditation

The Dairy Association of China (DAC) has begun to promulgate ‘state endorsed milk powder manufacturers’. Here, ‘milk powder’ mainly refers to infant formulae. Severa; have so far been stamped this way. Others are allowed to produce as well, but the state only guarantees the quality of the suppliers on its shortlist. It will surprise no one that China’s top dairy company Yili (see the item on China’s top brands of 2014) heads the list.

Foreign brands need to be registered and are not allowed to be active in China with more than 3 brands or 9 different products.

The best that can come out of this mess is that there now is finally an opportunity that the Chinese market for infant formulae becomes a level playing field in which domestic and foreign brands can compete fairly.

Inbound foreign investment- new style

Statistics seem to confirm that it works. Four of the five most popular infant forumula brands in China were foreign brands. This is happening in spite of recurrent media reports about batches of imported infant formulae being rejected by the Customs inspections.

A number of international players try circumvent those problems at the customs through setting up local production.

FrieslandCampina of the Netherlands entered into a joint venture with Huishan Dairy (Liaoning) to jointly produced infant formulae in October 2014. The joint venture will own Huishan’s facility in Xiushui (Liaoning). During the obligatory ceremony, the Dutch partner’s CEO said that he was ‘proud that FrieslandCampina will be part of the first joint venture between a Chinese and a foreign dairy company that will locally source, manufacture, market and distribute infant milk formula’. That statement called for correction, as a number of international investors have preceded FrieslandCampina, with varying results. A few years later, mid 2017 to be precise, the joint venture got into serious problems, when the Chinese partner Huishan was accused of fraud. FrieslandCampina opted to buy out their local partner early 2018 and now operate a wholly foreign owned company alongside their partner. This situation is far from ideal, as it renders FrieslandCampina’s local production in China extremely vulnerable.

Later that same month October 2014, Danone announced that it was to subscribe to a private placement by Yashili, one of China’s leading infant milk companies. Upon completion of the subscription, Mengniu, currently Yashili’s majority shareholder, will hold a 51.0% equity interest and Danone will hold 25.0%. Danone and Mengniu want to use this expanded alliance to grow Yashili and develop a wide range of products that meet the very highest standards in this category. Through their alliance, Danone, Mengniu and Yashili intend to expand and strengthen their cooperation in the infant milk formula business in China. The parties will study the possibility of a minority equity investment by Yashili in Danone’s subsidiary Dumex China.

Reaping success

Domestic brands have started recouping market share in 2018, fastening the pace in 2019. A leading player in this developed is newcomer Junlebao (Hebei). Founded in 1995, Junlebao used to make only yogurt. It added infant formula to its product line in 2014 to help revitalise the product’s domestic presence. In the following five years, the company established a whole industrial chain, including a planting pasture, a base for breeding cows and quality-control centre. By 2019, the company had 17 production plants and 10 breeding bases with more than 60,000 cows across China. To improve the quality of its milk sourcing, Junlebao has developed a high-standard cow breeding system, which consists of raising the animals in comfortable barns, feeding them with high-quality fodder and using high-tech machines to milk them. The market share of domestic formulae in China increased to more than 60% in 2018, thanks to Junlebao.

The following tables show the development of the value of the market and estimates for the years up to 2023 by various researchers.

Year	ValueRMB billion
2016	157.10
2017	187.30
2018	222.10
2019	257.86
2020	295.51

Outbound foreign investment – recent but rapid

A number of Chinese companies try to overcome the problems in the industry by acquiring foreign infant formula producers. Formulae imported from those plants then have a hybrid Chinese and foreign identity.

Bright Dairy & Food (Shanghai), China’s third-biggest dairy company by volume, has bought a majority stake in Canterbury milk processor Synlait Milk for $82 million in 2010. Synlait, which abandoned a planned $150 million share sale in 2009 due to a tepid response, is a joint owner of its processing company with Bright Dairy, while keeping and operating its farms through a separate company.

In 2014, Bright bought a majority stake in the Israeli manufacturer of infant formulae Tnuva.

September 2014, Guangdong real estate group Evergrande (which also owns the province’s main football team) acquired the New Zealand company Cowala Dairy.

Internet interaction analysis

An interesting development is that the China Statistical Information Service Centre (CSISC) has started analysing online consumer interaction about brands. CSISC published the following table showing consumer interaction about infant formulae in the 2nd quarter of 2014 today (19/9/2014).

