The secret is out. Chinese now know, in far greater numbers than before, that the favorite brand of the favorite staple food of hundreds of millions of them is made by a huge American company, General Mills, best known for sugar-coated cereals served to American children. (See my earlier article here.) In the current issue of China’s weekly business magazine Caijing is my Chinese-language article blowing the cover off the well-hidden fact that China’s tastiest and most popular brand of frozen dumplings, known in Chinese as 湾仔ç 头, “Wanzai Matouâ€, is made by the same guys who make Cheerios, Cocoa Puffs and Lucky Charms in the US.
You can read a copy of my Caijing article by clicking here.
Getting these facts in print was not simple. I’ve been an online columnist for Caijing for years. When I sent the manuscript the magazine’s editor, he did the journalistic version of a double take, refusing to believe at first that this dumpling brand he knows well is actually owned and run by a non-Chinese company, and a huge American conglomerate to boot. He asked many questions and apparently did his own digging around to confirm the truth of what I was claiming.
He asked me to reveal to him and Caijing’s readers the secret techniques General Mills has used to conquer the Chinese market. That further complicated things. It wasn’t, I explained, by selling stuff cheap, since Wanzai Matou sells in supermarkets for about double the price of pure domestic brands. Nor was it because they used the same kind of saturation television advertising P&G has pioneered in China to promote sales of its market-leading products Head & Shoulders and Tide. General Mills spends little on media advertising in China, relying instead on word of mouth and an efficient supply chain.
My explanation, such as it is, was that the Americans were either brave or crazy enough, beginning fifteen years ago, to believe Chinese would (a) start buying frozen food in supermarkets, and (b) when they did, they’d be willing to pay more for it than fresh-made stuff. Wanzai Matou costs more per dumpling than buying the hand-made ones available at the small dumpling restaurants that are so numerous in China just about everyone living in a city or reasonably-sized town is within a ten-minute walk of several.
In my case, I’ve got at least twenty places within that radius. I flat-out love Chinese dumplings. With only a small degree of exaggeration I tell people here that the chance to eat dumplings every day, three times a day, was a prime reason behind my move to China. For my money, and more important for that of many tens of millions of Chinese, the Wanzai Matou ones just taste better.
The article, though, does explain the complexities of building and managing a frozen “cold chain†in China. General Mills had more reason to master this than any company, domestic or foreign. That’s because along with Wanzai Matou they have a second frozen blockbuster in China: Häagen-Dazs ice cream, sold both in supermarkets and stand-alone Häagen-Dazs ice cream shops. Either way, it’s out of my price range, at something like $5 for a few thimblefuls, but lots of Chinese seem to love it. Both Wanzai Matou and Häagen-Dazs China are big enough and fast-growing enough to begin to have an impact on General Mills’ overall performance, $18 billion in revenues and $1.8bn in profits in 2014.
For whatever reason, General Mills doesn’t like to draw attention to its two stellar businesses in China. The annual report barely mentions China. This is in contrast to their Minnesota neighbor 3M which will tell anyone who’s listening including on Wall Street that it’s future is all about further expanding in China. But, the fundamentals of General Mills’ business in China look as strong, or stronger, than any other large American company operating here.
The title of my Caijing article is “外æ¥çš„厨å会åšé¥ºå” which translates as “Foreign cooks can make dumplings”. It expresses the surprise I’ve encountered at every turn here whenever I mention to people here that China’s most popular dumpling company is from my homeland not theirs.
Avoiding the hand-made dumplings is likely the cause of consumers willing to pay the price premium.
Seriously, those tiny restaurants are filthy. Ever see anyone wash their hands? Me either. Only the poor eat there, look around at your fellow customers sometime. Chinese people who know China don’t eat at these places. They’ll pay extra for frozen dumplings made by a big company. Maybe it’s dirty too, but at least it’s an unknown risk instead of certain.