The African swine flu epidemic continues to spread across China. The major livestock production province Shandong reported new cases of the contagion this week, taking the tally of confirmed cases to 100 across 27 regions since last August.
Although the disease is believed to be fatal only to pigs, its entry into the food supply chain is causing fresh alarm. Earlier this month at least 11 frozen food processors found that the virus had contaminated their products, including the country’s largest dumpling brand Sanquan. The timing made the public even more sensitive to the news as pork-stuffed dumplings (or jiaozi) is considered a staple item on menus for Chinese New Year’s eve.
Henan-based Sanquan said on Wednesday that it had withheld from sale adulterated products worth Rmb2.2 million, while supermarket chains such as WuMart were asked by authorities to suspend sales of the brand’s dumplings. The news has not only led to a 2.3% drop in Sanquan’s Shenzhen-listed shares, but also prompted investigation into its financials and operations.
The dumpling products made by Sanquan were mainly in the low-end range. For instance its soup dumplings are priced at Rmb9.9, versus rival Wanchai Ferry’s Rmb24.9 for a similar product – but where the quantity’s about 25% less. “The costs of pork and dough are probably higher than the selling price of the product. And there are also expenses linked to labour, distribution and promotion. One can imagine the quality of Sanquan’s soup dumplings,” one consumer told Sichuan-based Finance and Investment Daily.
Hong Kong-based Wanchai Ferry was one of the few major players in China’s frozen dumpling market to remain untouched by the food scandal. Named after the pier (demolished in 2014) where founder Chong Kin-wo first hawked her dumplings, the company ranked fourth in China’s dumpling market with a share of 9.68% in 2017.
Chong’s recent death at the age of 73 has received widespread media coverage. Born in Qingdao in Shandong province, Chong arrived in Hong Kong in 1974 with two daughters after separating from her Thai husband. Unable to speak Cantonese, she initially worked as a dishwasher at a restaurant and did some cleaning jobs on trams. It was her constant waist pain that put her off working menial jobs and led her to start her own business selling hand-made dumplings.
Her big break came in 1983, when the Hong Kong branch of Daimaru, a Japanese department store brand, offered to partner with her. The deal allowed her to build a proper manufacturing facility and scale up her business. By the time Hong Kong was handed back to China in 1997, Wanchai Ferry had grabbed over 30% of Hong Kong’s frozen dumpling market, with five production facilities. Chong became known as the “Dumpling Queen” and even inspired a biographical television drama.
Wanchai Ferry’s expansion into the mainland market started that same year, coinciding with US foodstuffs group Pillsbury buying a 70% stake in the company and investing $60 million to bulk up the dumpling maker’s capacity. Wanchai Ferry’s frozen jiaozi were initially sold in shops in Guangzhou, Shanghai and Beijing. From 2000, it also diversified its product lines, manufacturing frozen Cantonese dim sum such as siu mai (open-faced dumplings filled with ground pork) and jan jyu gai (steamed sticky rice and chicken wrapped in lotus leaf).
Over the past decade Wanchai Ferry has expanded its sales to the US and international markets too (helped by the merger of Pillbury with General Mills).
“Chinese food in the US is getting more and more popular. But there were no ready-to-eat Chinese meals until Wanchai Ferry launched its frozen food packages in 2007,” wrote Huxiu.com, a news portal, noting $50 million in US sales were achieved the first year.
Simon Wo, chairman of the Chamber of Food and Beverage Industry of Hong Kong, told the South China Morning Post that Madame Chong “was dedicated to setting a good safety system in her operation which won her a good reputation”.
© 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.