The brand most discussed is Junlebao (also featuring in my blog on old yoghurt), followed by Dumex and Mead Johnson. The brands that the central government has been heavily supporting in the above described campaign, like Yili, ranks 7. Obviously, brands can also turn up high in this graph, because consumers may share negative experience with it. Still, CSISC analysts believe that this outcome shows that newcomer Junlebao’s low price strategy is reaping results. Junlebao received class A certification of EU’s BRC Food Safety Global Standards in September 2014. Junlebao’s milk powder would be qualified to enter CIES’ 200 supermarket groups in the world. I would like to add that it also proves the central authorities right: the Chinese market for infant formulae is a level playing field now. The international brands are still favourites, but local entrepreneurs have ample space to move, as long as the get their strategy right.

Top formulae of 2019

The following table shows the top 5 infant formula suppliers in China of 2019

Company	Market share(%)
Nestlé	14
Feihe	13
Danone	10
Abbott	7
Mead Johnson	6

More babies, bigger market . . or not?

The market for infant formulae has changed in China, when the government decided that couples who both were only children were aloud to have 2 children. Even though fewer eligible couples responded positively than expected during the first few years after the decision, this is now gradually leading to a small baby boom. That and the continuing growth of an affluent middle class, has boosted the sales of most players in this market. However, this does not mean that China will once more become the paradise of multinationals in this field. It is a genuine level playing field now, and a growing one, with opportunities for all companies that are willing to play by the rules.

However, in spite of the new policy, 15.23 mln babies were born in China in 2018, 2 mln fewer than in 2017. Therefore, insiders estimate that the consumption of infant formulae in 2019 will be approximately the same as in 2018, and will decrease with 2% in 2020.

Innovative products – a step up the ladder for the Chinese industry

Beingmate (Hangzhou, Zhejiang) has received official approval for the production of infant formulae for prematurely born babies and over-birthweight babies in August 2019. While these are not new types of formulae, Beingmate was the first in China to launch these specialist products. Fonterra is a major shareholder of Beingmate. After the repositioning of the regular Chinese infant formulae, this development could mark the beginning of the rise of the Chinese industry on the technological ladder.

The organic way

The sales of organic infant formulae increased significantly in the course of 2019. Buoyed by the rising demand, several multinational companies like Germany’s Hibb, Switzerland’s Nestlé and its unit Wyeth are not only witnessing resurgent sales. Hipp is looking to further expand its presence in the e-commerce market. The company witnessed annual growth of about 20% in China in 2019, making the country its second-largest market after Germany. Besides, Wyeth, the baby and infant formula unit of Nestlé, has introduced Illuma 3 organic products for Chinese parents since 2017. Its research released in October shows that the sales of organic infant and maternity products grew by 33% year-on-year in China, creating a generation of “organic mothers”. US infant formula maker Mead-Johnson introduced its grass-fed Enfagrow to Chinese consumers in September 2019.

If this article is of interest to you, you may also like:

China’s maternal and infant water market

What on earth are . . . dumplings?

Posted on November 6, 2013 by Peter Peverelli

What do Chinese eat, when they have something to celebrate: dumplings! Frozen dumplings are a major food product in China. More than 10,000 companies related to that industry were registered on 8/11/2023.

Dumplings are small round sheets of dough (flour + water) filled with minced meat + condiments + vegetables. After a piece of filling has been placed in the centre of the dough, the latter is folded into a shape that vaguely resembles a horn, in particular that of a cow. This shape is the origin of the Chinese name: jiaozi. Jiao is ‘horn’ in Chinese and jiaozi means something like ‘small horn.’ Later, the link between dumplings and horns eroded and as dumplings became an important part of Chinese cuisine (in particular in the Northern part of China), a special character was coined for this food.

Dumplings are an old food, as is shown by various archeological finds. According to an archaeologist from the Museum of Xinjiang Uygur autonomous region, the three dumplings unearthed in the region’s Turpan area were determined to have been made during the Wei, Jin, Southern and Northern Dynasties (220-589). Archaeologists also found two complete dumplings made during the Tang Dynasty (618-907) in Turpan. The dumplings were 5 cm long, 1.5 cm wide and resembled the new moon in shape. Further research revealed the dumpling wrappers were made from wheat flour and the stuffing was meat.

According to legend, during the Eastern Han Dynasty (AD 22 – 220), there lived a famous physician of Traditional Chinese Medicine, named Zhang Zhongjing, who introduced dumplings. Once, the “medical saint” was returning to his ancestral village after a long period of absence. During that winter, a febrile disease was turning into an epidemic. Many poor people were submitted to the cold weather because of the lack of warm clothes and sufficient food and suffered frostbite, mainly around their ears. Seeing their condition, Zhang was determined to help them rid of the frostbite. He cooked lamb, black peppers and a few medicinal herbs, shredded them and wrapped it in the scrape of dough skin. He shaped them like ears and boiled them. Everyone sick person was given two ‘ears’ along with a bowl of warm soup. After a few days, the frostbite was gone and the epidemic was under control. Since then, most people begin imitating Zhang’s recipe with additional ingredients like vegetables and other kinds of meat to celebrate Chinese New Year.

