As the world becomes more globalized, Chinese companies are taking on new roles and facing new challenges. Whether this generation of Chinese companies, who have grown up in the Reform and Opening Up era, has the strength and wisdom to navigate themselves onto the next economic cycle, while also staying true to their cultural identity and commercial values?
It is important to look not just at the emerging startups that are expanding overseas, but also at the established household brand names that have been driving China's economic growth steadily. These brands are familiar to Chinese people, as their products have been engaged in our daily lives for decades. Yet their significant contributions to China's economy merging into the global markets are often overlooked.
In 2023, EqualOcean proposes a new presumption that companies, on their way to glory, will without exception pursue globalization as a growth strategy, and that while going global may experience ups and downs, globalization itself is an unstoppable trend. In the "100 Multinational Corporations" series, we will get close to these brands and explore how they can stand out against geopolitical risks and trade protectionism, how they can overcome stereotypes and embrace a technology-driven and humanistic brand image, and how they can forge a bridge for friendly exchanges between China and the rest of the world.
While the documentary A Bite of China leaves foreign audiences mouthwatering in front of the television, some Chinese cuisine brands are taking initiatives to expand their business in the international arena. Among them, Din Tai Fung（Chinese:鼎泰丰）marks an exemplar which is not only well-received by the normal foreign customers, but also attracts the celebrities like Mel Gibson, Sophie Marceau, Jackie Chan to take a bite of the traditional Chinese food. What’s the charm of Din Tai Fung and how does it achieve business success? Let’s dive into the story of Din Tai Fung’s growth.
Din Tai Fung, founded in Taiwan Province in 1972, is a world renowned cuisine brand specializing in Xiaolongbao, a small, juicy, bite-sized dumpling that is filled with pork, seafood or vegetables. Over the past 60 years, it has gone through a journey from establishment to thriving with branches now in Japan, the United States, Singapore and other countries. As of now, this Chinese restaurant has opened more than 160 stores worldwide and won countless global honors. In 1993, Din Tai Fung was listed as one of "the world's top ten gourmet restaurants" by The New York Times; in 2010, its Hong Kong branch was awarded a Michelin star; and in 2014, it was listed as one of the "best franchised businesses in the world" by CNN Travel and a "restaurant worth visiting."
Hong Kong branch was awarded a Michelin star
One of the reasons for Din Tai Fung's long-lasting success is its adherence to quality. Regardless of the expansion, Din Tai Fung's founder Yang Bing-yi would always stick to his principle on the dishes. After repeated trial and error, Yang found that too many or too few folds in the "Golden 18-Fold Xiaolongbao", which is now a must-order, would influence the textures and appearance of the dish and settled on "18" as the proper number.
Din Tai Fung has also developed many new dishes, such as fried rice with pork chops and eggs, spicy wontons, sautéed spinach with Shaoxing wine, and rice wine soup dumplings, each of which is well-received by foodies. In 2021, Din Tai Fung achieved a revenue of approximately USD 150 million.
From a small workshop to the dumpling empire
Yang Bing-yi was born in Yuanping, Shanxi in 1927. In 1948, Yang, at his 20s, sailed to Taiwan to seek career opportunities. There he met his wife, Lai Penmei, while working at Heng Tai Feng Oil Shop. Two years after their marriage and the birth of their child, Heng Tai Feng was shut down and the couple decided to start their own business. They stayed in the cooking oil industry and named their new store "Din Tai Fung" after their former employer. In 1972, traditional oil businesses was impacted by the merchandised bottled oil. Yang switched to sell Shanghai dim sum, such as xiaolongbao, dumplings, and thousand-layer cakes.
Began in 1990s, and now 160+ stores around the world
In the 1990s, Din Tai Fung embarked its journey of going global. In 1995, Yang Bing-yi's son, Yang Jihua, took over the business and transformed it into a corporate management system. In 1996, Din Tai Fung opened its first oversea branch in Shinjuku, Japan. Four years later, a new restaurant opened in California, USA. By 2023, Din Tai Fung has opened over 160 restaurants in the world covering Singapore, Thailand, Indonesia, South Korea, Malaysia, Australia, United Arab Emirates, Philippines, and the United Kingdom.
Standardize the steps of making the 18-fold Xiaolongbao
Standardization is a very difficult task for Chinese catering industry. The taste of the dish can vary greatly due to the delicate differentiations of ingredients, cooking temperature, and seasoning. For foreign employees, it is difficult to learn without precise steps. To solve this problem, Din Tai Fung redefined the process with precise and quantified steps.
For example, making each Xiaolongbao should complete four procedures: dough preparation, rolling out the skin, filling, and wrapping, which should be done with 5 grams of dough, 6.5 cm diameter of skin, 16 grams of filling, and 18 folds. Besides, the chicken soup must be heated to 85 celsius degrees, and the ratio of sauce and vinegar should be 1:3, and so on. Din Tai Fung has taken standardization to the extreme by quantifying its production process, which laid the foundation for Din Tai Fung to become a global brand.
