Source丨Xiaguang She ID丨Globalinsights Tang Fei
In 2023, Thailand's per capita annual snack consumption reached 10.52 kilograms, roughly equivalent to the total weight of 161 bags of Lay's potato chips (65g each). In other words, Thai consumers ate a bag of chips every two days that year. Moreover, Thailand's snack market continues to grow at a high annual rate of 5%. With a youthful demographic structure and increasing purchasing power, Southeast Asia's snack market is thriving and expanding, attracting many Chinese snack brands to go overseas one after another.
Recently, Yanjin Pu Zi, a domestic leisure food company, announced plans to invest 220 million yuan to establish a wholly-owned subsidiary and production base in Thailand. This news quickly made financial headlines across Southeast Asia. Thailand's Bangkok Post commented: "Chinese snack companies are shifting from 'product export' to 'industry chain export.'" Notably, in January this year, Yanjin Pu Zi had just established a Vietnamese subsidiary with a registered capital of approximately 882,300 yuan.
Yanjin Pu Zi's frequent moves in Southeast Asia are not an isolated case. Qiaqia Food's Thailand factory has been in operation for nearly five years, Weilong spicy strips occupy core shelves in Vietnamese convenience stores, and Hsu Fu Chi's first overseas brand store is located in Singapore's largest supermarket chain, Sheng Siong's Suntec City store. Behind these seemingly scattered business events lies a systematic "transformation" of the Southeast Asian snack market by Chinese snack companies.
The six major Southeast Asian countries have a population of 670 million, with over 50% under the age of 35. According to Statista, in this vibrant market, the snack market size is projected to exceed $43 billion by 2028, with a compound annual growth rate of 8.68% from 2023 to 2028, far exceeding the global average of 4.2%. As a result, Southeast Asia has become a battleground for the global snack industry. Chinese companies, with their flexible strategies, mature supply chains, and innovative marketing, are rewriting the industry rules here.
Southeast Asia: The "New World" of Snacks
In Indonesia, per capita annual snack consumption has reached 3.3 kilograms, nearly half of China's per capita annual snack consumption. Moreover, local young people's demand for snacks is no longer limited to filling hunger but is pursuing "healthier" and "more fun" options. A report by Indonesian market research firm Jakpat shows that 70% of consumers are willing to pay a premium for "low-sugar" or "high-protein" labels.
The pursuit of "health" is not limited to Indonesia; it is becoming popular across Southeast Asia. NielsenIQ's "New Opportunities for Chinese FMCG Companies Going Global" report shows that "health" has become an important label for Southeast Asian consumers, who are more willing to spend on health. Among them, 66% of consumers are willing to choose products that are more beneficial to health; 59% are willing to try new products designed to achieve health and wellness goals. The report concludes that overall, all major FMCG categories in Southeast Asia have achieved at least two consecutive years of growth, with the top three performing categories being beverages, beauty, and snacks.
Leveraging these new demands, many Chinese snack brands are leveraging their strengths to gradually move into broader markets. In the Philippines, Weilong spicy strips achieved single-session sales exceeding $1 million through TikTok live streaming; in Thailand, Jinzai dried fish snacks set a record of 100,000 packs sold in a day through Shopee's "flash sale" events; Three Squirrels has also placed hundreds of SKUs in convenience stores in Malaysia, Thailand, Singapore, and other markets, and has established brand flagship stores on major cross-border e-commerce platforms. In this golden land of Southeast Asia, many Chinese brands have not only increased order volumes but also gained tangible profits.
Image source: China Want Want financial report
China Want Want achieved a net profit of 1.86 billion yuan in the first half of fiscal 2024, a year-on-year increase of 7.6%, with a gross margin of 47.3%. The financial report highlighted that overseas markets achieved double-digit revenue growth, with significant growth in Asia, the Americas, Oceania, and other regions.
In the first half of 2024, Qiaqia Food's overseas market revenue was 246 million yuan, a year-on-year increase of 4.54%, accounting for 8.47% of total revenue. During the same period, Jinzai's overseas self-operated export sales increased by over 300% year-on-year.
In addition to the above large enterprises, more small and medium-sized brands are entering Southeast Asia through online platforms. TikTok Vietnam's famous influencer Hằng Du Mục became an internet sensation for live-selling Xinjiang red dates in Vietnam. According to TK Observer, Xinjiang red dates have always been the best-selling product in her live streams, and in one session, she sold 2 tons of red dates in less than a minute. Based on the price of 228,000 Vietnamese dong per kilogram (about 66 yuan) in Hằng Du Mục's live stream, she sold approximately 132,000 yuan worth of red dates alone, earning her the nickname "Red Date Sister."
While Chinese brands are aggressively expanding, local Southeast Asian brands seem somewhat overwhelmed in this transformation. The Philippines' largest snack food company, Universal Robina Corporation (URC), has been deeply rooted locally for over 60 years, with products covering all snack categories including snacks, chocolate, candies, biscuits, beverages, instant noodles, and macaroni. It has six overseas subsidiaries and factories, with business spanning mainland China, Thailand, Malaysia, Singapore, Vietnam, and other Southeast Asian countries and Oceania. In 2023, URC's sales grew only 2%, and had it not been for its active promotion of non-tea ready-to-drink beverages and bakery products in its home market, it might not have even maintained that 2% growth.