Already in traditional Chinese cuisine, some variation was applied in the preparation of dumplings. While pork was the main type of meat for the filling, beef and mutton were also used, combined with different vegetables. In Southern China seafood, especially shrimps, were used as filling as well. Vegetarian types of dumplings with, e.g., eggs, cucumber slices and glass noodles, etc. were known as Three Delicacies Dumplings.

Dumplings have developed into a Chinese type of fast food and special small restaurants only serving a wide variety of dumplings can be found on street corners of Beijing and other Northern cities.

Dumplings are THE Chinese festival food par excellence. Look at this video to learn more about the role of dumplings in the Chinese New Year celebration.

Industrial production

The dramatic change in life style of the past two decades has had a great impact on dumplings. While making dumplings (preparing the filling and the dough, folding the dumplings and, of course, eating them) used to be the number one family occupation during the weekends in the North, the quickening of the pace of life has decreased the interest in this time consuming preparation. It has not, however, tempered the love for dumplings of the Chinese. Towards the end of the 20^th Century, a number of food manufacturers started experimenting with the industrial production of quick frozen dumplings (one of these, Sanquan, already ranks among China’s top food brands), to cash in on the increasing pace of life of Chinese consumers. the current production is approximately 15 mln mt p.a., with 100 – 150 kt exported.

The latest news (October 2014) is that China’s top fruit juice producer, Huiyuan, is considering to invest in the production of quick frozen dumplings. This is a clear sign that dumplings are perceived as a lucrative business.

Apart from the quick frozen mass production, there are also machines that produce dumplings for use in restaurants and other types catering business.

This video shows part of the production of quick frozen dumplings at Sanquan.

Volatile market

The dumplings market consists of a several types of companies: manufacturers of dumplings, manufacturers of machines, manufacturers of ingredients, dumpling shops, catering businesses, etc. This market is very volatile. While new companies are registered each year, a number of companies disappears as well, due to bankruptcy, closing down by the owners and other causes. The following table shows the number of new companies and disappearances in the period 2019 – 2023; unit: number of companies.

Formulation

This development has created exciting new challenges for ingredients suppliers (see my blog on the Quick Frozen Tradition). First of all, do the manufacturers of frozen dumplings buy their own raw meat, vegetables, etc., or do they purchase minced meat and chopped vegetables. Especially for the meat, it seems more appropriate to have meat processing companies supply ready-to-use minced meat. Other ingredients used in the fillings include: flavours, taste enhancers, and dehydrated spices. The dough poses challenging opportunities for suppliers of enzymes. To mention one example: fungal α-amylase can lower the viscosity of the of the gelatinized starch, generating dextrin and a small quantity of glucose and maltose, which will make the dumplings softer and not stick to the teeth.

Here is a recipe for quick frozen dumpling skin that I picked up from a food technology site.

Ingredient	Volume (gr.)
High gluten flour	100
Modified potato starch	20
Wheat Gluten	6
Sodium hexametaphosphate	0.26
Sodium tripolyphosphate	0.14
sodium pyrophosphate	0.05
Sodium bicarbonate	0.2
CSL-SSL	0.3
Salt	1.5
Water	35
Guar gum	0.3
Shortening	4

Clean dumplings

Concepts like Clean Label have also reached China and started to get serious around 2022. However, the Chinese interpretation of ‘clean’ seems to be broader or lest strict than the Western. Here is an example of a quick frozen dumpling brand from Eurasia Consult’s database that is advertised as ‘zero additives’ site in China.

The product name is: black pig meat maize fried dumplings

Ingredients

black pig meat (>- 30%), wheat flour, maize kernels, water, carrots, starch, Chinese broccoli, brewed soy sauce (includes caramel colour), vegetable oil, crystal sugar, salt, MSG, white pepper

Special seasoning

The booming industrial production of dumplings and the resulting increased consumption has also triggered developments in related industries. A typical example is the appearance of ‘dumpling vinegar’. Dumplings are traditionally dipped in rice vinegar before consumption. China’s top vinegar brand Hengshun is now also available in a convenient table top packing. The label clearly indicates the motivation for this variety.

Innovation

Haibawang in Shantou (Guangdong) has launched innovative dumplings in September 2014 are ‘fish skin dumplings’. The wrapping of these dumplings contains 40% fish meat (probably in the form of fish paste). This makes them highly transparent. Highbawang has clearly stated that it intends to challenge the top producers of frozen dumplings like Sanquan with this novel product.

