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In recent years, Chinese catering companies have been booming in their overseas expansion, with many categories flourishing, including tea, coffee, hot pot, pastries, etc. According to incomplete statistics, more than 200 domestic catering brands will open stores overseas in 2023.

The development of the entire catering industry cannot be separated from policy support. In March this year, the Ministry of Commerce of China and nine other departments issued the "Guiding Opinions on Promoting the High-Quality Development of the Catering Industry", proposing to accelerate the "going out" of Chinese food. Support catering operators to actively explore overseas markets. Strengthen cooperation with key countries and regions in areas such as inspection and quarantine, actively promote Chinese chefs to work abroad, and support catering raw materials and auxiliary materials to enter the international market. Explore the "Chinese + Vocational Skills" project and encourage Chinese food professional colleges to expand international cooperation channels. Encourage domestic professional catering evaluation institutions to carry out international evaluation of Chinese food and enhance the international influence of Chinese food evaluation.

Chinese catering enterprises have experienced different stages of development in going global. According to the 2024 China Catering Enterprises Going Global to Southeast Asia Research Report (Singapore) released in April this year, the first Chinese restaurant in the United States was opened in San Francisco in 1849, marking the official entry of Chinese food into the overseas market. With the deepening of China's reform and opening-up policy at the end of the 20th century, more and more Chinese people began to explore the international market. Old state-owned catering companies represented by Quanjude, Donglaishun, and Ding Taifeng actively sought to open up new markets in developed countries such as Europe and the United States. Around 2010, China's catering industry, represented by leading private Chinese restaurant brands such as Haidilao, Meizhou Dongpo, and Huangjihuang, started a new round of international layout, focusing on the accuracy of market selection, and the target markets include Singapore, the United States, Australia, Japan, etc. Since 2023, Chinese catering brands have entered a new stage of development in going global, and market selection is more concentrated in Southeast Asia. Mongolia, Kazakhstan, the Middle East and other countries and regions in the "Belt and Road" initiative have also become markets of concern to catering brands.

Among the many companies that have "gone global", Happy Lamb was founded by the founding team that once created the "first Chinese hot pot stock". Since 2016, the company has established more than 100 chain hot pot restaurants in more than 10 countries and 90 cities, receiving 6 million customers from home and abroad each year. At the same time, the company has established an international industrial chain "from pasture to table" to ensure the supply of food ingredients for stores.

Yang Ou, the current vice president of Happy Lamb, has been deeply involved in the catering brand marketing field for 25 years. He has served as the head of brand marketing for McDonald's, Yum! Brands, and Burger King, and has practical experience in international brands. Recently, a reporter from 21st Century Business Herald conducted an exclusive interview with Yang Ou on topics such as the characteristics and challenges of Chinese catering companies' brands going global.

Yang Ou. Data map

The key to Chinese catering going overseas is whether it can enter the mainstream market

"21st Century": Please briefly talk about Happy Lamb's business layout at home and abroad and its future plans.

Yang Ou: Happy Lamb is a new brand created by the founding team of the "first Chinese hot pot stock" listed in Hong Kong. In 2016, Happy Lamb opened its first store in the United States, and its market positioning gradually shifted from mainly targeting the Chinese community to overseas customers. To date, Happy Lamb has opened more than 100 hot pot chain stores in more than 90 cities in more than 10 countries and regions around the world, covering the United States, the United Kingdom, Sweden, Australia, Hong Kong, China, Vietnam, Singapore and mainland China.

In general, Happy Lamb's development strategy is widely distributed across countries, and we have tried it in different countries and cities, and gradually grown stronger. Specifically, we mainly open a store in a country or city on a trial basis, and then consider whether to continue to expand the market in the same region based on the local operating conditions.

Considering that overseas Western customers account for more than 60%, it means that our business model has been accepted by the local mainstream market. In the future, Happy Lamb's layout will focus on overseas markets, and it is expected to add 100 more hot pot stores overseas.

"21st Century": In your opinion, what are the main aspects of the competitiveness of branded restaurants like Happy Lamb in overseas markets?

Yang Ou: I think the core competitiveness lies in the product. To layout in the global market, the main products need to have characteristics that are generally accepted by consumers in various countries. Among the Chinese catering categories, hot pot has undergone years of development and has a good acceptance and consumption base in the overseas market. Specifically for Happy Lamb, our founding team opened a store in Canada more than 20 years ago, so it can be said that it has the "gene of going overseas". In addition, compared with Sichuan spicy hot pot, our hot pot base focuses on the concept of "no dipping sauce". It is mainly made of old chicken, beef bones and 36 Chinese herbs to make soup, paired with beef and mutton, and focuses on "fresh, natural, healthy and delicious". This is unique and attractive to overseas customers.