"Chinese snacks have trendier packaging and spicier flavors; young people simply can't resist," lamented a Manila distributor.
The "Double Tactics" of Chinese Companies: The Game of Light and Heavy
A scenario that might actually happen to Thai consumers: the two bags of snacks in their hands come from completely different channels. On one side, in a domestic warehouse of a snack brand, workers are loading boxes of snacks onto logistics trucks. These products depart from Shenzhen, China, and arrive in Bangkok via cross-border logistics, taking 6-10 days in total. On the other side, in Qiaqia's Thailand factory, automated production lines are processing locally grown sunflower seeds into coconut-flavored melon seeds, and forklifts in the adjacent warehouse directly transport finished products to distribution centers, reaching Bangkok consumers within a day.
This is the two typical paths for Chinese snack companies going overseas—the game between asset-light and asset-heavy players.
Asset-light players represented by Weilong and Jinzai have risen rapidly through e-commerce and social media. In Thailand, Weilong spicy strips have become popular on campuses, even becoming a "hard currency" for elementary school students exchanging gifts. Jinzai has launched milder flavors such as sauce-flavored, braised, and sweet-and-sour, which are highly popular in many Southeast Asian countries. Especially in the first three quarters of 2024, overseas self-operated export sales increased by over 100% year-on-year. Zhou Jinsong, chairman of Jinzai Food, stated, "Next, we will consolidate our existing overseas markets, vigorously develop emerging markets, and comprehensively enhance Jinzai's brand influence overseas through participation in well-known domestic and international exhibitions, global distributor recruitment, and other activities. At the same time, we will increase overseas market research to provide global consumers with more innovative, high-quality products to meet increasingly diverse consumer demands."
On the other hand, some brands have directly built factories locally, and the "local-to-local" sales model has significantly reduced transportation costs and improved product competitiveness. Qiaqia Food's Thailand factory is a representative of asset-heavy layout. In 2019, Qiaqia invested 500 million yuan to build a sunflower seed full-industry-chain base in Thailand, integrating planting, processing, and warehousing. After the first phase was put into operation, annual sales are expected to be around 1 billion baht, with annual profits expected at 100 million baht. The second phase introduced nut product production lines, expanding nut processing, trade, branding, and distribution businesses. This strategy not only reduced raw material costs by 20% but also gave rise to hit products like "coconut-flavored melon seeds."
In 2023, Panpan Food completed preliminary research for an Indonesian production base and began preparations for factory construction. This factory will not only meet Panpan's growing demand in the Indonesian market but also effectively reduce production and logistics costs. Currently, Panpan's Indonesian base not only produces its classic products like French-style bread and wheat-flavored chicken nuggets but also plans to launch innovative products tailored to local market needs, such as "Indonesian shrimp crackers." These localization efforts have further enhanced Panpan's brand influence in Indonesia. In 2023, Panpan's export value to Indonesia reached 103 million yuan.
The news mentioned at the beginning about Yanjin Pu Zi's plan to set up a factory in Thailand is clearly also preparation for further tapping into the local market.
Although the asset-heavy model requires huge upfront investment, the returns are significant. Huaxin Securities analysts predict that Qiaqia's overseas revenue for the full year 2024 is expected to be around 600 million yuan. With domestic melon seed prices at high levels, the Thailand factory has obvious procurement cost advantages, and overseas brand awareness continues to build, so Qiaqia's overseas growth is expected to be higher than domestic growth. Taking Thailand as an example, after the launch of coconut-flavored melon seeds, sales reached 10 million yuan within the first three months.
A supply chain practitioner introduced that most Southeast Asian countries are in tropical zones with abundant rainfall, allowing many crops to be harvested multiple times a year. Taking dried mango and banana chips as examples, by directly cooperating with local orchards, production costs can be reduced by 15%, and delivery cycles can be shortened from 45 days to 25 days. Establishing local production bases allows for rapid cooperation with local agricultural resources, expanding local markets while also feeding back to domestic factories.
In this regard, Want Want's factory in Tien Giang, Vietnam, is the most representative. After officially starting production in 2022, the factory not only produces a variety of products but also offers OEM services, effectively reducing transportation and time costs. Additionally, Want Want fully utilizes the resources of nearby countries, such as longan honey from Thailand and crude palm oil from Malaysia and Indonesia, to improve product quality and further reduce raw material procurement costs, laying the foundation for higher profit margins.