A month later, in October 2014, Sinian (Zhengzhou, Henan) has launched a new range of dumplings with well known Chinese dishes like Sichuan Pepper Beef or Lime Beef fillings. Until this launch, the fillings of dumplings, whether home made or produced commercially, consisted of minced meat and a type of vegetable as the main ingredients, with spices and seasoning as added to finish the flavor. Stuffing a complete dish in a dumpling is revolutionary.

The mackerel dumplings of Hongye Food (Shandong) received the status of ‘traditional Chinese delicacy’ in February, 2020.

CP (Zhengda) has launched a range of ready to eat dumplings early 2022, marketed as breakfast dumplings. The are packed in small one-person helpings, also gearing to the growing market for single households.

Dumplings for children

Children are a major market segment for the Chinese food and beverage industry. Although a second child is a possibility now, for parents who are themselves single children, most children in China are still the ‘little emperors’ of the household who are doted on by parents and grandparents. Producers of quick frozen dumplings have also developed dumplings for children. They are marketed as more nutritious than the regular product and the skins are often coloured (typically red or green) to appeal more to the young. Sanquan‘s ‘King Shrimp Dumplings’ ended first in a taste panel test organized before Children’s Day (June 1), 2017.

Vegetarian

Although minced meat is the typical main ingredient of the fillings of dumplings, vegetarian dumplings exist as well. For home cooking, they do not pose a particular problem. However, the transformation to industrial production of vegetarian dumplings has its particular problems, the most prominent being the dehydration of the filling. Jiajiamei Seasoning (Zhoukou, Henan) has developed a seasoning mix specially formulated for vegetarian dumplings to deal with that problem.

(Towards) organic

Another way of distinguishing yourself in the growing mass of industrial dumpling makers is going for high quality, getting rid of unnecessary additives, perhaps going for organic in the near future. Such a company is Chuange (Qingdao, Shandong). Founded in 2009, it produces a range of hand-made seafood dumplings. It markets its products as an industrial reproduction of traditional seafood dumplings eaten by the local fishermen. Its product range even includes sepia dumplings, marked by its distinct colour, not unlike the sepia noodles from Italy, or sepia paella from Spain.

Spin-off products

Dumplings are such a popular food, that it has lead to the development of various products related to the making or eating dumplings. E.g., many producers of vinegar or soy sauce have developed special products for dipping dumplings. Some chefs have started making dumplings using other cereals, like the oat dumplings of the restaurant chain Xibei Youmian.

Eurasia Consult’s database of the Chinese food industry includes 10 producers of dumplings., industrial recipes, and more.

Rise of Instant Noodles: Resurgence in Chinese Cuisine

Posted on November 1, 2013 by Peter Peverelli

The total turnover of instant noodles in China in the first half of 2026 was RMB 13.733 billion; up 2.0%.

Instant noodles: winners in corona time

In the present times, when governments, companies and people around the globe are bearish about the economy, employment and even the timely supply of food, there are also winners. One big winner in China is the instant noodle. After this special corona vignette, you can read the regular post, which starts with the information that the Chinese instant noodle consumption has started rising again with a few percent annually, after a period of decline. That decline followed a much longer period of spectacular growth. Chinese consumers seem literally fed up with instant noodles and were eagerly looking for a larger variety of instant foods. The manufacturers fought back bravely, launching new types of instant noodles with a broader spectrum of flavours and more and fresher ingredients. Read the details below.

Then came the corona virus, changing the ways Chinese bought and consumed food. This gave an enormous boost to instant noodles. Check out the increase of the sales figures of the first 2 months of 2020 of the top producers, compared to the sales in the same period of 2019.

Company	Increase (%)
Uni-President	297.14
Jinmailang	180.00
Chef Kong	150.54

China has produced 2,246,998.4 mt of instant noodles in the first 5 months of 2020; Henan was the largest region good for 19.54%.

The industry is eagerly taking this opportunity up and is now advertising its modernized types of noodles. I am selecting a few of the most representative aspects.

Great taste

Imperial quality

Broad range of flavours

The regular blog text

One of the most intriguing headlines I read in the Chinese food industry media when I started this blog is in the shape of a question: ‘have instant noodles past their peak?‘ The national output of instant noodles in 2014 was 10,256,640 mt, down 1.55% compared to 2013. Total sales of instant noodles in 2015 decreased with 6.3% and the turnover with 2.6%. The market saw an increase of 0.9% in 2016, positive for the first time since several years. The volume of 2017 increased with an additional 2.8%, but plummeted again in 2018. The value of the market was worth RMB 143.546 billion in the first half of 2019; up 7.75% again. The leading companies filed increasing turnovers for again for 2018 (see below). The market is extremely volatile, but there is a trend towards sanitation, in which the top players grow, while smaller companies disappear.

According to a survey conducted mid 2017, the largest market segment are consumer of the age group 23 – 28, followed by the section 29 – 35. In both groups, women consume significantly more than men.

