In China’s lingua franca, Putonghua, the term for instant noodles translates as “convenient noodles”. In Taiwan such phrasing might elicit a titter or two because local nuance conflates the word “convenient” with going to the toilet.
Recently the cross-meaning has looked awkwardly appropriate, however, as Taiwan’s top noodlemaker flushed its own local business down the pan.
Founded in 1991, Tingyi is the largest producer of instant noodles in Greater China, leading with its signature brand Master Kong. According to data from Euromonitor, Master Kong meals have consistently grabbed over 40% market share among the region’s consumers for the last five years. So when Tingyi began the year by announcing that one of its subsidiaries, Master Kong (Taiwan) Foods, would be dissolved, many consumers across the Taiwan Strait wondered how they would get hold of their favourite instant noodle meals.
Despite its long term popularity, Master Kong’s sales in China have been falling. According to China Daily, income from instant noodles at Master Kong’s parent fell 8.75% between 2015 and 2016 to $969 million.
The problems began a year earlier, when there was a food safety scare in Taiwan over the use of animal oil. A separate company, Wei-Chuan Food Corporation, was at the heart of the crisis (Master Kong didn’t actually make the instant noodles but leased the production rights). Tingyi stopped it from using its Master Kong brand name but the scandal led to a consumer boycott and the company decided to stop distributing its instant noodles in Taiwan.
The problems spread further afield in 2015 when the controversy over the tainted products was reignited by a Taiwanese tour guide who was filmed telling mainland visitors that while the Taiwanese wouldn’t eat Master Kong noodles the company didn’t care because the majority of its sales were in the mainland market (see WiC292).
Tingyi now wants to draw a final line under the whole debacle by eliminating its troublesome Taiwanese subsidiary this month.
According to the China Post, after Tingyi cut short the contract with Wei-Chuan, Master Kong’s Taiwanese entity was largely dormant anyway, so the decision to liquidate it wasn’t a surprise.
Nonetheless Tingyi felt obliged to clarify the situation to its mainland Chinese customers a day later. On January 2 the company posted a message on its weibo account pointing out that its mainland operations were completely separate from its Taiwanese business, and that the shuttering of the Taiwanese outfit wouldn’t have any impact on sales and distribution in the much larger mainland market.
A greater concern for Tingyi will be the steady slowdown of instant noodles sales in general. According to data from the China Association for Science and Technology, noodle revenues have fallen for four straight years. Critics counter that Master Kong has erred by failing to develop new noodle varieties, relying too heavily on some of its tried-and-tested favourites, like the roasted beef flavour pot.
In the meantime, consumers are getting more choosy as their spending power increases, and as a wider range of culinary temptations is made available by the boom in O2O food delivery (see page 11). Tingyi did anticipate some of the dangers of declining popularity of its noodles by expanding its Master Kong brand into drinks and restaurants, but noodles still contribute the majority of its revenues. Tingyi’s press team has been working overtime this month too, assuring its shareholders and its consumers that the closure of its Taiwanese division will allow it to focus exclusively on the mainland market, and redouble its efforts to nurture its noodle division back into spicier growth.
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