Low-cost advantage aiding Chinese bakery firm's expansion into the Middle East

Stephen Feng, director of Shenzhen Rungu Food, said the company has been operating for more than 16 years and its production capacity has been rapidly growing. He also said they had to find new customers and new markets due to heightened competition in the local food manufacturing sector.

“So, we have come here (to the Gulfood show) to showcase our products and capability, and to find new customers and markets,”​ said Feng.

In terms of the Middle East’s market potential and business opportunities, Feng said there were high-volume opportunities.

He said the Middle East had few biscuit or cookie manufacturers, yet consumer demand for such products was high.

“Even if there are factories here, their prices are very high. We can make a similar quantity, at a lower cost. So they come to buy from us,”​ said Feng.

Private-label and franchise advantage​

Feng said, apart from capacity, having their own design department helped, especially in franchise or private label production.

“I do believe factories here (in the Middle East) cannot make private-label goods for customers due to the quantity involved. But we can,” ​he said.

“If it is a very big quantity (due to economies of scale), they might be able to do private-label production at a requested price. But, in our case, we have the ability to do so even for small quantities.”​

Shenzhen Rungu has its own brands such as Dringo and Hapi, and mainly produces gummy candy and butter cookies. However, it has a host of products under franchise for popular character brands such as Hello Kitty and Doraemon, as well as private-label manufacturing.

The company recently launched new product ranges for Disney, and other licensed cartoon brands. It also plans to develop more licensed candy and chocolate products for Disney, Doraemon and Hello Kitty this year.

In terms of candy, some of the recent trends he has noticed is that there are more candies in the market having health-beneficial ingredients in them such as collagen and Vitamin C, which he says is now a very important element. There are also more gummy candies with fruit juice.

The company has recently purchased machinery from Italy to produce Italian-style filled biscuits — such as with chocolate or flavoured cream. Feng said the machinery would be operational in April, and is currently being shipped to their new factories in Jiangxi and Zhejiang that were set up last year.

Feng said the company has been growing steadily in terms of new markets, new customers as well as new products. Today, in Asia, its products are in more than 30 countries including Saudi Arabia, Japan, Korea, China, Thailand, Malaysia, Vietnam, the Philippines, Mongolia and Singapore. Its products are also exported to Europe and the US.

Shenzhen Rungu has about 200 permanent full-time workers. In 2016, company sales hit US$450m.