The following table shows the development of the Chinese instant noodle output from 2010 thru 2018.

Year	volume (mt)
2010	6,881,100
2011	8,275,900
2012	9,467,400
2013	10,307,600
2014	10,256,640
2015	10,178,000
2016	11,039,000
2017	11,032,000
2018	6,695,000

China has produced 5.13 mln mt of instant noodles in 2021; down 6.8%.

The market has been dominated by 4 main players for many years. The following tables shows their market shares from 2005 to 2017. An interesting detail is that the first 2 are Taiwan-based.

Whether instant noodles are on retreat is indeed a bold question. If there is one Chinese food product that has seemingly conquered the world in the sense that it is known and available in supermarkets on all continents it is instant noodles.

Yes, soy sauce was know in most Western countries long before the first pack of instant noodles appeared on the shelves of our supermarkets and yes, instant noodles are probably a Japanese invention. However, it was that huge neighbour of Japan that posed the single largest market for this convenience food and it was through the Chinese diaspora that it ended up in supermarkets in regions like Europe, North America, or Australia. The products on offer in Western shops are not only imported from Asia, but also partly produced by Western companies like Unilever’s Unox brand.

One theory says that the rise of instant noodles was partly caused by the mass movement of surplus rural labour to the Chinese cities. Instant noodles became the favourite food of the migrant workers. It was cheap, tasty and easy to prepare. Migrants have now accumulated enough wealth to move on to more healthy foods, causing a drop in instant noodle sales.

Another surprising factor influencing the decrease of instant noodle consumption in China is booming development of the high speed rail network. In a special post on train food in China, I have reported that railroad stations are important points of sales for instant noodles. However, with the shortening of the time between any two cities, the demand for instant noodles decreases proportionally. This comes on top of the rise in living standard, which makes Chinese rail travellers buy more fancy lunch boxes, on the expense of cheaper instant foods.

Market not endless

The market for instant noodles in China seemed to be growing endlessly. From a convenience snack it has become a regular meal for many white-collar workers. The growing spending power in the Chinese created an ever-larger number of new adaptors for this food. The following video gives an impression about the an instant noodles production line.

What we could notice during the past few years was that the manufacturers of instant noodles had to go into ever-larger lengths to create new flavours and textures, new additions like dried pieces of meat that could be rehydrated like the dried vegetables that were a more traditional ingredient of instant noodles. With hindsight, this can be regarded as a sign that the consumers were getting a little bored and needed to be stimulated again.

Against the background of the many food scandals of recent years, Chinese consumers have grown more conscious of food safety and healthy food in general. While instant noodles are not unhealthy, it is surely not healthy food. Major players are noticing that the need to rid their product of the ‘junk food’ image.

All top manufacturers have already switched from fried to boiled instant noodles, reducing the fat content, which also decreases the need for antioxidants.

Another recent trend is that several producers of instant noodles, even market leader Master Kong, have started diversifying, adding soft drinks or other foods (like biscuits) and beverages to their product range. Their strategists may have read the signs on the wall.

Master Kong, a brand of Taiwan-based Tingyi, is the absolute leader in this market. In 2013, the company operated 23% of all instant noodle production lines in China, was good for 46.6% of the national turnover of the industry and produced 34.5% of the national volume. Moreover, Master Kong was the fastest selling Chinese brand in 2013, for the second time in row. 91.4% of the respondents in the survey had been in contact with the brand. That even this company has stopped placing all its eggs in the instant noodle basket is telling. Tingyi is reporting a serious drop in net profit in 2014. The net profit of the 3rd quarter of 2014 was 13.85% lower than in the same period of 2013.

Tingyi, the owner of the Master Kong brand makes half the instant noodles eaten annually in China, yet revenue is stagnating as middle-class consumers abandon the salty, fatty cups for healthier options. Tingyi is on a mission to reinvent the humble noodle, pouring millions of dollars into customer education, food science, Olympic Games sponsorships and “Kung Fu Panda” movie shorts to convince diners the cheap meal can be part of their gastronomic aspirations. “We want to continue to grow up, and ‘premium up,’ with our Chinese consumers,” Richard Chen, Tingyi’s chief technology officer, said at the company’s Shanghai research centre. “In a couple of years, we will be able to reach the gold standard, which is when you can’t tell our noodles apart from what you would get in a noodle shop.”

The latest innovative move of Master Kong to keep its leading position is launching two sister varieties based on Western flavours: black and white pepper steak.

Innovators at Tingyi once focused on practical advancements such as foldable forks and double-layer packaging so working-class Chinese could wolf down noodles on their commutes. Now, they work out of an RMB 500 mln research complex in Shanghai, with Tingyi tapping the nation’s top food-science university programs and partnering with Japanese companies such as Itochu Corp. to develop chemical-free flavorings and palm oil-free noodles. Master Kong’s turnover of 2018 was RMB 60.686 billion; up 2.94%. Its turnover for instant noodles was RMB 23.917 billion; up 5.73%.