Reshaping the Industry: Comprehensive Penetration from Supply Chain to Cultural Identity
The journey of Chinese companies in Southeast Asia is not just a battle for market share but also a reshaping of industry standards. Qiaqia has gone overseas with its entire food quality and safety supply chain management system, from "planting" to "product processing" and extending to "consumers," establishing and passing certifications such as HACCP, QMS, FSMS, BRC, and traceability systems, allowing local consumers to enjoy safer snacks. It also optimizes local supply chains. Taking Qiaqia's Thailand factory as an example, the average monthly wage in Thailand's manufacturing sector is about 3,000 yuan, 40% lower than China's coastal areas, providing obvious labor cost advantages. Container freight from Bangkok Port to Singapore Port is 35% lower than from Shanghai Port, and import tariffs on food processing equipment have been reduced from 8% to 3%, significantly lowering the cost of importing raw materials and equipment.
A McKinsey report points out that Chinese companies' supply chain optimization has reduced total costs in the Southeast Asian market by an average of 18% and increased delivery speed by 50%.
On the marketing front, Chinese brands are shifting from "selling products" to "creating culture." Qiaqia collaborated with foreign influencer @kaktiaaa, successfully embedding its products in a picnic video at a popular water park, gaining 74,000 impressions. Data shows that after the video was released, online searches for Qiaqia melon seeds increased by 20%, and sales increased by 12%. It also invited Thai actor Sunny Suwanmethanont as a spokesperson to continuously expand brand influence and increase brand exposure. The actor has starred in well-known works such as "Cupid's Tears" and "Heart Attack," and is not only famous in Thailand but also has many fans in China.
On the other hand, Chinese snack brands also place great emphasis on localization in Southeast Asia. Investor Wang Chao told us that localization truly tests a brand's deep understanding of local culture. He gave an example: our common Dove chocolate and Dove body wash actually have the same English name, "Dove," but they were localized when entering China. The name for Dove chocolate is closer to its pronunciation, which can be considered a transliteration, while Dove body wash cleverly incorporates a free translation while staying close to its pronunciation, using the character "芬" (fragrance) because it's a body wash. This method helps Chinese consumers quickly understand the brand's tone and function.
Qiaqia uses "chacha" in some Southeast Asian countries and "chacheer" in others, which serves a similar purpose. "chacha" is closer to the transliteration of Qiaqia, with slight adjustments for foreigners' pronunciation. "chacheer" leans toward a free translation, as when people are happy or gathering to eat melon seeds, they naturally cheer.
Undercurrents: Local Counterattacks and Transformation Pains
Of course, the expansion of Chinese companies has not always been smooth sailing. On one hand, facing the aggressive advance of Chinese brands, local Southeast Asian companies have begun to fight back. Indonesia's snack food company Indofood, which previously held an important market position with a wide variety of salty snacks like Chitato and Qtela, has in recent years focused on promoting the "Chitato Lite" series, targeting a low-calorie route to compete with other brands' healthy snacks.
On the other hand, localization and compliance also pose challenges for Chinese brands. Since different regions have their own dietary habits and cultures, and snack brands going overseas are not as standardized as traditional manufacturing categories, food regulations vary by country. Chinese brands need to find a balance between production, formula compliance, and maintaining the original taste of their products. Zhang Xuewu, chairman of Yanjin Pu Zi, pointed out, "Deliciousness knows no borders, but for a long time, Chinese cuisine has not been easy to go abroad due to low standardization."
An overseas head of a snack brand believes that the main drawback of Chinese brands is the lack of global vision and localization strategies. For example, awareness of cultural differences: In Thailand, packaging for snacks indicating spicy flavor is basically red, but Chinese snack brands might package it in orange-red, which Thai consumers would interpret as sour. Southeast Asian consumers have requirements for packaging windows, hoping to clearly see the contents through the packaging, but Chinese snack brands might use fully sealed packaging.
In this regard, Zhu Danpeng, a Chinese food industry analyst, believes that the current difficulties for Chinese snacks going overseas mainly lie in the mismatch between domestic and international product standards. "Many Chinese snack standards may not be suitable or match EU, US, Japanese, or Korean standards. This requires snack brands to truly enter standardized, professional, branded, and scaled development before they can better go overseas."
Additionally, the low shelf share of Chinese snack brands in mainstream Southeast Asian channels is also a pain point affecting their overseas expansion. Taking Thailand as an example, the main snack sales channels are divided into MT channels (modern trade), including supermarkets, chain convenience stores, and CP Group's 7-11 chain convenience stores, which rank third globally in store scale with about 14,000-15,000 stores; and TD channels (traditional trade), small retail grocery stores or mom-and-pop shops, numbering over 800,000, which remain the mainstream offline channels. Data shows that Chinese food's shelf share in mainstream retail channels in Thailand is very low, still less than 1%.
Therefore, although more and more Chinese snacks are favored by foreign consumers, for domestic snack brands, going overseas is still at the stage of "crossing the river by feeling the stones."
Today, the Southeast Asian stories of Yanjin Pu Zi and others resemble a modern version of the ancient Maritime Silk Road. The difference is that merchant ships have been replaced by supply chains, and porcelain and silk have become spicy strips and melon seeds. This war without gunpowder is not only about market share but also a contest of standards, efficiency, and culture.