Spicy and sweet, this is the secret of Pingjiang latiao's appeal to children. (Photo by Oriental IC) Eighteen years ago, latiao was invented by accident, yet it unexpectedly saved Pingjiang County, a poor county in Hunan. After a period of wild growth, latiao companies began upgrading to shed the label of junk food, while also turning latiao into an internet sensation. First published in Southern Weekly On June 8, 2016, a low-pressure system clashed with warm maritime air from the south, bringing drizzling rain across most of China. Zhang Yudong, owner of Hunan Yufeng Food Company, drove between the provincial capital's R&D center and his factory in his hometown of Pingjiang County. He was planning to use robotic arms to upgrade the production line that had just been put into operation in 2012. More than 600 kilometers away in Henan Province, another latiao industry leader, Liu Weiping, had just completed the semi-automation upgrade of his company, Weilong Food Co., Ltd. (hereinafter "Weilong") in Luohe City, Henan. The gleaming workshop shone with the luster of "Industry 4.0." Apart from being fellow townsmen from Pingjiang County, the two industry leaders, Zhang Yudong and Liu Weiping, had no other connection in life until 1998, 18 years ago, when latiao was invented by three other fellow townsmen in Pingjiang County, which changed the industrial direction of the entire county and also affected the fate of both men. Located on the banks of the Miluo River in northern Hunan, Pingjiang County is a national-level poverty-stricken county. The latiao industry took root in Pingjiang, sprouted in Henan, and rose rapidly in less than 20 years, bringing the dawn of prosperity to the people of Pingjiang. In stark contrast to its down-to-earth image in the real world, in cyberspace, latiao is an internet celebrity that never goes out of style. After several rounds of hype, phrases like "Let's have a pack of latiao to calm down" and "Actually, I should have a pack of latiao to quiet my mind" became classic quotes on social networks. As a result, latiao was crowned the "most powerful snack in history." In April 2016, a microblog post by a "big V joke teller" once again put latiao at the center of online discussion: "In 2015, China's film market box office reached a historic high of 30 billion yuan, but it still couldn't match the total output value of latiao in Henan Province alone." The claim in that microblog post was not false. The development of the latiao snack industry, which is common in daily life, has already surpassed many people's imagination. Data provided by the Pingjiang County Food Industry Association shows that there are more than 1,000 gluten food (latiao) manufacturers nationwide, with an output value of at least 50-60 billion yuan, with Hunan and Henan each accounting for half. From starting from scratch, flourishing everywhere, to chaos and industry regulation, the latiao industry is actually a classic microcosm of the wild growth of private enterprises.

  1. Adding Sweetness to Spicy and Numbing "Now it looks like a story, but at the time it was an accident." Qiu Ping, known as the "flavor master" in Pingjiang, was one of the three partners who first invented latiao. He recalled to a Southern Weekly reporter that there was no such food as latiao in history; its invention was highly accidental. In 1998, Qiu Ping, who had failed in the spicy snack business in Changsha, "fled back" to his hometown. "Life was a mess," and he was at a low point in his career. At the same time, Zhong Qingyuan, who was in the glass business, and Li Mengneng, who was working in Guangdong, both encountered obstacles that were hard to overcome at the time. The three entrepreneurial founders, not defeated by setbacks, coincidentally got together and "still wanted to do something," hoping to regroup. Pingjiang County has a long tradition of making dried tofu (gan dou). Li Mengneng naturally thought of returning to the old business. After the idea of making dried tofu came to him, he specifically went to the food market in Changsha to conduct a careful survey. In fact, latiao originated from Pingjiang dried tofu. According to the "Pingjiang County Annals": "The food industry is a traditional industry in Pingjiang. During the Kangxi period of the Qing Dynasty, Pingjiang's Changshou dried tofu was listed as a tribute to the imperial court." "In Pingjiang, every household can make dried tofu; it is a major specialty of Pingjiang." Zou Kuadong, former president of the Pingjiang County Food Industry Association, worked in the Industry and Commerce Bureau in the 1990s and witnessed the entire process of traditional dried tofu brewing evolving into the latiao industry. He told a Southern Weekly reporter that Pingjiang has scarce arable land and poor transportation. A long time ago, people had to walk dozens of miles of mountain roads to carry their homemade dried tofu on shoulder poles to the roadside, then take a bus to Changsha to sell it wholesale or retail by the river. Selling dried tofu was a basic way for many Pingjiang people to support their families. In 1983, people from Sanshi Town in Pingjiang County improved Pingjiang dried tofu by introducing sesame and chili as auxiliary ingredients for the first time, creating spicy and numbing dried tofu. The county's annual output of dried tofu reached 7 million tubes. Li Mengneng, a native of Sanshi Town, was familiar with the production of dried tofu, but the market