Master Kong launched a range of power bars, marketed as breakfast replacers early 2020.

The company also divested into various beverages. Master Kong’s turnover in the first half of 2020 was RMB 32.934 billion; but only RMB 14.910 was derived from instant noodles.

Master Kong’s main competitor is another Taiwanese company: Uni-President. While Master Kong is still the leader, it is struggling with decreasing sales (-1.51% in the first half of 2014), while Uni-President is still showing, low, increasing sales (1.3%).

There could be some truth in the predictions of the author of the above-mentioned article. We need to wait and see how this market develops. For the time being it remains huge. UniPresidents’s turnover in China of 2018 was RMB 21.772 billion; up 4.6%. Its turnover for instant noodles was RMB 8.425 billion; up 5.7%.

Master Kong launched yet another new range of instant noodles in the summer of 2016; this time with a broader spectrum of dried vegetables and meats. These ‘healthier’ noodles are advertised using a famous actor.

We can also see an increase in regional variation in these production and sales statistics. The biggest decrease in output during the first half of 2014 was in Sichuan (-46.75%), and the largest increase in Guangxi (27.38). These figures are much higher than the slight decrease in the national output, so perhaps we are witnessing a regional shift in production, that is temporarily creating a downturn on the national level.

Chinese food scientists have also taken up the idea to enhance the nutritional image of instant noodles. One group is picking up the Chinese government’s idea to make potatoes the nation’s fourth staple foods and is developing a recipe and production process for instant noodles in which part of the wheat is replaced by potato. See my blog on potato processing for more details.

Baixiang Food Group (Zhengzhou, Henan) is developing more tasty products with better raw materials and production techniques. The company uses a special technique to freeze-dry noodles at -30 C to lock the nutrients in fresh noodles. When cooking, the noodles will be able to restore the original taste and texture after boiling. The company is increasing its investment in research and development by building more advanced labs, upgrading facilities, and attracting more talents. Baixiang has also established research institutes in South Korea and Japan.

Success by concentrating on a single segment

In 2024/25, Jinmailang reaped an enormous success, becoming the top selling branch in February 2025. This success was accomplished by the company’s new range of instant products specially designed for students. This included even the brand name: Xiaohui Banmian, ‘School Badge Noodles’.

A brand with a story: Nanjiecun

Wang Hongbin from Nanjie, a village in Henan province, was among the first in his village to travel overseas. In 1988, Wang, then in his 30s, had a chance to visit Japan, where he had his very first taste of instant noodles. A year after his return, a company in the nearby city of Pingdingshan bought two production lines for instant noodles, but their efforts to popularize the convenience food failed. Wang and some friends from Nanjie took over the factory and founded Nanjiecun Co. Targeting people in rural areas and students, the noodles were priced at RMB 0.5 per packet: cheap, but not very cheap in a country where many rural people still earned less than RMB 3 a day. Nevertheless, soon everyone was talking about Nanjie noodles. Nanjiecun’s star rose and the village was soon one of the wealthiest in the country. A full industrial cluster grew up around instant noodles, including print shops and seasoning and packaging factories. Production lines increased from two to 36. Annual capacity now can reach 120,000 packets per line. In 2017, the company sold noodles worth RMB 600 mln. About RMB 80 mln of that came from online sales. Nanjiecun has set up an R&D centre to develop new flavours. As the following picture shows, Nanjiecun is hooking on to the current craze for spicy food. Moreover, for those who can read Chinese: note that this flavour is linked to Beijing. The history of Yanjing Beer elsewhere in this blog shows that linking your product to the nation’s capital can be a winning strategy.

Food delivery offers more variety

The rise of food delivery has also played a role in the declining fortunes of the instant noodle industry. Food delivery gives consumers access to quick meals of more diversified tastes. Users of food delivery services reached 295 mln by the end of June 2017, a 41.6% increase from the end of 2016, according to the China Internet Network Information Center. Food delivery services have even reached high-speed trains (see the previous paragraphs). In mid-July 2017, 27 major railway stations across China launched a pilot on-demand food delivery service for high-speed trains passing through the stations.

Nissin severs ties with Jinmailang

Nissin has sold its interest in three joint-venture operations for RMB 450 mln to partner Jinmailang late 2015. Nissin said that in the future, the company would focus on expanding its business in China through local subsidiaries, without elaborating on exactly why the agreement had been ended. Insiders note that there is a growing preference for foreign brands of instant noodles, particularly in the larger cities such as Beijing and Shanghai, which bodes well for Nissin.

