Chicken and duck skin pretending to be pork! The incident involved 1.4 million packs of dumplings, and Haibawang was fined 500,000 yuan

Image source: Visual China

Blue Whale Financial Reporter Zhang Jinglun

Recently, the Shanghai Market Supervision Bureau announced the typical cases of anti-unfair competition in 2023, with more than 1,500 cases. Among them, the cabbage and pork dumplings sold by Haibawang (Shantou) Food Co., Ltd. (hereinafter referred to as "Haibawang") were suspected of false promotion of the product because the content of chicken or duck skin was higher than that of pork, and was fined 500,000 yuan.

In response to the relevant circumstances of the punishment, the official staff of Haibawang responded that the punishment incident was a few years ago, mainly because the labeling of cabbage and pork dumpling products was not standardized and flawed, and it has been rectified. Now the products sold on the market are in line with the requirements of national standards, and there are third-party inspection products, and there are no products that were not standardized before.

In fact, before this incident, Haibawang had been exposed many times as counterfeiting and suspected of false propaganda.

"After the 'suspected false publicity' of Haibawang is exposed, it will have a certain negative impact on the brand. Consumers may have doubts about the integrity of businesses and concerns about the quality and safety of products. Jiang Han, a senior researcher at Pangu Think Tank, believes that the extent of the decline in brand influence depends on how companies respond to the crisis. If companies can take effective measures in a timely manner, sincerely apologize to consumers, and ensure product quality and safety, then the negative impact of the brand may be mitigated to a certain extent. Conversely, if the business does not handle it properly, the brand image can be seriously damaged.

Repeatedly "selling dog meat on the head of a sheep"

According to the news released by the Shanghai Market Supervision Bureau, from November 2020, affected by the sharp increase in pork prices, in order to reduce the cost of raw materials, Haibawang has greatly reduced the pork ingredient content in 19 quick-frozen dumpling products such as "cabbage pork dumplings 500g", resulting in the content of chicken or duck skin in the ingredients of the above products being higher than that of pork, and pork is no longer the main ingredient of the above-mentioned dumpling filling ingredients.

In order to gain a competitive advantage, Haibawang designed and produced its own product packaging, using a striking font on the outer packaging of the above-mentioned 19 quick-frozen dumpling products with "pork dumplings" as the product name, and did not remark in a conspicuous position to indicate the change of the main ingredients of the product, resulting in consumers misidentifying the ingredients of the product. At the time of the case, Haibawang sold a total of more than 140 packages of the above-mentioned types of quick-frozen dumpling products.

The Shanghai Municipal Administration for Market Regulation believes that Haibawang's use of product names to falsely advertise product traits violates the first paragraph of Article 8 of the Anti-Unfair Competition Law of the People's Republic of China, which stipulates that "business operators shall not make false or misleading commercial promotions about the performance, function, quality, sales status, user evaluation, and honors of their products, so as to deceive and mislead consumers", and made a decision to fine 500,000 yuan.

According to the information on the official website of Haibawang, Haibawang International Group is a diversified enterprise group integrating catering, quick-frozen food, real estate, hotels and trade logistics. Haibawang (Shantou) Food Co., Ltd. is equipped with more than 30 food production lines, 4 large-scale production bases, with an annual production capacity of more than 150,000 tons of quick-frozen food, and the product line involves more than 200 varieties of hot pot dumplings, glutinous rice balls, dumplings, balls, fish slurry products, skewers, buns, meat products, salads, etc.

However, it is worth noting that such a well-known enterprise in the quick-frozen food industry has been exposed many times in the past few years to product quality problems such as "selling dog meat on the head of a sheep".

As early as 2016, the relevant agencies conducted random inspections on the "Sea Princess" peeing beef balls under Haibawang, and no bovine-derived ingredients were detected in both cases. In 2022, the Shanghai Municipal Commission for the Protection of Consumer Rights and Interests purchased a batch of fish balls on an e-commerce platform and found that most of the product ingredients were "surimi" or "frozen surimi", and many fish ball products were adulterated with other meats.

For the sake of cost and taste, "mixed meat" has become a common phenomenon in the industry

In the field of quick-frozen food, this phenomenon of "mixed meat" has long become a norm. According to a previous report by the Beijing News, 8 of the "beef" dumplings sold by Sanquan and Synear contain pork or pork and chicken, and 10 of the "pork" dumplings of Sanquan, Longfeng and Baiyu have chicken ingredients added.

