Look closely enough, and it’s easy to spot a tribal quality to Chinese business. Regular readers will recall the high number of gold miners arriving in Ghana from Shanglin county (see WiC195); or the network of Putian practitioners buying up the private hospital industry (see WiC242); or the stranglehold Guangfeng folk have over the excavator leasing market (see WiC195).
Now WiC’s attention turns to a specialty from another otherwise unknown community that has spread across China: Shaxian and its delicacies (or Shaxian snacks, for a more literal translation).
At first glance, they appear no different from regular Chinese fare: steamed dumplings, sauced noodles, fried chicken. But the brand has spread with such gusto that Chinese media has been struggling to explain why.
The story begins in Sha county (xian means ‘county’) in the early 1990s. According to Southern Weekly, a shadow financing scheme that had been fuelling the local economy began to collapse and suddenly many local people were in debt. Looking for money, a group of pioneers travelled to Xiamen – a larger city in Fujian province – and began selling delicacies from their hometown.
From this first batch of entrepreneurs, the Shaxian Delicacies business has since grown to incorporate over 20,000 restaurants in China, taking in combined revenues of Rmb7 billion ($1.06 billion) a year, Global Times reports. The snack food chain has even spread overseas to Taiwan, Macau, Germany, the US and New Zealand.
But referring to Shaxian Delicacies as a chain is not accurate. It is not owned by a single person or company. What connects the 20,000 or so restaurants is the food they sell.
In 1998 the Shaxian government did trademark Shaxian Delicacies, hoping to help promote the cuisine and combat unemployment. It encouraged its local officials to take unpaid leave and enter the business. It also provided funds for the training of chefs.
Many who opted to leave Shaxian took their own recipes and set up shops elsewhere.
China Radio International explains the food’s distinctiveness: “Snacks from Shaxian consist of common Chinese dishes such as dumplings, noodles and tofu balls, although the dishes are prepared in a way that makes them unique to the region. Steamed dumplings are prepared using cassava flour to make thinner, more translucent wrappings. They also feature starch vermicelli as a stuffing instead of the usual pork.”
It is common too for Shaxian chefs to refuse to share cooking techniques with outsiders, and for some the source of authentic ingredients is a paramount concern.
As such, a secondary industry has developed, supplying Shaxian-sourced ingredients to the entrepreneurs serving up the cuisine. In 2012 China Radio International reported that the most prosperous of the suppliers, Zhang Changchao, made yearly profits of over Rmb100 million. Zhang told Southern Weekend: “We sell our ingredients to Shaxian locals in China and seldom to strangers.”
The qualification of “seldom” is telling, because although the barriers to outsiders are not as impenetrable as they might seem. “According to incomplete statistics, about half of Shaxian snack food operators are not Shaxian locals”, comments Southern Weekly.
After doing its best to promote and preserve the county’s ‘unique cultural export’, the Shaxian government now plans to consolidate the industry.
In 2008 it invested Rmb65 million to found the Shaxian Snacks Group, in a further attempt to establish a single fast food brand. According to Beijing News, the county wants to integrate 6,000 restaurants through the Shaxian Snacks Group by 2018, and has ambitions to take the state-controlled firm public.
The Global Times is sceptical of the group’s IPO plans: “Most of the restaurants are individually-owned, lack an integrated supply chain and would have to meet the strict listing requirements of the securities regulators.”
KFC and McDonald’s need not be worried by the Shaxian phenomenon.
During a recent trip by WiC to Xiamen a local explained that the main attraction of the snacks was their cheapness – with items often costing less than Rmb5 each.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.