As the gates of the Chinese market began to open in 1978 through Deng Xiaoping’s Four Modernization Policy, western industries began scrambling to access the 1 billion prospective customers within China’s borders. The chocolate industry in particular made a noticeable effort in trying to alter the Chinese diet so that it could include the massive quantities of the sweet treat that western societies have grown so fond of. However, despite their efforts throughout these years, the average person in modern day China only consumes about “1.8 ounces of chocolate annually”. In comparison, Switzerland consumes “22 pounds per person” and the U.S. consumes “11.7 pounds per person” annually (Allen, 28). But what factors in China have contributed to this stark difference? This blog will address how cultural barriers and distrust in dairy products have deterred the spread of chocolate within China’s rapidly growing populace.
The disparate cultural layout of China’s provinces has proven to be difficult for chocolate companies to maneuver. For starters, although the Chinese ethnic diversity is mainly homogenous with “92 percent” of the population being Han Chinese, the culinary traditions are not. For example, the north prefers “salty” foods, while the south favors “sweet and fresh”; “spicy” is the ideal flavor in the east, as opposed to the west, which adheres to “sour” flavors (Allen, 23). This amalgamation of preferences has made it difficult for chocolate companies to create products that would satisfy the majority of the population and make lasting impressions on anyone that is willing to go out of their comfort zone to purchase the exotic confectionaries.
Furthermore, older generations of Chinese were accustomed to a “limited range of foods” due to the tough economic times of the 40’s and 50’s. This caused monotony in the citizens’ diets, as their palates became accustomed to eating the same salty foods well beyond the moment China’s borders opened to foreign lands. As a result, the introduction of chocolate into the Chinese diet in the ‘80’s was not well received because “the sweetness of chocolate [was] too foreign and too extreme” (Allen, 27). This deterred people from consuming it in their daily lives due to how abnormal it was when compared to the average Chinese foods at the time; thus, it was considered a luxury to eat chocolate, which could be equated to how westerners view fine wine. This also proved that traditional marketing methods that worked on average westerners would not function with the Chinese populace. To account for this, the exotic and sweet treat was introduced as something one would give as a gift during a special occasion rather than for self-consumption. The following Chinese Dove Commercial is a perfect example of this practice. During the ‘80’s and ‘90’s, chocolate as a gift accounted for “over half” of the sales in China, but so long as chocolate continued to be viewed as a gift, it would never reach the heights that we see in the west. Younger generations of Chinese citizens, who have grown up eating the popular dessert, have been known to be more likely to purchase it for self-consumption. According to a study by the New York Times, modern Chinese chocolate consumers mostly consist of young people ages fifteen to twenty-four, which shows that there is still hope for chocolate as a commodity in China’s future.
One other reason why Chinese people have avoided chocolate and other dairy-based products has been because of a general distrust in the quality of Chinese milk. One incident, in particular, caused Chinese trust in milk products to dwindle. According to a Harvard Business School case study, in 2008, Sanlu, a milk provider, started adding increased amounts of melamine in their products in order to maintain protein content standards. These increased chemical levels killed six infants and made 300,000 other people sick. This article by Forbes gives more details on how this incident has effected the Chinese dairy industry. After this incident, many other milk brands were found to have this exact same problem with their products, thus, causing widespread skepticism towards Chinese dairy. Chocolate in China, which contains at least 15% milk powder, took a major hit within this scene. One article from Reuters recalls how on September 29, 2008 Cadbury had to shutdown eleven of its Chinese chocolate products due to the suspicion that they were contaminated by melamine. Eventually, the company was forced to close three of its chocolate factories within China. Below, you can find a chart to visualize how much of the Chinese chocolate market the top companies had during the year of 2008. As expected, Cadbury was not doing so well after the milk scandal.
As a result of this scandal, the confectionary industry has since slowed down, but the Chinese government has imposed tighter regulations on the milk industry in order to regain customer loyalty and trust. For instance, in 2009, the government passed a series of legislation that mandated dairy product producers to raise industry standards, bolster the barriers of entry, and promote the development of large-scale dairy farms, which tended to have higher quality products than their smaller counterparts. These tight regulations allowed for our favorite confectionary treat to make a comeback in the country years later. In 2012, CNN declared that chocolate sales in China grew about 19%, which accounted for $1.9 billion in sales, so we can see that chocolate is here to stay in the long run and is slowly making its way into the Chinese hearts and stomachs.
Allen, Lawrence L. Chocolate Fortunes. American Management Association, 2010.
Burke, Samuel. “Who Consumes the Most Chocolate?” CNN, Cable News Network, 17 Jan. 2012, thecnnfreedomproject.blogs.cnn.com/2012/01/17/who-consumes-the-most-chocolate/.
Jones, David, and Tan Ee Lyn. “Cadbury Withdraws China Chocolate on Melamine Concern.” Reuters, Thomson Reuters, 29 Sept. 2008, uk.reuters.com/article/uk-cadbury/cadbury-withdraws-china-chocolate-on-melamine-concern-idUKTRE48S2B520080929.
Kirby, William and Dai, Nancy Hua. (2016) Yili Group: Building a Global Dairy Company. 9-317-003. Cambridge, MA: Harvard Business School.
Shen, Samuel. “Chocolate Makers Try to Satisfy a Picky Chinese Palate.” The New York Times, The New York Times, 3 July 2008, www.nytimes.com/2008/07/03/business/worldbusiness/03iht-choco.1.14202940.html.