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Author's profile photo John Ward

What Trendy Bakeries Can Tell You About China’s New Economy

Consumer tastes in China are changing, and in the nation’s expanding cities, coffee shops and Western-style bakeries are definitely part of the phenomenon.

A couple of years ago, The New York Times reported that while baked goods are not a staple of a traditional Chinese diet “. . . they have been quickly catching up among China’s urban middle class.

The article cites industry insiders who point out that more and more young Chinese city dwellers, influenced by Western culture, now favor bread over more traditional breakfast fare. What’s more, Chinese consumers are increasingly buying cakes for special occasions like birthdays and other celebrations.

At the same time, according to the Coffee International Organization, coffee consumption increased 16% per year in the country from 2004 to 2014.

These trends haven’t gone unnoticed.

International food chains and coffee shops have been expanding their presence rapidly in this vast country where more than 819 million people live in China’s cities alone. Furthermore, foreign investors aren’t the only ones looking to capitalize on these changes in appetite.

Among the competition for China’s new café crowd you’ll also find some home-grown businesses. In China’s Shandong Province, this includes Qingdao DanLex Food Co. Ltd. – already one of the oldest and largest bakery chains in the region.

Sweet Success for One Local Company

“Today, DanLex has over 200 locations and more than 1,800 employees in Shandong,” says Shuzhai Wang, General Manager at Qingdao DanLex.

As Wang explains, the bakery chain offers Chinese consumers more than 1,000 different products – everything from breads, cakes, and desserts, to traditional festival foods like mooncakes and sweet dumplings.

And yes, DanLex serves up plenty of fresh-brewed coffee too.

But while the company’s extensive menu may combine trending treats with ancient favorites, DanLex’s approach to growing its business operations is totally modern.

“First, DanLex has hired experts who are highly-trained in the art of creating Western-style pastries,” Wang says, “and the company adheres to strict standards in both food safety and production.”

The company also worked with implementation partner, Qingdao Huazhi Information Technology Company, to ensure consistent business processes and data management across DanLex’s various branch locations and three production facilities.

Based on the SAP Business One application and the SAP HANA platform, this system has helped the bakery chain automate its production planning processes and gain a better understanding of customers’ buying habits through more accurate data analysis.

For DanLex, the recipe for successful business growth is pretty straightforward.

“Many small and midsize enterprises are facing non-standardized business processes,” notes Wang. “But they need to avoid huge investments, bloated IT teams, and long implementations.”

An Ongoing Trend

China’s middle class and urban populations continue to grow. Meanwhile, an increasing number of Chinese are travelling abroad. So trends like China’s growing consumption of coffee and Western-style baked goods are likely to continue as well.

In fact, the coffee giant Starbucks expects China to eventually overtake the United States as the coffee chain’s largest market.

Meanwhile, Qingdao DanLex has its own vision of the future. The company foresees expanding beyond 800 stores in Shandong Province – all of them sharing a singular goal.

“We want to provide the perfect consumer experience,” says Wang, “with great tasting products and meticulous service.”

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