Even COVID-19 did not make food deliveries profitable – Ashley Dudarenok

 

Ashley Dudarenok

China’s food shipping was already far ahead of competitors in the US, but making a profit is still not possible, says marketing veteran Ashley Dudarenok to 90xtra, although the restaurants are griping about the percentages the shippers ask. And the COVID-19 crisis did not improve relations between retailers and shippers.

90xtra:

Ashley Dudarenok, co-writer of “New Retail Born in China Going Global,” notes how most Chinese shipping workers use maneuverable and mild e-bikes, though their Western counterparts generate cars extensive distances and incur steep labor, parking, and refueling costs. She also says Ele.me motorists are pressured by rigid evaluate systems, which penalize them RMB 200 Chinese renminbi (RMB) per weak assessment and RMB 1200 for every complaint. Another incentive: Meituan’s Supply Time Coverage alternative that charges end users simply RMB 1 ($.14), and refunds portions of service fees for any late orders…

Dudarenok, in the meantime, details out that “franchisees, HR businesses, and other third get-togethers involved in the system are in the middle. The agent on your own can even account for 25 % of Meituan’s supply profit.” Her conclusion: “Meituan’s deliveries are not sufficient to make finishes meet. It has been at a reduction for 5 many years, and it has only been successful in 2019.”

Those figures did not increase all through the pandemic, even with some restaurateurs grousing about substantial expenses. In its place, Meituan’s 1st quarter earnings announcement in depth a 12 months-in excess of-year revenue drop from RMB 19.2 billion to RMB 16.8 billion, citing offer and demand from customers difficulties (having said that, Dudarenok factors out “after the resumption of function in March and April, the volume of supply orders… has returned to practically 80 percent of the orders in advance of the outbreak” very first started).

More at 90xtra.

Ashley Dudarenok is a speaker at the China Speakers Bureau. Do you need her at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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Origin food overrules brands for Chinese consumers - James Roy

James Roy

The origin of food is key for Chinese consumers, since brands can be made everywhere, including China, says retail analyst James Roy in FreshPlaza. "Brands are almost no longer important to the Chinese consumer when it comes to food, as long as the product's origin is foreign."

FreshPlaza:

Affluent Chinese will always choose imported products over local ones, said James Roy, a business analyst at China Market Research Group. Brands are almost no longer important to the Chinese consumer when it comes to food, as long as the product's origin is foreign. 

"For foreign food and agriculture brands, it's really important to emphasize where they are manufactured, and to show where it comes from," said Roy. 

Governments are encouraging their exporters to take advantage of such demand. During a visit to promote agricultural products in China earlier this year, EU Commissioner for Agriculture Phil Hogan said that an estimated 3 million jobs in Europe already directly depend on export sales to China, many of them in the agriculture sector.

More in FreshPlaza.

James Roy is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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How Nestle´s localization strategy failed - Shaun Rein

+Shaun Rein 

Localizing has been the mantra of many foreign firms in China, but in Nestle´s dairy milk case that failed. In his book The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia Shaun Rein explains what the Swiss company did wrong. A snippet from his book.

Shaun Rein:

 Vanessa responded, "I just don´t trust dairy products made in China, domestic Chinese or foreign brands. The supply chain is a mess. I will spend more if I trust the brand and quality." Fears over another melamine scandal, or a botulism scandal, which struck New Zealand dairy company Fonterra in 2013, linger for years, and parents do not want to take any risks. 

Her answer mirrored respondents on social media China Market Research Group (CMR) tracked and explained why foreign brands with cheap dairy products lost market share. For instance CMR did for a hedge fund analyzing baby formula, we found mothers correlated high price with safer products. 

Many mothers responded they did not trust Nestle baby formula, for instance. Nestle located its dairy farmland in northeast China, a region known as China´s rust belt. From Nestle´s perspective, establishing operations there introduced international farming and quality standards and helped local farmers and the local community. Nestle instituted a cheaper price position than other international players. 

But Nestle´s strategy backfired. Chinese mothers feared unsafe chemicals from decades of industrial runoff contaminated the soil, poisoning the grass, the cows, and finally the baby formula. 

Users commented that Nestle´s price level, often 50 percent cheaper or less than competitor products, such as domestic player Biostime, slumped so low that they worried about quality control. Nestle´s problems in infant formula show the dangers of competing in China as a foreign brand - consumers perceive that foreign brands from Western developed markets, such as Switzerland, should be more expensive than local ones, or ones from developing regions, such as Thailand or eastern Europe.

A first excerpt of Shaun Rein book has been published in CampaignAsia.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you interested in more experts on innovation at the China Speakers Bureau? Do check our latest list here.

