Major international groups are beefing up their operations here as consumer demand in the bread and cake sector expands rapidly
You have to whip up something extra special to make an impact in China's bakery business.
When Rich Products Corp arrived here 25 years ago, the multinational firm based in the United States was surprised by one suggestion from a Chinese company.
Specializing in providing varieties of dough, whipped toppings and non-dairy frozen food products to retailers, bakeries and stores, Rich was asked to roll out a different range of ingredients for the "mix-and-whip" process here.
In the US, bakery groups tend to blend their food products by using medium-speed mixers. In China, some bakeries are used to a faster technique.
"One bakery turned to me and said, 'I don't want medium speed, I want high speed'," William Gisel, now president and CEO of Rich, recalled. "They felt high speed produced better products."
Taking onboard the advice, the Rich team went back to the US and worked on "high speed" techniques to produce food ingredients for the Chinese market.
"We wanted to get the quality just right," Gisel said. "We are a global company, but we need to be very local in different countries. We also need to understand our customers' tastes and everything about them in different parts of the world."
The group has come a long way since branching out into international markets back in 1988. It now operates in 100 countries from Asia to Africa, and Europe to Latin America.
During the decades that have followed, Rich has honed its business model. "Our products here are not just the same as those sold in the US," Gisel said. "They are produced specifically for the Chinese market."
The group has three factories here in Shanghai, Suzhou, a major city in Jiangsu province, and Tianjin, which borders Hebei province, employing 10,000 workers.
Rich's product line has been expanded to 150 brands, including a variety of dessert toppings and doughs, to cater for the booming bakery market. It is also recognized as a food service provider to retailers.
"We believe there are great opportunities for growth, although it's difficult to predict what that growth will be. But we will be increasing our investment here," Gisel said, without disclosing detailed financial figures, revenue or sales numbers in China as the company is privately owned.
Fueling that growth will rest with the country's middle class shoppers and their passion for tasty treats.
In a survey released in August by Mintel Group Ltd, the privately owned market research firm in the United Kingdom, China's bakery market was worth 113.3 billion yuan ($17.81 billion) last year, an increase of 23.6 percent compared to 2013.
Mintel has also predicted that the sector will reach 139 billion yuan by the end of this year and top 253 billion yuan in 2020.
As the industry increases, bakeries and suppliers are rolling out new products to tempt customers.
"Chinese consumers are willing to try new ideas and that is what the food industry needs," Gisel said. "It keeps customers coming back to the stores."
Bread is still the most popular product in bakeries and supermarkets, with upmarket chains such as Paris Baguette and Tous Les Jours expanding their operations in tier-one and tier-two cities such as Shanghai, Beijing, Guangzhou and Shenzhen.
"Consumers see bread and sweet bakery products as an increasingly common treat, while closely tied to the desire for a healthier choice," Esther Lau, a research analyst at Mintel, said.
Tous Les Jours arrived here in 2005 and now has 46 stores and 30 licensed outlets. Paris Baguette set up shop in China in 2003 and has 118 stores.
Still, bread remains a snack product in Asia with afternoon tea, unlike in the West, where it is a staple food item.
For the market in China, perfecting a range of sweet bread products, such as chocolate-flavored loaves, has proved popular.
These variations are enticing younger shoppers into bakeries.
About 43 percent of Chinese consumers in their late 20s visit a bakery between two and six times a week, Mintel research highlighted in its report.
"We see a lot of young consumers in bakeries and cafes," Gisel, president and CEO of Rich, said. "The Chinese sector is heavily influenced by markets in Japan and South Korea. So what we focus on here is to look at what's happening in those markets."
As bakery groups and cafe chains scramble to attract customers, store design has become important. Relaxing in a cool environment appeals to younger customers, while comfort has become a major priority.
Data from the Mintel report showed that 57 percent of those people polled preferred to visit bakers with seating areas. Only 26 percent opted for the self-service format.
Looking ahead, the move toward healthier bakery products will help drive growth.
"Gourmet bakery chains are using the effective marketing mix of innovation and social media to develop convenient and healthy food choices for modern Chinese consumers," Lau, from Mintel, said.
