Tuesday, August 02, 2011

Why fast foreign food wins in China - Shaun Rein

Various donuts from the Dunkin' Donuts store i...Image via WikipediaChinese consumers know that oil and sugar provide not a healthy diet, but they know that Western fast food brands in China at least keep a close eye on their production processes, unlike the Chinese competition. That is why they win, explains Shaun Rein in CNBC.

Shaun Rein:
My firm interviewed thousands more Chinese consumers in eight cities about their dining habits, we found that Emily's response was not unusual. Many Chinese consumers consider western fast food brands like Yum Brands, McDonald's and even Dunkin Donuts healthy.
They all know a healthy food diet should not have too much oil and sugar, but they also trust foreign brands won't cut corners in the production process. They fear tainted ingredients more than fat.

Far too many Chinese view western fast food companies as healthy alternatives to local restaurants, rather than a once in a while greedy indulgence. China's food supply-chain is clearly a mess, and it is a serious problem that needs to be fixed immediately.

In a survey of 5000 consumers in fifteen cities, my firm found that food and product safety was the biggest concern for Chinese consumers, ahead of paying for medical bills or children's education.
Those concerns continue to be top of mind because of regular allegations that food companies and restaurants are using poor quality ingredients. Last week, for example, shares of Chinese noodle chain Ajisen [0538.HK 12.54 -0.92 (-6.83%) ] plummeted nearly ten percent when word got out they allegedly use instant broth flavoring rather than stock made from boiling bones as they claimed in advertisements. Before the news broke, consumers told my firm they trusted Ajisen to provide healthy food.

Misrepresentation of product safety can be costly because the Chinese have become unforgiving when it comes to health. A mere allegation is enough for businesses to lose customers, see their bottom lines hit and their share prices decimated.

Shaun Rein
More in CNBC

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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