TOPICS 

    Subscribe to our newsletter

     By signing up, you agree to our Terms Of Use.

    FOLLOW US

    • About Us
    • |
    • Contribute
    • |
    • Contact Us
    • |
    • Sitemap
    封面
    VOICES & OPINION

    Why Economists Are Chewing Over China’s Instant Noodle Sales

    Instant noodle sales are heating up across China, but the rise may indicate an economy in hot water.
    Oct 17, 2018#economy#food

    Cheap, quick to prepare, and containing almost none of the nutrients the human body needs to survive, instant noodles have long been the unofficial snack of students, migrant workers, and train passengers across China. Curiously, it turns out they may also be the key to understanding the direction of the country’s economy.

    China buys more instant noodles than any other nation on the planet. According to the World Instant Noodles Association, Chinese mainlanders and Hong Kongers altogether ate nearly 39 billion servings of the salty snack in 2017 — three times as many as runner-up Indonesia did. To put that in perspective: Every man, woman, and child in the United Kingdom would have to eat instant noodles three times a day for 195 straight days to consume the same amount.

    More remarkably, this figure qualifies as low in comparison to recent years, with instant noodle sales in China having dropped by 17 percent since 2013. In a BBC News column published late last year, business writer Simon Atkinson attributed this downward trend to some of the broader economic and social changes taking place in the country, such as growing access to online food delivery services, a shrinking migrant laborer population, and a desire on the part of Chinese consumers for better, higher-quality products.

    The ups and downs of a country’s instant noodle market are more significant than they might seem. The economist Frank-Jürgen Richter has argued that instant noodle sales can be a useful barometer of a country's overall economic situation. When times are good — and shoppers confident — sales of cheap, ready-made products typically fall, as customers flock to higher-quality options. Conversely, when the economy is struggling, shoppers are more likely to cut back on expenses — including by purchasing cheap processed goods instead of splurging on delivery or meals out. So it is notable that — almost immediately after Atkinson published his BBC piece on the decline of China’s instant noodle market — the industry began showing renewed signs of life.

    In the first half of 2018, China’s two largest instant noodle companies — Master Kong and the Taiwan-based Uni-President Enterprises Corporation — reported year-over-year sales increases of 8.5 percent and 6 percent, respectively. Meanwhile, the country’s online food delivery sector — the rise of which has occasionally been listed as a reason for declining instant noodle sales— grew by just 18.4 percent over the same time frame, marking the lowest rate on record.

    It may not be a coincidence that this revival comes at a moment when anxieties over a spiraling trade war and falling housing prices are beginning to creep into the popular discourse. As the prospect of an economic downturn looms ever larger, middle-class Chinese consumers are reconsidering their willingness to splurge on high-end products and experiences, with some cutting back on nonessentials and luxury purchases — a phenomenon many in the country have termed the “consumption downgrade.” Meanwhile, the demand for instant noodles among lower-income shoppers is making a comeback, as the migrant population is once again on the rise and more younger Chinese are giving up on the rat race.

    Already, many Chinese brands — instant noodle manufacturers included — are repositioning themselves and their product marketing in response to these changes. Sensing the unease felt by the country’s increasingly squeezed middle class, instant noodle companies now offer slightly upscale but still cheap versions of their staple products. In 2017, Uni-President released a new midmarket brand aimed squarely at the country’s middle class. This came on the heels of a 2016 announcement by Master Kong — Uni-President’s biggest competitor — that it would release a new brand somewhat improbably targeted at middle-class customers interested in staying fit and eating right. To convince skeptical shoppers that instant noodles were not inherently unhealthy, Master Kong brought in a number of well-known athletes to endorse their products and even opened a pop-up restaurant at the 2016 Olympic Games.

    Both companies share the same goal: to change consumer perceptions of instant noodles as an unhealthy junk food that’s out of step with middle-class pretensions. The early returns are promising. According to Master Kong’s 2018 midyear performance report, the company’s upscale brands were its fastest growing product line, with 12.5 percent year-over-year sales growth.

    The resurgence in demand for instant noodles in China is also linked to the emergence of what the Japanese management consultant Kenichi Ohmae has called “low-desire societies.” The term — which was first used in reference to Japan — describes aging, shrinking populations in which young people lack all ambition, material desire, and motivation. Rather than buying houses, getting married, and having children — or even just going out with friends from time to time — young Chinese increasingly choose to stay home and eat simple, inexpensive meals while watching TV dramas or playing games on their phones. Resigned to the reality that they will never have the financial resources to set down roots in a major city, some embrace the disillusionment and disaffectedness of subcultures such as sang, opting for jobs that maximize their free time while paying them just enough to get by.

    One demonstration of this trend can be seen at the San He Talent Markets in the southern city of Shenzhen. A center for the local gig and migrant labor economies, the unofficial motto of the workers there is “Work for a day, then rest for three.” When they’re not performing one of myriad petty tasks — some lawful, many less so — they can be found in the area’s internet cafes or lounging in nearby parks. Instant noodles are a natural fit for this group: Extremely cheap, they allow workers to stretch their wages further. Indeed, on a trip to San He this August, I noticed many local supermarkets had given over some of their most valuable shelf space to instant noodles and inexpensive bottles of water.

    As with the middle class, instant noodle companies are making considerable efforts to reach out to this demographic, as well as low-income and migrant workers more generally. Long a key part of their market base, the country’s migrant population has rebounded somewhat over the past year after shrinking in both 2015 and 2016 — a fact that has helped boost sales. One common marketing strategy is to partner with companies that create popular online and mobile games to offer codes that can be redeemed for in-game rewards.

    Moving forward, these two groups — the country’s middle class and its combination of low-income and migrant workers — are key to the future of China’s instant noodle market. The latter are something of an evergreen: As long as there are students and migrants, there will always be those hungry for a cheap fix. The former, however, will take some wooing. If instant noodle companies want to stay competitive in a changing market, they need to refine their product lines and tailor them according to shoppers’ aspirations and tastes. The ultimate goal is to transform instant noodles from a fallback for those short on time and money into a product that consumers truly desire.

    But all of that lies in the future — if it happens at all. The current uptick in instant noodle sales is less the result of successful marketing and product development programs — most of which are years from bearing fruit — and more the natural outcome of the country’s ongoing economic malaise. Admittedly, there’s a touch of irony to the fact that tough times for China mean boom times for its instant noodle industry. But with clouds on the horizon, it might be time to sit back, heat up a bowl of noodles, and get ready to weather the storm.

    Translator: Katherine Tse; editors: Zhang Bo and Kilian O’Donnell

    (Header image: A young boy enjoys a meal of instant noodles at a railway station in Beijing, Jan. 29, 2013. Wang Yixuan/Beijing Times/VCG)