With the Prolonged COVID-19, Home Economy Thrives in China... Korean Ramyeon Sells Better

Prolonged COVID-19... Reluctance to Go Out and Ramen Stockpiling Increase
Nongshim and Samyang Expected to Overcome Logistics Disruptions and Perform Well
Premium and Spicy Flavors Continue to Gain Popularity... High Sales Growth Expected

[Asia Economy Reporter Choi Sunghye] As the prolonged COVID-19 pandemic has led to the rise of the homeconomy (a neologism combining "home" and "economy") trend where economic activities are conducted online, domestic ramen companies such as Nongshim and Samyang Foods, which have entered the Chinese market, are expected to benefit. Similar to Korea, consumers in China are avoiding outdoor activities due to concerns about COVID-19 infection, causing panic buying through e-commerce channels.

According to Ebest Investment & Securities on the 5th, an analysis of Chinese e-commerce consumer data shows that since the outbreak of COVID-19, demand for instant foods like ramen and fresh vegetables has significantly increased compared to the previous year. In particular, e-commerce ramen sales rose by 133.43% year-on-year. Kangshifu, the number one company in the Chinese ramen market, saw sales increase by 150.54% compared to the previous year, while Tongyi, the runner-up, recorded a staggering 297.14% growth. According to the World Instant Noodles Association, China is the dominant leader in the global ramen market, accounting for 38.9% of global consumption.

Domestic ramen companies had concerns about logistics disruptions due to the COVID-19 situation, but panic buying is expected to mitigate any significant damage. According to Kiwoom Securities and the companies, Nongshim, which holds the fifth-largest market share in ramen, is estimated to have exceeded 40 billion KRW in exports to China in the first quarter of this year, growing 6.8% compared to the previous year. Nongshim also operates local production in China, achieving annual sales of approximately 300 billion KRW through this.

Samyang Foods, a strong player in online sales, is also expected to achieve over 55 billion KRW in exports to China in the first quarter. Early last year, Samyang Foods replaced its Chinese distributor with Youbei, expanding its distribution network from the coastal areas to inland China. Thanks to this, exports to China are expected to increase by 19.9% compared to the previous year.

The industry expects domestic ramen companies’ sales in China to continue high growth for the time being. The Chinese ramen market itself is projected to grow at an annual average rate of over 3% for the next five years, and Chinese consumers are increasingly favoring premium ramen and spicy flavors.

Jomi Jin, a researcher at NH Investment & Securities, stated, "Premium products are expected to replace low-priced products in the Chinese ramen market going forward," adding, "The market share of premium ramen products is expected to reach 23% this year." Domestic ramen companies are targeting the market with premium images and spicy flavors. Nongshim’s unit selling price is set about 60% higher than other major ramen companies in both cup noodles and bagged noodles markets.

Chinese consumers’ preference for spicy flavors is also on the rise. Nongshim began promoting "Korean-style spicy flavor" through Shin Ramyun, while Samyang Foods is recognized as a leader of the spicy flavor craze with its Buldak Bokkeum Myun (Hot Chicken Flavor Ramen).

As the Chinese ramen market continues to grow alongside the e-commerce market, Nongshim and Samyang Foods are actively entering the online market. By 2018, the number of internet users in China reached 829 million, and e-commerce users reached 610 million, a 14.4% increase from the previous year. In 2018, Samyang Foods’ Buldak Bokkeum Myun ranked first in sales among Korean food products on Tmall, China’s second-largest cross-border e-commerce platform, and it achieved the highest sales among Korean food products during last year’s Singles’ Day. Buldak Bokkeum Myun gained popularity as Wanghong (internet celebrities) introduced it, ranking within the top 10 in Taobao sales and selling about 1.8 million packs per month. Nongshim’s online sales share in China is still small, but its online sales revenue is expanding annually.

This content was produced with the assistance of AI translation services.