The China Syndrome: Products Help to Fuel Giant Economic Growth

January 3, 2006

There is no doubt that anyone who has visited China in the last decade as a tourist or businessman has seen the unbelievable growth taking place in every phase of the Chinese economy, save for population. (As of this writing the population is holding at approximately 1.3 billion people.) Like any other industry in China, the food industry is hardly an exception. When numbers are spoken about in China they are not in terms of tens of thousands or even hundreds of thousands, but rather in terms of millions and billions.

The Chinese want to be the winner in everything, and they are doing a good job of it. Recently, a leading newspaper published a photo of a tightrope walker standing on a wire, with the caption, “A wire walker has just completed 37 days living on the wire, a new world record.”

China plans on sending its first man to the moon in the near future, after its successful mission in outer space last year. In the daily press one can read that Airbus and Boeing just signed a $150 billion deal with China Airlines; that the final cost of the “Three Gorge Project” will amount to $280 billion, with four million Chinese having to be relocated; that Beijing is investing $80 billion in the 2008 Olympic games; or that each year there are one million new automobile sales. When Disneyland opens in Hong Kong in September, the forecast is that one million mainland Chinese will be visiting weekly.

The food industry is growing rapidly as well and exports are in the billions of dollars; of course the kosher food industry is also undergoing significant growth. Today there are hundreds of plants which have kosher certification in Mainland China, most of them producing food additives; food chemicals, such as antioxidants; preservatives, health supplements, dehydrated vegetables and frozen processed fish; and food chemicals for the food and pharmaceuticals industries globally.

There are now several hundred OU certified plants in China, a total that will double each year at the present rate, not including the plants requesting supervision for special runs, for which we have to be prepared if we want to maintain our position in the country. I predict that before long we will be sending over slaughterers and certifiers for the production of meat, which will be shipped kosher worldwide from China.

At present, most certified facilities in the food industry are relatively simple operations consisting of chemicals and freeze-dried/dehydrated fruits and vegetables which require periodic inspections by a qualified team of mashgichim. These plants are growing at an ever increasing rate.

There are currently many joint ventures in which large companies from Japan, the United States, England and Canada, to name a few, are investing billions of dollars to open factories on the mainland because of cheaper labor, and in the process are introducing very sophisticated technology. The government encourages privatization and joint ventures so that all the previously state-owned companies are being spun off to these businesses in what I would term pure capitalism. Because ninety percent of the mainland is agricultural, most plants are found or are being constructed near the location of the agricultural product.

Consequently, the OU certifies 12 Tunhe group plants in Xianjiang Province in the northwest, where tomatoes and apricots are harvested three months a year. It is no wonder that state-of-the art plants were constructed near the farms which have the most up-to-date equipment, imported from Italy.The tomato paste produced by the Tunhe group is shipped in 100 kilo drums and/or 300 metric ton plastic totes to large plants in the United States, which in turn use this tomato paste as a primary ingredient in their ketchups and soups. The same goes for the Qingdao region and Yantai in the central east, across the straits from Japan; as a result there are many factories being run by the Japanese with the state-of-the art technology for which Japan is known.

The shipping industry boasts that it is the largest in the world with the largest cargo ports, for example in Shanghai, so there is no problem sending products worldwide.

In the past few years transportation has improved dramatically and super highways crisscross the country, including the rural areas, so that trucking raw material to the plants and/or the ports has become much easier and more efficient than previously. It goes without saying that it also becomes easier for the RFR (Rabbinic Field Representative) to reach the plant than in the past. In addition, even in the most remote cities airports are being built at a very fast rate, providing the RFR with easier and more efficient access.

When I first was sent to Shanghai in 1981 to visit a citric acid plant seeking kosher certification, I arrived at a rat-infested hotel, my contact was nowhere to be found, and there were no telephones or any method of communicating. Moreover, I was being followed around. I couldn’t wait to leave the country. Today just about every Chinese has a mobile phone, even the farmers and the peasants in the fields; there are five-star hotels in all the major cities; and the sense of freedom and security are paramount as is the entrepreneurial feeling.

My most difficult trip was to the Tibet region of western China, which came at the end of an 18-day journey visiting 20 factories (15 of them as initial inspections), in which my mission was to witness the making of dried milk by the Tibetans from yak milk. To get to my destination I had to fly in to Lanzhou, and the drive from Lanzhou took almost six hours through the most treacherous terrain and roads; I had to go back the same way. It was a most interesting trip, as I had to enter a Tibetan home to see the process. It was eye-opening to see people who are still living the exact same way they did hundreds of years ago with nothing changed, no running water, no electricity, no gas heat, and no refrigeration. Old cast iron stoves were fired with sticks of wood, a barrel of water was used for washing purposes, and they were still using the sun to make dried milk which is sold to casein manufacturers. Since there is no refrigeration they had to dry the product the day the yak was milked so it would not spoil.

There is no doubt that although the OU is presently providing supervision primarily to food additives, food chemicals and pharmaceutical ingredients which are used as ingredients in intermediary and/or retail consumer products, it is just a matter of time before the demand for certification from Chinese manufacturers producing retail products will come as well. In fact, we are already supervising the hand-decorated candies and lollipops you find in the retail market, especially before holidays such as Purim and Chanukah.

There are now many food exhibitions in China at which the OU has a booth in order to better educate the interested companies about kosher. It is truly amazing how “kosher” is now a household word in Chinese food plants, especially those that process and manufacture food additives.

Originally it was brokers or trading agents who had to encourage and convince Chinese manufacturers to apply for kosher. However in the last year or so it is already fashionable for the plants in China to apply directly to the OU, especially now that the OU has a Chinese website, an office in Beijing where Mr. Joe Yannan is the OU liaison representative, plus brochures and literature in Chinese. It is also very interesting that the Chinese are proud of their history of harboring the Jews in Shanghai during World War II. The Chinese feel they have a lot in common with Jews, at least when it comes to business and trading, so when they realize that kosher is a Jewish concern, they are very open to the idea and are curious to learn about it.

After I made a plant inspection I was talking politics with the plant manager. I had just read that the Chinese Foreign Minister had snubbed the Japanese Prime Minister by not showing up to a scheduled meeting with him. I said to the plant manager, “I understand China and Japan don’t have such good relations right now.” He responded, “Yes, no more friendly relations with them, just business!” That’s how China can be described in today’s world, “All business, yes everybody’s business!”

That business, increasingly, includes OU Kosher.


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