Regarding the addition of other meat to the dumplings, the customer service of Synear responded at that time that it was mainly for taste. In addition, Synear Food also said that all its products are clearly marked one by one in accordance with the "International Food Safety Standard General Principles for the Labeling of Prepackaged Food" (GB 7718-2011), in order of decreasing proportion of raw materials. Sanquan Foods' customer service said that its "mushroom pork stuffed wonton" product does contain other ingredients, but pork and shiitake mushrooms are the main ingredients, so the product name is taken this way. The addition of chicken to dumplings with the nominal "pork" is mainly based on comprehensive considerations such as research and development.

Improving the taste of fillings and reducing the cost of raw materials are attributed to the two main reasons for the production of this "mixed meat filling" product by quick-frozen food companies. Among them, cost reduction is probably the more critical consideration. From a cost point of view, there are indeed differences in the prices of chicken, pork, and beef under the same specifications. According to the data monitored by the Ministry of Agriculture and Rural Affairs, as of 2 p.m. on January 11, the average price of pork in the national agricultural products wholesale market was 19.81 yuan/kg, beef was 71.12 yuan/kg, and white chicken was 17.61 yuan/kg.

Different from Haibawang's alleged false publicity, these brands were exposed as "impure" materials, not that the chicken content in pork dumplings exceeds pork, and the pork content in beef dumplings exceeds beef.

According to Zhu Danpeng, an analyst in China's food industry, it is very necessary for Haibawang to be punished accordingly. Many food companies adopt similar methods in the process of competition, the first is to cut corners, the second is shoddy, and the third is to defraud consumers. The punishment of Haibawang protects the legitimate rights and interests of consumers, and also purifies the chaos in the industry to a certain extent.

Chen Xiaolong, an investor in the food and beverage industry, said: "The price of chicken is cheaper than pork, and the price of duck skin is cheaper. Merchants take risks in order to increase profits, and finally damage the brand image, which is really a kind of killing chicken and egg. ”

"The Sea Overlord incident also put forward a new idea for the whole society. Fu Minrong, a lawyer at Shanghai Xinwenhui Law Firm, told the Blue Whale financial reporter, "Due to the uncertainty of consumers, the fines were handed over to the state treasury, and the real victim consumers did not receive the compensation they deserved." Moreover, the fine of 500,000 yuan is actually painless for the "Sea Overlord". Now that public interest litigation does not constitute an obstacle at the legal level, it is recommended that the procuratorate and the consumer protection association should file a public interest lawsuit to impose punitive civil compensation on companies such as "Haibawang", and use the money obtained from the compensation to set up a "consumer injury compensation fund", from which consumers can be compensated if their rights and interests are harmed in the future. ”

The head brand effect of the quick-frozen food industry is significant

Affected by the fast-paced life, consumers' demand for convenient and fast food is increasing, and the scale of China's quick-frozen food market is expanding. According to iiMedia Research, the scale of China's quick-frozen food market continues to expand, and the scale of China's quick-frozen food market has reached 168.85 billion yuan in 2022 and is expected to reach 213.09 billion yuan in 2025.

According to the above-mentioned research report of iiMedia Research, in 2023, Chinese consumers will prefer quick-frozen food in the hot pot food category, accounting for 68.4%, followed by meat (62.7%), dumplings (55.3%), and glutinous rice balls (51.7%). Among the brands that consumers have purchased, Synear, Chia Tai, Anjing, Wan Chai Pier and Sunner are among the top five, and in addition to these five brands, the consumer choice of other quick-frozen food brands accounts for no more than 30%, and the industry leading effect is obvious.

It can be seen that the quick-frozen food industry currently has a high degree of industry concentration, the yield of the head enterprises is considerable, and the head brand effect is obvious. Under this pattern, leading enterprises can make good use of the scale effect to continuously consolidate their position, and continue to launch new products and further expand the market by virtue of strong financial strength and R&D capabilities. Coupled with this turmoil, if Haibawang wants to continue to lay out and cultivate, the future may not be easy.

On the other hand, as a leading food enterprise with an annual turnover of 2 billion yuan, Haibawang has not been listed for a long time, which is also a long-term concern of the market.

Jiang Han told the Blue Whale financial reporter that there may be many reasons why the company has not been listed for a long time. On the one hand, the enterprise may believe that the current operating conditions and market environment are not suitable for listing, and on the other hand, the enterprise may have some problems that are difficult to solve, such as poor financial status and imperfect corporate governance structure, which make the enterprise temporarily unable to meet the conditions for listing.

Chen Xiaolong believes that whether a company is listed, when to choose to be listed, and where to be listed, involves many factors, otherwise, even if it is listed, the market value is not good, and even below the issue price is possible, if the ideal financing goal cannot be achieved, it is better to wait for the right time. The frozen products industry products are mature, and it is not easy to make differentiation, the gross profit and net profit are not high, mainly relying on scale profits, and at this stage, the public pursues cost-effective consumption orientation, and it is not easy to make money from quick-frozen products.