Hospitable service creating good customer experience
Din Tai Fung's services have been praised in the industry. At the daily morning meeting, service staff need to practice "smiling for 30 seconds" face to face. When walking around, service staff should observe the angle at which customers drink tea. If the cup is tilted more than 45 degrees, which means the tea is almost finished, and they should proactively refill it. The staff should not let customers order too much or only recommend expensive dishes. For Xiaolongbao, one broken piece should be replaced by another, and three broken pieces be replaced by a new basket.
The staff was offering detailed service with big smile
Besides, a small notebook is the secret weapon for Ding Tai Fung's staff to win over the customers. To create comfortable and enjoyable dining experience, Ding Tai Fung requires front-line staff to carry notebooks to record customers' habits and preferences, so that they can review the list of regular customers and their information. Whenever a customer pays a regular visit, Ding Tai Fung's staff will write down their characteristics in the notebook, and share this information with other colleagues. It is the warm and detailed services that make Ding Tai Fung's success. Statistics showed that during its peak period, Ding Tai Fung had a record of receiving 19 batches of customers in one table within one day, and at most, there were over 100 customers waiting in line for dining.
Emphasis on Talent Development and Management with Satisfactory Salary and Benefits
Din Tai Fung values internal employee training. Middle and high-level managers in the operation department should start from the basics, including those who have been with the company for 15-20 years or even more than 20 years. Meanwhile, Din Tai Fung implements a high salary and high benefits system, providing employees with salaries higher than other local catering enterprises. Senior staff above the level of restaurant managers can receive up to 20 months of year-end bonuses. If calculated based on a store manager's salary of CNY 100,000, the year-end bonus alone can reach as high as CNY 2 million. Currently, the starting salary for field staff is CNY 38,000, equivalent to the monthly salary of a mid-level manager in a five-star hotel, not including performance bonuses and dividends. Personnel costs have reached 46% and 48% in 2021 and 2022. Din Tai Fung believes that the core competitiveness of cuisine brands still lies in the human resources system. To retain talent, income is a basic prerequisite. On this basis, attention should also be paid to employees' spiritual aspects, such as improving their motivation and sense of belonging.
Competition with Local Industries when Going abroad
Most Chinese food companies going overseas will choose the United States, Japan, and Singapore as the first batch of target markets, and each has their own unique characteristics. The United States boast to have many renowned chain restaurants like McDonald's, Burger King, Subway, and Starbucks, which have formed unique brand cultures and stories with many loyal fans. American cuisines are concentrated in fast food enterprises, like hamburgers, pizza, fried chicken, etc. The brands are constantly updating their brand image to cater to consumer preferences and maintain brand vitality through product innovation with a high degree of standardization.
Japan has always been a battleground for many Chinese catering companies due to the spatial distance. The Japanese catering industry has entered a mature period, characterized by low growth and low death rates. According to Japanese catering expert Miyauchi Kai, the closure rate of restaurants in Japan is only 10%. The Japanese catering industry advocates productism, bringing single products to their extremes, such as beef rice bowls, ramen, tempura, and sushi, which occupy half of the Japanese catering industry. In terms of product refinement, they uphold the pursuit of perfection and craftsmanship. Japan has 62 listed catering brands, each of which are characterized as small and delicate, providing convenient and fast service.
Singapore is a multi-ethnic and multicultural country where food culture is colorful and diverse. On the one hand, Singapore's economy is developed and has huge commercial potential. On the other hand, since the Chinese population dominates in Singapore, and the language and food culture are similar to China's, giving promising prospect for Chinese cuisine brand. Whether it is street vendors, popular food chains, or exquisite Michelin-starred restaurants, cuisines from Japan, South Korea, China, Middle East, as well as the rest of the world, are all prevalent and scattered in Singapore's catering market.
Last month, Yang Bing-yi, the founder of Din Tai Fung, passed away at the age of 96. The legend ends, but the spirit lives on. Din Tai Fung has grown from a small oil shop into a multinational corporation over the past 65 years. Yang once summarized two management principles. The first one is tolerance, which means being able to accept losses, since those who cannot accept losses cannot survive in the catering industry. Second is professionalism and integrity that Shanxi businessmen firmly believe in. Although the scale of Din Tai Fung's 160 stores is not that large in today's Chinese catering industry, its global reputation and iconic Chinese cuisine brand still serves as the industry benchmark, and its pursuit of fine management and adherence to the craftsmanship spirit are also worthy of all Chinese brands' learning.
At this critical stage, the ESG2023 "the US Sub-Forum" will be held in Shenzhen on June 2, 2023. EqualOcean will invite the representatives of academic institutions and investment institutions, as well as company leaders, from the International Studies Institute of Fudan University, Sun Yat-sen University, Jinan University School of International Relations, Gaorong Capital, Vision Plus Capital, FreeS Fund, ZWC Partners, Source Code Capital, Niu Technologies, TikTok, SHEIN, NEIWAI, miHoYo, Tuya, MINISO, Dreame, Ecovacs, WYBOTICS, Lifen, and UniUni.EqualOcean analysts will also release the US Report 2023 at the US Sub-Forum, summarizing business opportunities and best practices for expanding into the US market in the new stage. Click the link to apply and scan the QR code below to learn more about ESG2023.