Related articles

• Fonterra buys shares in Beingmate as part of dairy partnership
• Fonterra cuts milk price payout, full-yr profits tumble
• Nestle removes beef pasta meals after finding horsemeat
• NZ babies miss out - New Zealand Herald
• Ten Companies That Control The World's Food

Three holes in some Shanghai walls

Tomato egg, one of my favorites

Shanghai might be changing very fast, but a few things fortunately have not. We had a excellent lunch at an authentic Shanghai eaterie (我家餐厅/Wo Jia Can Ting)) at Huashan Lu 241 lane (it has no number, but you can find it in the back). It claims a listing at the CNN Best Shanghai Eats for 2010, according to a sticker at the front door, but we could not retrieve the listing. Actually, they would not really match most of the other listings, apart from the nice and tasty food.
The restaurant combines three different old houses, and offers an amazing crappiness with a cozy atmosphere, partly because it is run by three older Shanghainese men. The food is mostly sweet Shanghainese food, not appreciate by our neighboring table with some guest from outside Shanghai, who preferred more spicy food and thought the price was still high.
We did not dare to have a peek into the kitchen, as we like to do, since it might not have helped out appetite. And while the entrance is hard to find, we were already refused a few times at night, because it was too busy. An early lunch today proved to be possible.
The operations offers not only nice Shanghai food, it illustrates also a group of Shanghai men who have made the best out of their unprivileged position. Shanghai men are forced into submission by their women, most clearly illustrated by them carrying the handbags of their wives. They have to carry out most of the household, including cooking.
The three men at this restaurant obvious have been able to make the best out of their disadvantaged position, by using their talents in a professional kitchen.  The two older complaining old men at the Muppet Show, look most closely like those three men, making derogative comments about anybody who cannot hear them. Worth a visit.

Update: The restaurant was listed at the CNN website, a friend told me. Here is the post.

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New Year´s eve dinner at Da Dong Roasted Duck restaurant

Preparing duck at our table

While traditional Shanghainese food is still going strong, fine dining is definitely making huge inroads among the locals in Shanghai. Good foreign restaurants have already been around for foreigners, but fine dining is also becoming popular among Chinese. This evening we had a great evening at Da Dong Roasted Duck, originating from Beijing.
Dinner starts is a typical new Chinese tradition: exchanging the access code of the free wifi at the restaurant to avoid roaming coast. In China, if you do not offer free access to the internet, you do not deserve to exist.
Da Dong is an efficient organization, and with some good preparation, we marched past the waiting rows, directly to our table. In the middle, burning wood fires prepare rows of ducks for later consumption.
The restaurant is not small, but minor compared to many food factories in Shanghai that can host many thousands of guests. People take their time for eating (not that normal for locals), and for a good reason: food is excellent. Most Shanghai restaurants are great for their food, or great for their ambiance. Da Dong has both right.
I counted faces: I did not see one other foreigner, apart from one standing at the entrance, otherwise Chinese paying a fair price for excellent food and atmosphere. That has been different, not so long ago.
Not yet jealous? Here are some more pictures.

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• Making a reservation, Shanghai style
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Within the range of being forgiven - A Shanghai argument

Lunch on Sunday was enjoyed at the headquarters of Wang Jia Sha, at Nanjingxilu 805 in Shanghai, after our earlier lunch at their branch office. A worthwhile experience with a lesson in Shanghai style customer relations.

Compared to the branch store, quality of the headquarters was much better. Heating was working and upstairs you actually had a service at the table. the store was divided in two classes, downstairs for the take-away´s and food for the poor. Upstairs better quality food for higher prices, and smaller dishes. Service was excellent and fast; waitresses used electronic equipment, although an occasional shout added to the nice ambiance.
This photo of Wang Jia Sha Restaurant (Wanhangdu Road) is courtesy of TripAdvisor
While walking downstairs, the chief cook was involved in a heated argument with one of the clients, who claimed to have found an insect in her food. While the cook was prepared to compensate the client with a 100 Renminbi, he fell short of straight forward apology, like would be standard practice elsewhere.

This was a mistake that falls in the range of being given forgiveness. When you make a vegetable dish as home, there is always a small chance of a bug getting into you food.

The client demanded a full a¨apology, and possible a higher compensation too. We did not wait to see if she got it.

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China needs to import food - Arthur Kroeber

Arthur Kroeber

Diminishing water resources might force China to import large amounts of grain in the future, tells economic analyst Arthur Kroeber in Business Week. Although it might first groom domestic players like Cofco, before facing competitors like Cargill on a global market place.

Business Week:

China may have to increase imports because its dependence on the use of ground water for grain production “isn’t going to be sustainable indefinitely,” said Arthur Kroeber, managing director of Beijing-based GaveKal Dragonomics Research, a financial advisory firm... 

