Huarong, a small county in Hunan province, has been growing leaf mustard for well over a century. The fields yielded so much of the greens over time, locals began pickling them, blanching the greens before adding plenty of salt, sugar, peppercorn, cooking wine and water. They were then put inside what is known locally as a laotan, an earthenware jar, topped with a heavy weight to press out all the moisture during fermentation. After a week or so, the vegetable transformed into suancai, or ‘sour vegetable’, a pickle with a yellowy hue that tastes both savoury and sour.
Chinese people enjoy eating the pickled vegetable in everything from stews to, more commonly, in noodle dishes. One of the most popular flavours of Master Kong, China’s largest instant noodle producer, is its laotan suancai beef noodle. Its rival Uni-President, too, makes a similar product.
Last week, both Taiwanese noodle makers were caught by a food safety crisis after the state broadcaster CCTV exposed how suancai had actually been prepared by some of the country’s biggest pickle producers including Chaqi Vegetable.
The exposé was made during the 3.15 Gala, an annual TV show that focuses on consumers’ rights violations.
The footage shows suancai being produced in large muddy pits instead of being pickled in laotan as claimed. Workers – some in slippers, some barefoot – are seen stepping on the pickled greens to squeeze the water away during the fermentation process. Some are smoking and one man even throws a cigarette butt into the cabbage. To keep the greens from going bad in such insanitary conditions, one factory boss admitted to adding preservatives in volumes that were “way over the limit” so as to kill germs.
Images of this unsavoury production method for one of China’s most popular fast-foods soon went viral. Consumers were enraged. “So suancai produced in these factories were not only filthy, gross, poor quality but they were also toxic?” one thundered.
“I’m never eating suancai instant noodles ever again,” another added.
Corporate image aside, the share price of the Hong Kong-listed firm that operates Master Kong’s China business dived 13% the following day. The noodle maker quickly published a statement, admitting that Chaqi Vegtable was indeed a supplier for its Laotan Suancai products. It apologised for its quality control lapse and promise to take all related products from retail shelves.
Luckily for Uni-President, it does not deal with the Hunan-based pickled cabbage supplier. However, it added that it had contacted its own suppliers to ensure all products meet required hygiene standards.
Sensing an opportunity, Baixiang, a local instant noodle producer, quickly published a weibo post: “No collaboration; eat with confidence,” its message read reassuringly, indicating that it did not source its pickled cabbage from Chaqi Vegetable either.
Baixiang, which rather unfortunately means ‘White Elephant’ in English, is based in Henan. The unlisted company was founded in 1997 as an instant noodle producer but it later diversified into operating its own chain of restaurants. However, its catering business didn’t prove a major hit with consumers while competitors like Uni-President and Master Kong gradually exerted dominance over the vast and very profitable instant noodle segment.
Compared with its bigger rivals, Baixiang’s distribution network has clearly lagged. Baixiang claims to have 1.2 million sales points, compared with Master Kong’s five million. It has also been much slower to launch new instant noodle flavours too.
Following CCTV’s latest exposé, however, Baixiang saw a strong uptick in demand. On JD.com, its sales almost tripled while the number of Baidu searches also jumped sixfold.
Despite its rather negative English name, Baixiang has also established a reputation as one of the rare ‘social’ enterprises in the country. Over a third of the company’s employees are reportedly physically handicapped. One employee told Blue Whale Media that handicapped employees enjoy the same benefits as everyone else within the company. “As long as his situation does not hinder his advancement within his job scope, handicapped employees can also be promoted to workshop leaders,” he told the news portal.
According to a ranking from financial market data company Refinitiv, Baixiang was last year the fourth largest instant noodle maker in China, with a 4% market share. The top three were Master Kong, Uni-President and Jinmailang. However, after last week’s sales surge, Baixiang has been outselling Jinmailang, and moved into third place.
© 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.