survey results were not satisfactory. Li Mengneng recalled to a Southern Weekly reporter that in 1998, the price of soybeans, the raw material for making dried tofu, rose sharply, "from over 7 mao per jin to suddenly over 1 yuan and 5 or 6 mao per jin," and the dried tofu market continued to decline. In fact, the direct reason for Qiu Ping's failure was that he was hit by this drastic market fluctuation. Seeing the dried tofu industry in dire straits, Li Mengneng almost lost heart. Fortunately, he did not completely give up at that time. With a glimmer of hope, he went deep into the market again to investigate for a long time, until he met a boss who was in the agricultural and sideline products wholesale business. That boss told Li Mengneng that although dried tofu was unsalable, the food market had not cooled down. If he could make an innovative product, the boss would be responsible for purchasing it. "As long as there is a new product, it can be sold," the boss said to Li Mengneng. "I agreed without thinking, and said, 'Yes, I can definitely make a new product.'" The speaker had no intention, but the listener took it seriously. Li Mengneng had no idea what new category he would make, but in order to seize the business opportunity, he agreed readily. After discussing with Qiu Ping and Zhong Qingyuan, Li Mengneng began to look for suitable ingredients in the agricultural trade market. After walking around, they found that soybean prices showed no sign of falling. In comparison, the cheapest raw material on the market was flour. "The main reason for choosing flour was that it was cheap and available in large quantities," Qiu Ping added. After selecting the raw materials, the three had little experience in how to process them. "Coincidentally, we had a neighbor who delivered rice noodles, so we went to visit the rice noodle factory." Bold and decisive, Li Mengneng immediately bought an old rice noodle machine from the county town and started tinkering with it in his own yard. Qiu Ping, who participated in the process, admitted that they had no idea about machine operation or flour processing. The first things they made were almost inedible, but fortunately, they had a foundation in dried tofu making and were good at research. After several months of closed-door development, they finally made a cooked food product similar to gluten. But they fully utilized the production techniques of dried tofu, adding saltiness and spiciness to the gluten product. "At first, it was not a snack but a seasoning for staple food," Li Mengneng said. After the spicy and numbing gluten was made, it was very popular and quickly occupied the market that originally belonged to dried tofu. Around 2000, Qiu Ping, who had a good understanding of seasoning, began to add an appropriate amount of sweetness to the spicy and numbing gluten. "Distributors kept reporting that children liked sweet things," Li Mengneng recalled. After continuous adjustments, by around 2002, Pingjiang's gluten products had established the basic framework of spicy, numbing, and sweet. Adding sweetness to the spicy and numbing was a "great innovation." Gluten suddenly transformed from a small-scale, niche industry into latiao that spread across the country. "You can buy our Pingjiang gluten food all over the country, even in Tibet." Zou Kuadong analyzed that dried tofu has a unique flavor that non-Hunanese might not be used to, while gluten is cheap, the production process is relatively simple, and the key is that the taste is popular, so it was able to quickly capture the market.
  2. Food Safety Storm It was precisely because the production of gluten did not require high technical or financial barriers that after the new flour-based product invented by the "three entrepreneurial heroes" became an instant hit, the workshops and factories that originally made dried tofu converted to produce the more popular gluten products. Gluten enterprises were replicated in batches and grew rapidly. "We Pingjiang people tend to stick together; we don't hide anything from each other." Qiu Ping believed that the mutual support and healthy competition without undermining each other among Pingjiang people were also prerequisites for the industry's growth. However, Pingjiang County, located in the mountainous area of the middle and lower reaches of the Yangtze River, does not produce wheat. Due to insufficient raw materials, some Pingjiang people began to seek opportunities elsewhere. Heading north along the Beijing-Guangzhou Railway, the Central Plains region, which is rich in wheat, has convenient transportation and abundant labor, becoming a gathering place for Pingjiang people to start businesses. Currently, the annual total output value of the gluten industry in Pingjiang County is nearly 20 billion yuan, and 99% of latiao operators nationwide are from Pingjiang. The vitality of small and medium-sized enterprises is fully reflected in the latiao industry, but it also laid hidden dangers for the industry. Due to frequent food safety incidents, latiao has always been synonymous with low-end junk food in the minds of consumers. "First, the threshold is low, the enterprises are small, and operations are not standardized; second, the industry is relatively new, and there is no unified national standard." Liu Songbao, president of the Hunan Food Industry Federation, analyzed to a Southern Weekly reporter that food safety has always been the primary issue troubling the