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