China may be putting off “inevitable” large grain imports for 10 to 20 years to enable the opportunity to “develop companies like Cofco as domestic alternatives to Cargill and give them some sense of security of supply,” Kroeber said. 

While the government has limited expansion of corn-based industry to ensure priority for livestock, “it’s difficult to control demand for starch” or other corn-derived products because there’s a strong demand for them, he said. So “either we produce here, or buy from outside,” he said... 

Most countries will find it a rather “sensitive matter” to either sell or give long-term leases for food production areas to other foreign entities, Kroeber said. Still, cash-rich Cofco can offer “very attractive terms,” he said.

More about China's food strategy in Business Week.


Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conferencen? Do get in touch. You can also fill in our 'speakers' request' form. 

Related articles

• Rising wages in China do not create jobs in the US - Arthur Kroeber (chinaspeakersbureau.info)
• Two different ways to look at a currency - Arthur Kroeber (chinaherald.net)
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• China: expected to continue economic growth - Arthur Kroeber (chinaherald.net)

We need a sugar-free zone over Shanghai - Paul French

Image via WikipediaUS-style doughnut shops are proliferating in China's large cities, and that is bad news for their already deteriorating diet, tells retail analyst Paul French in the Washington Post, when they take of. French studied the obesity levels in the country in his book "Fat China".

The Washington Post:

“We’re going to need a U.N. resolution very soon – they’re going to have to declare a sugar-free zone over Shanghai,” said Paul French, the British-born founder of a market research company, Access Asia, that focuses on the retail sector. “There’s too many, because we’re starting to see them close down.”

For the time being, and that is good news for the Chinese diet, the stores are not doing well:

Still, the pessimists think the doughnut might have a hard time finding a toehold in China — as evidenced by the largely empty doughnut stores, and the number of leftovers on the shelves at closing time. “It’s one of those food concepts that has singularly failed to set the country alight,” said French, the retail analyst.

French noted the biggest obstacle yet: In Shanghai, he noted, police officers seem to prefer smoking cigarettes to taking a doughnut and coffee break. “They haven’t cracked the cop market,” he said.

Paul French

More in the Washington Post.

Paul French is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.


Related articles

• Fat childrens' health problems - Paul French (chinaspeakersbureau.info)
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Eating at Guang Ming Cun

Image by Fantake via Flickr

I'm unfortunately not able to keep you updated on my daily culinary advertures in Shanghai: we also need time to eat, isn't it. But last night's visit at the famous Guang Ming Cun in Huaihai Zhonglu, after hours of shopping (indeed, we visited the Mediamarket at the other side again, and I might soon provide an update on my earlier entry) is an exception. Our tired feet only found relief after we strategically stared out some customers who already finished eating.
The queue outside for their snacks are famous for ages, and their previously very shabby interior got an amazing remake, staff got new clean uniforms. Their run-down looks had never stopped the Shanghainese from dropping in, and now you can feel yourself even a king - that is if your can find a place to sit down. Visiting the toilets is still not advised.
Food has been literally been the same, admittedly sometimes a bit on the greasy side. Service is quick, it seemed we got our food even before ordering had finished. And while Guang Ming Cun will never get a star from the Michelin guide, it keeps on getting a flow of customers. That might be just enough for them.

Related articles

• Old Shanghai A-Z - Paul French (chinaherald.net)

Qi Bao Old Street: a cultural Disneyland

Image by Fantake via Flickr

Yesterday, at a normal weekday, one of Shanghai's tourist attractions, the Qi Bao Old Street, reachable by subway no.9, was packed with people. While I felt initially a bit lost in this weird mixture of concrete, some old buildings, blaring propaganda loudhailers and occasional statue of Confucius and picture of the - still-disgraced - Lin Biao, the Chinese tourists did not seem to be bothered by this strange Disneyland of Chinese culture.
But what could attract them, I asked myself, when I wandered past the boring souvenir shops with overpriced products? I knew what they were coming for when we entered the food section of the two streets. Initially, it looked just like any food street anywhere in China, but the combination of really authentic food, in small shops for fair prices brought excitement in the thick crowds.
Even the fact that some of the shop owners had dressed up was barely noticed, as people jumped on the - indeed - delicious food. Would I advise Western tourists to take subway line 9 to visit this exhibit of pure Chinese tourism? When you are interesting in watching Chinese tourists, it is a great place. Otherw

I

ise, do not bother. They won't miss you, since there are enough Chinese tourists around.