Africa the new frontier?

However, wouldn’t it be an interesting thought that some time in the near future, the consumption of instant noodles in the Western countries could be higher than in China?

Or will the Asian manufacturers succeed in reviving this product with more, and in particular healthier, formulations?

Anyway, I just (Aug. 27, 2014) read an interesting news item on a Chinese food industry site, with an even more intriguing title than the one this blog starts with: ‘Chinese instant noodles are attacking Coca Cola in Africa‘. It starts by reporting that a cup of instant noodles (see the above illustration) is already replacing the traditional corn porridge Kenkey as the typical breakfast in urban Ghana. The reporter then conjectures that Chinese instant noodles are pushing Coca Cola from its position as the leading foreign food and beverage product in that country. Food for thought indeed.

Export to . . . Chinese tourists

A report released jointly on Sept 28 by Alibaba’s Alitrip and Internet finance platform Wacai showed once and for all that Chinese tourists have a true, unswerving love for instant noodles. The report noted that up to 31.29% of Chinese tourists have packed instant noodles in their luggage when going abroad, and 58.24% have bought instant noodles after reaching their outbound destinations. The report shows that 66.14% of tourists born in 1970s pack instant noodles in their luggage, whereas the number is reduced to 53.82% for those born in the 1980s, and 50.96% for babies of the 1990s.

Still a newcomer

Early September 2014, Taiwan-based Wantwant Group suddenly announced that it intends to enter the instant noodle market. Wantwant is a major producer of candy, flavoured dairy beverages, snacks and other leisure food, but so far completely unfamiliar with instant noodles. The only link I can see so far is that the above mentioned top players also originate from Taiwan. Master Kong and Uni-president have not yet reacted to Wantwant’s announcement.

High end experiments

Uni-president attempted to open up a new market segment for its instant noodles by launching a line priced at RMB 30 per cup early 2016. The experiment failed utterly, and the products were recalled within a month after launch.

Flavour maker Haoji (Sichuan) has relaunched its non-fried instant noodles in November 2016. This instant noodle product — branded 99 Love, or phonetically “long-lasting love” in Chinese — is marketed as a healthy product that is made primarily from wheat, corn, buckwheat and potato sourced from high-altitude unpolluted areas; it is steamed, as opposed to fried, during the manufacturing process. An earlier launch failed, because Chinese consumers were apparently not ready for such an innovative product.

Instant relief

However, instant noodles have will remain to be the absolute favourite for one application: quick relief in times of disasters. When parts of China are shut off from the rest of the country due to floods or earthquakes, it is always possible to get a supply of light-weight instant noodles to the disaster area to prevent people from starving.

Instant noodles will remain an important pillar in the Chinese food industry, but it is a mature market and the main players will be fighting fiercely for a few percent for some time to come.

Instant noodle restaurants – are you serious?

Chinese are masters in turning anything around and market it as something completely new. One entrepreneur has played this trick on instant noodles and opened a restaurant annex convenience store chain named Nonoodle (bufangbianmian in Chinese). You can purchase a wide range of instant noodles there and a few other snacks and drinks, but you can also eat your instant noodles in the dining space. The English name Nonoodle is not a literal translation. In Chinese, instant noodles are called fangbianmian, ‘convenient noodles’. So, bufangbianmian literally means ‘inconvenient noodles’. The entrepreneur is suggesting that cooking water, soaking the noodles with the condiments in water, and wait until the noodles are more or less ready to eat is actually not that convenient. Why not let a ‘cook’ prepare the noodles of your choice for you. After the meal, you just go away, home or to another destination. The trick works, as long lines of young consumers can be seen at Nonoodles any time of the day. Amazing.

Corona virus facilitating the revival of instant noodles

When almost all urban Chinese were locked up inside their homes for a few weeks early 2020, it actually was a major boost for instant noodles. It is light, so easy to take home in large quantities. It is tasty and, in combination with some vegetables, chunks of meat, an egg, etc., can be a quite nutritious easy to prepare meal. However, the inventive Chinese invented a broad variety of dishes with instant noodles as the main ingredient. The following picture shows one example of such a novel dishe.

During and after COVID, noodle chains (not only instant) became a serious target for big investors. Once focused on high tech companies, venture-capital funds are pouring money into new noodle chain brands. Even tech giants like Tencent, the mother company of WeChat as well as an active investor, are doubling their bets on the sector. Chinese-style noodle chain restaurants first became tech investor darlings in 2021 when the industry faced tightened regulation while the country’s consumers became increasingly willing to spend more on quality products and experiences. There were twelve noodle chain investment deals in the first half of that year, with a combined total of RMB 1 billion injected into the emerging area.

Eurasia Consult’s database includes 342 producers of instant noodles.

