Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

China's Leading Indicator as Goes the Instant Noodle, So Goes

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

China's Leading Indicator as Goes the Instant Noodle, So Goes

Article excerpt

A crumpled instant-noodle bowl ground into the mud is an unlikely symbol of economic vitality. But during China's boom years those bowls were as ubiquitous around Chinese construction sites as the high-rise cranes above them.

That was no accident. For millions of Chinese workers, instant noodles were the convenient meal of choice, available for a few cents in every commissary and convenience store. And China's instant-noodle makers prospered. Between 2003 and 2008, annual instant-noodle sales expanded to $7.1 billion from $4.2 billion.

But just as China's economy has slowed, so too has its appetite for instant noodles. Earlier this month, Tingyi, China's biggest noodle maker, was removed as a component of Hong Kong's Hang Seng Index after seeing its noodle profits drop 60 percent. China's instant-noodle sales are down 6.75 percent this year, the fourth consecutive year of decline.

The first problem is demographics. China's instant-noodle makers grew in parallel with an economic boom that was fueled by the migration of low-cost workers from the countryside. But China's working-age population has been in decline since 2010, and in 2015, the migrant population fell for the first time in 30 years. With more workers staying home, the incentive - and desire - to eat a prepackaged bowl of noodles was likely to decline, and it has.

There's also the matter of the slowing economy. In 2015, sales growth of inexpensive food and consumer products hit a five-year low, according to a June study from Bain Capital. Declines were particularly steep in products that cater to blue-collar workers, such as cheap beer (down 3.5 percent) and instant noodles - a phenomenon that Bain partly blames on Chinese jobs migrating to lower-wage countries.

What's bad for noodle makers is great for many others. Rising wages have improved living standards and expectations for millions of Chinese workers. …

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