Sunset in­dus­try

ChinAfrica - - China Report -

Septem­ber 5 was a black day for Tingyi, China’s big­gest in­stant noo­dle maker. The com­pany was of­fi­cially re­moved from Hong Kong’s Hang Seng In­dex (HSI) con­stituent stocks af­ter see­ing its prof­its plum­met 60 per­cent in the first half of 2016.

Tingyi joined Hong Kong’s HSI in 2011 at the apex of a 10-year pros­per­ity cy­cle, dur­ing which its share price in­creased more than 20-fold. This suc­cess came on the back of the golden age of in­stant noo­dles in China.

In­vented by Ja­panese busi­ness­man Mo­mo­fuku Ando in the late 1950s, in­stant noo­dles quickly swept across Asia with the ad­vent of con­ve­nience foods. But it was only af­ter con­quer­ing the mas­sive Chi­nese mar­ket that it re­ally took off. Its ad­van­tages are easy to un­der­stand - con­ve­nient, cheap and ac­ces­si­ble - a per­fect match for the needs of low in­come peo­ple, those trapped in the rat race and starved of time to cook a real din­ner, or train trav­el­ers on long jour­neys need­ing sus­te­nance.

By the time Tingyi joined Hong Kong’s HSI, China had be­come the world’s top con­sumer of in­stant noo­dles and was also pro­duc­ing more than half of the world’s in­stant noo­dles, ac­cord­ing to Xin­hua News Agency.

As the pi­o­neer in the mar­ket, Tingyi had the big­gest slice of a very big pie - Tingyi’s fac­tory in Tian­jin pro­duced nearly 5 bil­lion pack­ets of in­stant noo­dles an­nu­ally, more than the to­tal com­bined out­put of all in­stant noo­dle fac­to­ries in Japan, gen­er­at­ing $4 bil­lion, ac­cord­ing to the com­pany’s fi­nan­cial re­port in 2012.

But in the same year of 2012, China’s in­stant noo­dle sales began to drop. A re­port re­leased ear­lier this year by the Chi­nese In­sti­tute of Food Science and Tech­nol­ogy con­firmed what few peo­ple would be­lieve - the sales vol­ume of in­stant noo­dles in China has been de­clin­ing for five con­sec­u­tive years and six pro­duc­ers have al­ready left the mar­ket. In Au­gust, Tingyi re­ceived its worst six-month fi­nan­cial re­port in the past 10 years, while its com­peti­tors, such as Ting Hsin, were also strug­gling with a drop in sales.

Zhu Dan­peng, re­searcher at the China Brand Re­search In­sti­tute, at­trib­uted the in­dus­try’s pre­car­i­ous sit­u­a­tion to the change in mar­ket en­vi­ron­ment, most notably the de­mand for con­ve­nience food

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