Uniting Cultures: The Role of Food in International Relations

Posted on October 30, 2013 by Peter Peverelli

If food is such a great means to create cross-cultural cohesion, perhaps the UN should pay more attention to finding ways to solve international conflicts with food.

Vrije Universiteit (VU) Amsterdam held an International Day yesterday; a very successful event.

All countries in which any faculty of the university has partners were advertising themselves on stands.

While the staff of the International Office and those responsible for focus countries like myself (for China, obviously) were present to help students interested in studying abroad with information, the key persons yesterday were the foreign students studying at VU University who volunteered to occupy their country’s stands from noon to 5 pm.

Some of them wore traditional garments, while others had brought musical instruments. Combined with the national flags and posters, all this was good for a colourful event.

If I were to name one single aspect that was shared by all stands it would be: food.

The students had, per country, been given a certain budget with which they could purchase foods and drinks from their country to attract visitors. Fortunately, there are plenty of smaller and larger shops in Amsterdam specialising in national delicacies from all over the world.

This proved a perfect ruse to create traffic to the stands and the event as a whole. Walking over the floor of the event was a genuine eating spree for the students, who, while munching on an unknown delicacy, leafed through brochures to see if they could find something of their liking.

Not only the visiting students, but also the students at the stands regularly visited those of other countries to chat, and . . . to have taste of the other’s cuisine.

Confucius > food > political aspirations

During the 2018 meeting of the Shanghai Cooperation Organization in Qingdao (Shandong, the province that is also the home of Confucius’ birth town Qufu), the Chinese hosts served dishes from the so called Confucian cuisine. That is a fine combination of region marketing and linking traditional Chinese philosophy to China’s modern global aspirations. One of the core concepts of Confucius’ philosophy is ‘harmonious society’, a society in which all kinds of people feel that they have their rightful place. This idea is reflected in an equally important notion in Chinese cuisine: balancing the flavours.

Not only cuisine

Nations not only meet by mixing their cuisines. They can also form interesting combinations of popular manufactured foods; like the Chinese Yeshu coconut drink in this picture matches well with most famous of Dutch candies: drop (liquorice).

Chinese food and culture in a Dutch school cantine

The Hague University of Applied Sciences had a Chinese food theme in its main cantine in June 2016. Yet another way of positively reinforcement mutual understanding through food.

Food tears down borders

This blog includes a great post introducing the way China is using its food industry to create transnational regions, with Xinjiang (Chinese Turkestan) and Kazakhstan as an example. Follow the link to read all about it.

Asian Civilisation Week

Several food festivals were held in Hangzhou, Chengdu and Guangzhou, as part of the Asian Civilisation Week and the Conference on Dialogue of Asian Civilizations held in Beijing, May 2019.

Chinese workers and US soldiers unite over food in Afghanistan

I read about this in a very interesting (and humorous) blog post (Oct 11, 2019) of a Chinese construction worker on assignment in Afghanistan that I posted on LinkedIn. Chinese government-sent construction workers share their food with US soldiers stationed there. The Americans were apparently so fed up (!) with their army grub, that they asked the Chinese if they could eat in their dining room every now and then. The Chinese had no problem with that, under the condition that the Americans would help them with some of their tasks and . . . if they were allowed to practice shooting with the American rifles. Fried rice for bullets; sounds like a great deal and the photo shows that the food was appreciated. A warm human interest story from which Mr Trump could learn a lot.

Food as alternative for politics

This report about a China-Hungary Workshop that was organised by the College of Food Science, Southwest University in Chongqing is a great example of how food is the best topic to forge international and cross-cultural relations. Hungary, as several other central European nations, is caught in the political issues between the EU and the US, the EU and Russia, the EU and China, etc. The participants of this workshop include diplomats, alongside academics, so you can argue that it is not entirely void of politics. Still, the topic of food creates an ambiance in which the participants start by identifying common interests in a specific topic; a great example of people’s diplomacy.

Food in foreign policy

The leading thought in Chinese foreign policy is the Belt and Road Initiative. This policy is founded on future major infrastructure links between East Asia over land and sea to Europe. I have written a separate blog about the way this foreign policy is linked to bilateral agreements about food between China and Kazakhstan.

Peverelli on Chinese food and culture

Chinese food beverage ingredients industry

Will Nestlé’s challenger be Chinese?

Exploring Babao Porridge: Tradition Meets Convenience

What on earth are . . . mantou?

What on earth is . . . jiang?

Understanding China’s Infant Formula Market Dynamics

What on earth are . . . dumplings?

Rise of Instant Noodles: Resurgence in Chinese Cuisine

Instant noodles: winners in corona time

Uniting Cultures: The Role of Food in International Relations

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Instant noodles: winners in corona time

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