Chinese cooking has a century-old history famous around the world. But for many Chinese families, fussing over cookware is a recent phenomenon.

Analysts say in the past most Chinese did not care about the equipment they used for cooking, but now, thanks to increasing health consciousness, consumers are seeking cleaner, more modern methods.

This is good news for cookware makers. The market in China is booming, with brand names such as Supor and Aishida reaping the benefits.

But due to their small size, some local firms are gearing up for a battle with larger foreign brands hungry for a piece of the China market.

Take the ASD Group, owner of the nation's leading cookware manufacturer. Last year its sales revenue reached over 900 million yuan (US$112 million), says company vice president Chen Meirong, adding that the company's net profit was about 100 million (US$12.5 million) last year.

Two of ASD's popular products are the pressure-cooker and non-stick pan. ASD sells its products mainly through large supermarkets such as Walmart, Carrefour and Metro.

In order to keep growing, ASD focuses on inventing new cookware and patenting its products. In time, it hopes to launch a global brand to help it compete against larger foreign firms.

Brand promotion

As a maker of consumer goods, ASD believes new products help it gain favour among buyers. Every year the company launches over 100 new products, according to Chen.

"Our consumers always hope that they can use the most modern cookware, so every year we will add some fashionable elements to our new products so as to draw their attention," he says.

The products, he says, not only extend their product line, but add vitality to the brand, which they believe helps to promote its name.

"Sales of our new products will account for over 30 per cent in total sales revenue every year," he says.

Now, the Zhejiang-based company is working with experts from Tongji University on the design of their products.

With the frequent launch of new products, intellectual property right (IPR) protection is an important factor for Chen and his staff.

"Every year we apply for dozens of patents for our new products, most of which are related to product design," he says.

ASD believes good sales work is another way of brand promotion. According to Chen, they have many advisers to introduce their products into supermarkets.

"It is an effective way to promote our brand," Chen says. "Many consumers get to know our products through the introduction of the advisers."

Chen says they have not invested a lot in media advertisements, such as television commercials, because the company doesn't think it's the right time.

Industry stumbling blocks

Although optimistic about the future of the company, Chen does see some problems in the cookware industry.

"Compared with foreign companies, Chinese cookware makers are comparatively small, which has hindered them from going overseas," he says.

"Moreover, many Chinese companies are still original equipment manufacturers (OEM) of foreign companies," he notes.

ASD itself is doing OEM work, which means they manufacture products that are sold under another company's name. It has become the cookware provider of companies from developed countries, such as the US and Germany.

Because of these arrangements, "in the overseas market there is no Aishida brand," Chen says.

Last year, ASD's exported products accounted for almost 50 per cent in the total sales figures of ASD.

Some firms' failure to grow has meant takeover by foreign companies.

Earlier this month, Zhejiang Supor Cookware Co Ltd confirmed its takeover by French firm SEB Internationale SAS for 2.37 billion yuan (US$296 million).

Despite being China's largest cookware manufacturer, the company agreed to sell a 61 per cent stake to the France-based producer of small domestic appliances in a three-stage transaction.

SEB wanted to take advantage of Supor's sound sales networks in China to develop its own brands. It was attracted by Supor's strengths in manufacturing and cost-cutting, says an analyst familiar with the industry.

Some analysts are against the deal, saying the government must prevent this investment, which they think will allow a foreign company to gain a monopolistic position in the local market.

"After taking control of Supor, SEB will monopolize the Chinese market," says the analyst. "It is not good for the development of the Chinese cookware industry."

"The take-over will have a negative effect on the industry," he says. "Chinese companies should go overseas in order to catch bigger market share."

Chen agrees, saying his company is considering developing its own brand for the global market.

(China Daily 08/28/2006 page9)

2013-07-17