Related articles

• Old Shanghai A-Z - Paul French (chinaherald.net)
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Food price controls temporary - Shaun Rein

Shaun Rein by Fantake via Flickr

Shaun Rein goes on air in CNBC to explain the confines of the recent food controls imposed by the Chinese authorities to control inflation. Controlling the food prices and lowering the production costs - by killing the toll fees for food trucks - are only temporary measures to bring back confidence of the people, he says. He expects the controls to be limited in time for perhaps one or two months.
And meanwhile he has to address persisting myths on the importance of export for China's economy in the debate: percentage of export in GDP has dropped from 40 percent ten years ago to 20 percent now.

Commercial
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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• How I fought the financial crisis - Shaun Rein (chinaherald.net)
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Fat China - Paul French

Paul French        via Flickr

Today saw the long anticipated book Fat China: How Expanding Waistlines are Changing a Nation (China in the 21st Century) by Paul French, on obesity in China. "An in-depth analysis of the growing problem of obesity in China and its relationship to the nation's changing diet, lifestyle trends and healthcare system."
From the announcement:
China's economy has boomed, but a potentially disastrous side effect - along with pollution and a growing income gap between urban and rural regions - is the effects obesity will have on the country's fragile healthcare system. China's urban centres have seen alarmingly rising rates of obesity. Throughout the country, an estimated 200 million people out of a total population of around 1.3 billion were overweight - over 15%.

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Paul French is a speaker at the China Speakers Bureau. When you need him at your conference, do get in touch. 

Related articles by Zemanta

• From famine to feast in two generations - Paul French (chinaherald.net)
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99 percent of Chinese food export is safe

Getting your public relations done is still tough for Chinese officials, I learn from this pick-up at the China Digital Times of the Shanghai Daily.

ABOUT 99 percent of China's exported food is safe, a senior official of the country's quality watchdog said today in Beijing.The Chinese government is very responsible and supervises each step of the process in food exports, said Lin Wei, vice director of the Administration of Quality Supervision, Inspection and Quarantine.

Of course, the prospect of one percent of the food export not being safe is not very appealing for potential consumers. Putting our hope on the ongoing five-year plan might be convincing for a Chinese audience, it does not work with me.

Expanding waistlines in China

China's citizens see a fast expansion of their waistlines and on Thursday 12 July Paul French will talk about "Fat China: How Expanding Waistlines Will Change a Nation" at the British Chamber of Commerce.

From the invite:

From a situation 20 years ago when diets were limited by food availability, and famine was still a recent memory, China'surban centres have seen alarmingly rising rates of obesity: Across China 7.1% percent of adults are obese and 22.8% (more than one fifth) were overweight. Throughout the country an estimated 200 million people out of a total population of around 1.3 billion were overweight (over 15%). This rate rises to nearly 20% in China's major cities. In the past decade, the number of Chinese defined as overweight increased 39%, and the number deemed clinically obese by 97%.China's economy has boomed, but a potentially disastrous side effect, along with pollution and a growing income gap between urban and rural regions, is the effects obesity will have on the country's fragile health care system. Today's fat kids in China can look to a mixed future of bright economic hopes for their country, and poor and deteriorating health for themselves.

The details:

Thursday 12th July 2007, 6:00 pm to 7:00 pm

Venue: Mesa & Manifesto, 748 Julu Lu, T: 6289 9108

Cost: Member: RMB 120, Non-member: RMB 140

Pay at the event

Contact Detailsariel.wang@sha.britcham.org

Paul French is also part of our upcoming Speakers' Bureau and if you are interested in getting him as a speaker, do drop us a line.

China is everywhere in the food chain

LA Times adds a new element in the ongoing debate on the Chinese food scandals. US firms like Mission Food Corp. and Tyson Food inc. have been trying to ban all Chinese food additives from their products. The conclusion: it is impossible.

In the last decade, China has become the world's leading supplier of many food flavorings, vitamins and preservatives. Like fingernail clippers, playing cards, Christmas ornaments and other items, some food additives are available in vast quantities only from China.

Much more at the LA Times. (h/t Danwei's aggregator).

Further fall-out of the food crisis

Pressure on China to act is growing as the world is becoming worried about the quality of food products coming out of China. Some quotes, here from Reuters:

"This scandal has had severe consequences for the whole industry," said Chuk Ng, general manager of Nutrogen (Dalian) Co. Ltd, a company specializing in organic and non-genetically modified (GMO) farm products.
"Now the European and U.S. clients are checking every batch of products coming from China ... The GMO test is one. Now you add tests for melamine or other heavy metals or pesticides, the costs are very high, too high," Ng said.

In the International Herald Tribune:

"This isn't an international crisis yet, but if they don't do something about it quickly, it will be," says David Zweig, a China specialist who teaches at the Hong Kong University of Science & Technology. "The question is whether it spills over and 'Made in China' becomes known as 'Buyer Beware.' "

China exports annually US$30 bn worth of drugs and food products.