Minimum wage rise means frozen dumplings for China

Featured - July 11th, 2012

Chinese restaurants, under strain from rising minimum wages, will now serve frozen dumplings and customers “won’t even know the difference” between frozen and fresh, according to new consumer data.

Increasing labor costs have pushed restaurants into serving frozen dumplings instead of the time-consuming fill-and-fold ones. According to analysts for the Financial Times, frozen dumpling sales will rapidly grow as dumpling shops and restaurants opt for labor-free dumplings amid rising minimum wages. The government has brought the minimum wage up 20%.

US food company General Mills, the leading frozen dumpling maker in China, is one company which sees a smooth ride to the shift. Its Wanchai Ferry brand accounts for 44% of the market with sales, growing annually, that peaked at $200m last year. Head of General Mill’s China businesses, Gary Chu, told the FT, “People used to make dumplings at home but now nobody has the time because it’s messy. Today’s women don’t want to cook anymore.”

The Wanchai Ferry is facing growing local competition, underlining the quality of local brands. General Mills indicated net sales worth $550 million in China last year. It predicts that they could reach $900 million by 2015. General Mills is also planning to expand beyond frozen food and introduce yoghurt brands to the market.