One Small China Restaurant Writ Large. Really Large.
Had a discussion the other day with two super knowledgeable China people. Both of these people are businesspeople. Both are fluent in Chinese. Both have been living in China for at least a decade. One is a marketing person. The conversation started with my bemoaning how my favorite restaurant in Qingdao so rapidly deteriorated, in every respect. These two people said that virtually always happens and then they proceeded to give me the chronology of what happens to so many good restaurants in China:
1. Restaurant opens with nice space, really good chef, plenty of staff, and no skimping on ingredients.
2. Restaurant gets really popular and then chef asks for more money and when that is refused, he or she leaves. New, cheaper chef comes in and food quality starts to decline.
3. Decline in quality from #2 above leads to a small decline in customers.
4. Seeking to make up for the decline in customers, the restaurant owner starts skimping on the ingredients. Maybe they go from top quality fresh spices to cheaper dried spices.
5. Decline in the quality of ingredients leads to a decline in the number of customers.
6. Seeking to make up for the decline in customers, the restaurant owner lays off some staff and starts skimping on overall upkeep of the restaurant.
7. Decline in customers accelerates and restaurant eventually shuts down.
8. Owner blames new restaurant down the street for the problems.
We then started talking about how we had seen the same sort of thing with some Chinese products and Chinese suppliers of product to foreign buyers. We talked of how this sort of decline is nearly inevitable if you believe price is what drives your customers.
There is a whole lot of the above going on with Chinese companies and this sort of business is not going to endear one to Western buyers. But we three also talked about Chinese companies we knew that had very consciously broken the above mold and by having done so were thriving in both China and overseas.
Is the above what is holding back Chinese companies from better competing in the West? Is this changing? I say "yes," to both though I think it will all take a long time.
What do you think?
UPDATE: Just came across an excellent post over at Taikongron's Advice, entitled, "The China Branding Problem – its marketing, stupid!" which looks at this same issue from a different perspective.
Comments (9)
Read through and enter the discussion by using the form at the endBing - June 3, 2010 6:12 PM
The situation of the second one only happens to some restaurants which doesn't have famous dishes( perhaps they have something special, but definitely not famous). In the popular restaurants, if they one or more famous dishes, you cannot imagine the salary of the chef especially the one dealing with the core recipe. The restaurant owners are not stupid, because they know they will lose everything if the chef leaves. That is the real situation in many of the famous restaurants which are small but popular regional or national wide.
Handan - June 3, 2010 8:41 PM
Assuming your nicely simplified (yes, it's meant as a compliment) process outline is a good reflection of reality, the interesting question to me is:
What does it take to change?
If the blame is put on the restaurant down the street, no lesson is learnt. So the particular individual owner is not gonna change that much. So you are talking about a change more general, in the larger society.
and that seems to require better causel attribution skills to enable learning. What in turn makes that happen?
Dan - June 4, 2010 5:07 AM
Handan,
That is the question. I don't know the answer, but I think it is a combination of a new guard coming on and experience.
Inst - June 4, 2010 11:45 AM
I agree with the overall phenomenon but I've heard a different explanation. Instead of personnel conflicts and death spirals killing the restaurant, these things are actually planned for and the restaurateurs expect the food quality to go downhill very rapidly. It's close to Paul Midler's quality fade/profit zero; the restaurant starts out strong, attracts word of mouth, then the owners complete their bait-and-switch and start skimping on ingredients/staff to profit off the restaurant.
This actually occurs stateside in Chinese enclaves as well, and I would expect this to occur somewhat in Hong Kong.
Rodrigo Nunes - June 4, 2010 5:15 PM
I think the answer for both question is yes, as China is doing a huge effort to get the latest technology and improve product quality. I also think that what I call the "China model of production" (combining low waged working force with mass production of medium to low value added goods) will make "hardware" prices get lower and lower, this meaning there is no more game for companies (or countries) that used to depend on high value added electronics to survive. There is no more businnes for commoditie producers in the developed world, and it includes electronic conventionals or anything that can be easily reengeneered. The US and Europe should overpass the old jargon of keeping the (low skilled) jobs at home, and understand that if both want to continue as superpowers, it will be necessary to focus on services and intangibles exports.
Handan - June 4, 2010 7:42 PM
I've always thought experience is overrated. Learning ability can be quite independent from experience. Experience too often leads to no learning or wrong learning. What's more, learning results don't always turn in to practices, if there are no incentives.
China used to own many multi-generational trustworthy brands. Historical comparison as well as inter-national comparison would be highly interesting.
LoveChinaLongTime - June 4, 2010 10:38 PM
But...but...don't the Chinese always look at the big picture? Take the long term view? Why I've read in all those "China is Awesome" books that the Chinese are dedicated, committed business people that are not in it for short term gains or fast & easy profits!
Peter Hua - July 25, 2010 3:36 PM
I agree with INST, the same thing occurs in Chinese restaurants in Chinatown stateside. The quality inevitably goes down and the restaurant either goes out of business or moves to a new area and starts the whole process again.
Riccardo Benussi - July 30, 2010 4:42 AM
In my humble opinion of a hungry Beijing streets walker, I think the example is mama-huhu, the scenario is right but it's much more complex than that. What your two friends have broken down so systematically can be done for anything and anywhere on the globe. This can happen in Singapore, in Tuscany, in the Bay Area or in Buenos Aires: if the chef wants to be paid more, he'll get it or he'll walk.
An example that involves more "china-traits" could be hotels: shimmering galactic 3 or 4 star hotels that look like the latest 5+1 stars elsewhere and then semester by semester it goes down down down because they don't know how to keep the standards because they need an incentive that is very far away from prestige and it's: big money.
For any other issue related to services, I find Chinese (it's so hard to generalize a peoples this broad, you will accept my apologies) still a very service- and customer- oriented mentality when it comes to restaurants, hotels, customer support, transportation etc. Everyone knows their place and it's not like in many countries of the West where you feel embarrassed to get the waiter's attention or feel you have to be extra careful and polite to a maid on the hotel floor.