Introduction In the early 1990s, Master Kong and Uni-President successively entered the Chinese mainland market, becoming direct competitors. During the instant noodle war of 2013-2014, the two companies used 4 billion ham sausages as free gifts for noodle purchases. However, as China's economic growth slowed and consumer spending upgraded, both businesses suffered significant impacts, transforming them from rivals into brothers in distress in the new era. In the late 1980s, the Wei brothers, who had struggled in Taiwan, brought NT$150 million to test the waters on the mainland. They successively established four joint ventures in Beijing, Jinan, Qinhuangdao, Tongliao, etc., producing castor oil, egg rolls, and other products. However, limited by the purchasing power of mainland consumers at the time, business did not improve much. A chance opportunity shaped the Wei brothers' future career. In 1991, the fourth brother, Wei Yingxing, ate instant noodles brought from his hometown in Taiwan on a train, and the aroma quickly filled the entire carriage. Passengers frequently asked Wei Yingxing where they could buy such noodles. This revealed a business opportunity to the Wei brothers. In August 1992, the Wei brothers invested US$8 million to establish Tianjin Tingyi International Food Co., Ltd., producing instant noodles. The first pack of Master Kong's红烧牛肉面 (braised beef noodles) was born the same year and quickly became popular across China. Seeing Master Kong's success on the mainland, Uni-President, then a giant in Taiwan's food and distribution industries, also came to the mainland in 1993, also producing instant noodles. These two Taiwanese companies have been locked in competition in the mainland market for over 20 years. However, times have changed, and now they can hardly call each other rivals. 1 In the early 1990s, China's consumer market was a vast blue ocean. The Wei brothers' instant noodle business progressed smoothly. In 1994, Master Kong established production bases in Guangzhou, Hangzhou, Wuhan, Chongqing, Xi'an, Shenyang, etc., and daily output quickly exceeded 25 million packs. Master Kong's sales kept rising, eventually reaching 6 billion packs annually, securing its position as the leader in China's instant noodle industry. In 1995, Master Kong expanded into pastries and beverages. In 1996, Master Kong was listed on the Hong Kong Stock Exchange. Slightly different from Master Kong, Uni-President was already the leader in Taiwan's food and distribution industries before investing in the mainland. In 1992, Uni-President founder Kao Ching-yuan ambitiously declared that by 2017, the company would achieve US$120 billion in revenue, becoming the world's largest food group. Driven by this goal, Uni-President turned its investment focus to the mainland in 1993. While Master Kong's braised beef noodles were hugely popular, Uni-President tried to win the mainland market with shrimp-flavored noodles favored by Taiwanese, but got off to a bad start, suffering severe cultural mismatch. By 1998, it was already 1 billion yuan behind Master Kong in revenue. Channels have always been a crucial part of FMCG competition. Master Kong was among the first FMCG companies to propose channel下沉 (channel sinking). As early as around 2000, Master Kong extended its channels to prefecture-level cities and townships. One claim is that Master Kong can complete nationwide distribution of new products from cities to mom-and-pop stores in townships within two weeks. This means Master Kong had a stronger channel advantage in its competition with Uni-President. Uni-President's channel reach was not as dense; it only did business in cities above the prefecture level. However, as the leader of Taiwan's food industry, Uni-President had superior R&D capabilities. In 2008, Uni-President launched its old坛酸菜牛肉面 (pickled cabbage beef noodles) and invited Wang Han as spokesperson. This noodle quickly became a hit in the instant noodle world. When annual sales of the old坛酸菜牛肉面 reached 2 billion yuan, Master Kong, fearing its leading position was threatened, launched its own陈坛酸菜牛肉面 (aged pickled cabbage beef noodles), engaging in direct confrontation with Uni-President. "Some imitate my face, and some imitate my noodles," Uni-President used this advertising slogan to insinuate Master Kong's follow-up behavior. Starting in 2001, both Master Kong and Uni-President launched tea beverages, beginning competition in the tea drink sector. In 2002, Uni-President's Daily Fresh Orange and Master Kong's "Fresh Daily C" again stirred the waters in the Chinese mainland, and through fierce competition, they quickly became new powers in China's soft drink industry, even alarming giants like Coca-Cola and Pepsi. At that time, Master Kong and Uni-President were both competitors and rapidly growing in the vast mainland market. In 2007, Uni-President also completed its Hong Kong listing plan. 2 For a long time, in China's food and beverage industry, Master Kong and Uni-President played leading roles in product and channel innovation. But their business collisions never ceased. In 2013, the two companies engaged in another thrilling instant noodle war. Uni-President Chairman Lo Chih-hsien once revealed that in the fierce competition, 4 billion ham sausages were consumed as free gifts for noodle purchases. This was also seen by outsiders as the main reason for the two companies' declining performance in 2014. However, after stopping the instant noodle war, Uni-President and Master Kong did not see a rebound in performance. 2016 was a difficult year for both. That year, Uni-President's revenue was approximately 20.9 billion yuan, down 5.1% year-on-year, with net profit of 607 million yuan, down 27.2%; Master Kong's revenue was approximately 57.68 billion yuan, down 8%, with net profit of 1.47 billion yuan, down 24.3%. The decline in their performance is most directly related to the decline in demand for instant noodles. Data from the World Instant Noodles Association (WINA) shows that from 2011 to 2013, China's annual demand for instant noodles grew to 46.22 billion servings. After 2013, market demand began to decline. By 2016, demand in China had fallen to 38.52 billion servings. But fundamentally, the slowdown in China's economic growth, the upgrade of consumer demand, the disappearance of China's demographic dividend, and the channel changes triggered by internet development... these factors are the root causes of the decline in performance for Master Kong and Uni-President. For example, regarding consumption upgrades, as Chinese people's consumption levels rise, brands automatically sink and become low-end products. In facing uncertainty, Uni-President and Master Kong, and even more FMCG giants rooted in the Chinese market, have become defenders of trends. How to grasp the lifeline to avoid decline in a dramatically changing market environment? The two chose different approaches. Master Kong focused on product upgrades and developing mid-to-high-end products. Over the past two years, Master Kong not only upgraded its instant noodle category, launching high-priced and premium noodles, but also launched mid-range water "Youyue" in the beverage sector to respond to the consumption upgrade trend in the mainland market. Uni-President focused more on upgrading its own brands. Besides seizing the upgrade opportunity in the instant noodle sector and launching premium noodles, Uni-President also focused on innovation in beverages. In 2014, Uni-President's functional drink "Hai Zhi Yan" captured the high-end market; in 2015, among the 12 beverages launched by Uni-President, the cute-style "Xiao Ming Tong Xue" stood out. Relying on these two drinks, in 2015 when other beverage giants saw declining performance, Uni-President's beverage segment saw a slight revenue increase of 0.3%. In 2016 and 2017, Uni-President continued its aggressive new product launch strategy, not only continuously introducing new products in the fruit and vegetable juice sector but also crossing over into functional drinks, boldly downplaying its corporate identity, and continuing its "de-Uni-President" strategy. The various major moves by the two companies were effective in responding to external trends. In 2017, both Master Kong and Uni-President saw a rebound in performance. But concerns remain. With the disappearance of the demographic dividend in mainland China, market competition has shifted from incremental market competition to stock market competition. In this situation, it seems competitors cannot avoid each other. But the biggest uncertainty they face is the rapid change in consumer interests brought about by changes in the new era environment. After all, in such an era, it is difficult to launch a single blockbuster product that dominates the market. Whether it is Master Kong, Uni-President, or other FMCG giants, the enemy they face is the ever-changing selection criteria of consumers. Source: Lishi Business Review -END-