Secondly, the supply chain is an important part of ensuring product quality. We have established a lamb supply chain system in the UK and Australia, and cooperated with local ranches and meat associations to facilitate the supply of goods to overseas markets. In addition, we have set up factories in Inner Mongolia, China to ensure that the export qualifications of hot pot soup base meet international certification. Based on this, Happy Lamb can achieve supply chain support no matter where it opens a store.

More importantly, whether the company has the strategic thinking to carry out global layout. Behind this is whether the "top leader" of the company has the awareness of building an international brand and whether he has the spirit of long-termism. Whether it is high-quality products or the creation of a supply chain, a lot of initial investment is required. Only by gradually implementing the top-level design can we seize opportunities in the process of "going overseas" and inject "soul" into the corporate brand through original intention and craftsmanship.

Looking to the future, we believe that the key to a company's competitiveness in "going overseas" lies in whether it can enter the mainstream market. As far as Chinese catering is concerned, the ultimate market for "going overseas" is in Europe and the United States. Last year, the scale of the US catering market exceeded 1 trillion US dollars, and Chinese food accounted for less than 2%, which means there is still huge potential. In contrast, in the Southeast Asian market, there are many hot pot categories and Chinese brands, and homogeneous competition is becoming increasingly fierce. Overall, the market has changed from a "blue ocean" to a "red ocean."

Adhere to long-termism

21st Century: You have been engaged in brand building in the catering industry for a long time. According to your understanding, what are the characteristics and development trends of Chinese catering enterprises' overseas expansion at different stages?

Yang Ou: From the development history of Chinese enterprises going global, catering was the first category to go global. As Chinese catering enterprises continue to grow and develop, enterprises going global have also gradually moved from family-style and workshop-style operations in the early years to corporatization, systematization, branding, and digitalization.

"21st Century": What challenges do Chinese catering companies currently face in expanding their overseas brands?

Yang Ou: From the overall development direction and general trend, the prospect of Chinese catering enterprises going overseas is optimistic. According to estimates, there is still a consumption potential of 5 trillion US dollars in the overseas market for Chinese catering to be released. Although the market is vast, each enterprise needs to consider whether its own category is suitable for going overseas, especially the supply chain security and sustainability issues need to be considered in advance.

At present, Chinese enterprises "going global" mainly rely on the "single-handed" approach, lacking the "team spirit". In the future, chambers of commerce and associations can be relied upon to provide support for enterprises to "team up" and build complete supply chain supporting facilities. In addition, some Chinese enterprises are in a state of "quick success and instant benefits", looking at problems from a short-term perspective, and expanding overseas franchises at a very fast speed. At the same time, brand control is not in place, which creates some risks.

I think franchising is not the best solution. To truly enhance the competitiveness of Chinese catering brands overseas, it is more important to start from a long-term perspective, establish companies overseas, and gradually take root in the local market through direct sales and an international team of talents. At the same time, from the company itself to the image of China, this involves us to think about what kind of brand culture we want to export?

In general, Chinese companies need to fully understand local laws and regulations and respect local culture when expanding their overseas markets. They cannot mechanically apply existing management models. At the same time, competing through low prices, subsidies, and other means is unsustainable for the companies themselves, and is not conducive to the ecological balance and healthy development of the entire industry, nor is it conducive to Chinese companies building an international brand image. In the future, can companies compete in a more benign way? This requires raising awareness and doing a good job of industry standard management.

Create product features and differentiation

"21st Century": In your opinion, what is the significance of Chinese catering companies' overseas expansion?

Yang Ou: I think enterprises are the bridge for transmitting culture, and catering is the most direct and influential platform. The more Chinese enterprises "go global", the more competitive Chinese products will be in the international market. This will not only allow international consumers to feel and experience Chinese culture and deepen their understanding of China, but also provide employment options for more overseas Chinese students and Chinese people.

21st Century: In May this year, Happy Lamb was once again selected for the "2024 China Brand Day" event. Please talk about Happy Lamb's experience and insights in building the brand.

Yang Ou: Since 2017, China has designated May 10th of each year as China Brand Day. I believe that the construction of Chinese brands cannot be separated from the efforts of every enterprise. This year's theme of China Brand Day focuses on "Chinese brands, shared by the world; domestic trendy brands, building the future". Happy Lamb, as the only branded catering company in Inner Mongolia, was selected into the list of the China Brand Day brand pavilion. This will continue to inspire us to build a good brand and continue to promote Chinese brands overseas.

It can be said that catering is the best cultural business card to convey and share Chinese brands to the world. Chinese companies should have the ambition to build international brands. Every Chinese brand represents China's business card. As I have mentioned, the key question is what kind of brand cultural value do we export? The fundamental of brand building lies in products rather than marketing. We must have the spirit of craftsmanship to make good products. Only by bringing the unique value of Chinese products to overseas customers can we better reflect the value of Chinese brands.

From a larger perspective, how to achieve the three transformations, namely, "Made in China to Created in China, China Speed ​​to China Quality, and China Products to China Brands", is a long-term project. For enterprises, they need to have cultural confidence to make Chinese products distinctive and differentiated.