industry's development. In December 2005, CCTV exposed a food factory in Pingjiang County for using the banned additive dimethyl fumarate (commonly known as mold killer). In 2007, the General Administration of Quality Supervision, Inspection and Quarantine listed Pingjiang as a key county for national food safety rectification. "There is no unified standard, and there is no clear statement about what should be added and what should not be added." Zhang Yudong, chairman of Yufeng Food, told a Southern Weekly reporter that for the long-term development of the industry, gluten enterprises in Pingjiang County spontaneously attempted standardized operations. In 2007, leading enterprises such as Hunan Yufeng Food, Hunan Wanghui Food Co., Ltd. (hereinafter "Wanghui"), and Hunan Xiangyu Food Co., Ltd., in the name of the Pingjiang County Food Industry Association, jointly applied for a local standard for the gluten industry, and finally signed the "Hunan Provincial Local Standard (Xiangwei Flour Cooked Food)" with the Hunan Provincial Standards Committee. On this basis, in 2009, they revised this standard to "Hunan Provincial Local Standard (Xiangwei Cooked Food: Extruded Flour Cooked Food)", adding strict requirements for natural pigments. "We talked one by one, I don't know how many meetings we had, and how many times we argued." Zhang Yudong recalled that from their own interests, several large-scale enterprises quickly reached a consensus. However, raising the standard meant that enterprises would need to invest more in safety production and upgrade machinery and equipment, and it was not easy to persuade small and micro enterprises to comply with this standard. At this time, the inherent tradition of unity among Pingjiang people played a significant role. "Everyone helps each other. If others are operating in a standardized way, how can you feel comfortable not doing so?" Liu Wanghui, chairman of Wanghui Company, told a Southern Weekly reporter. By 2012, the gluten food industry standard was further upgraded and revised to "Hunan Provincial Food Safety Local Standard (Xiang-style Extruded Pastry)". "The third draft was very strict, and the implementation was also very strict," Zou Kuadong said. The latiao industry was independently created by private owners, and the spontaneously formed industry association played a strong regulatory role in the standardized operation of the entire industry. On December 24, 2015, at the "China Gluten Food Hometown Awarding Ceremony and Food Industry Development Strategy Seminar" held in Pingjiang County, Yueyang City, Hunan Province, the China Food Industry Association announced the resolution "Reply on Agreeing to Award Hunan Province Pingjiang County the Title of 'China Gluten Food Hometown'", granting Pingjiang County the title of "China Gluten Food Hometown". Currently, there are 343 gluten food enterprises in Pingjiang County, of which 1 has an annual output value exceeding 1 billion yuan, 48 have exceeded 100 million yuan, and the total annual output value is nearly 20 billion yuan, accounting for 67% of Hunan Province's gluten food sales and 40% of the national gluten food sales.
  3. South Yufeng, North Weilong Weilong Food, located in Luohe City, Henan Province, is the undisputed leader in the latiao industry, and the company's boss, Liu Weiping, is also from Pingjiang. In 2014, after moving into their newly built factory, they invited a professional photography team to take promotional photos of the workshop. The highly automated shiny equipment and spotless clean workshop immediately stunned the photographers. The photographer casually uploaded the photos to Weibo and expressed his shock. Unexpectedly, within a short time, the Weibo post easily gained millions of views, and jokes about latiao spread widely. Min Quanlu, general manager of production and operations at Weilong, said this made them realize the power of online communication. Afterwards, Weilong took the initiative to cooperate closely with Baozou Manhua and Weibo joke tellers, creating trending search terms from time to time. "Many things were created by us, and netizens like to watch them." Yu Feng, public relations director of Weilong, told a Southern Weekly reporter that cooperation with Weibo marketing accounts followed the common practice in the industry, which is a performance-based commission. But he found that these grassroots big Vs were particularly willing to cooperate with latiao companies because it could quickly increase their followers. "It's not just ordinary follower growth; a hot topic can increase followers by hundreds of thousands," Yu Feng said. Because Weilong positions its products as relaxed, lively, and entertaining, online marketing went smoothly. They would closely monitor online hot events and set up marketing topics. Yu Feng once saw a friend on social networks post a photo of eating latiao while working overtime, with the caption: "Actually, I should have a pack of latiao to quiet my mind." The marketing team was greatly inspired and decided to incorporate scenario-based elements into the product's image. Soon, the phrase "Actually, I should have a pack of latiao to quiet my mind" appeared on the packaging of a new product. After the Dragon Boat Festival holiday, they planned to invite internet celebrity "Zhang Quandan" to broadcast live from Weilong's workshop in Luohe. "You don't believe our workshop is real? Then we'll show you live, using a phone to broadcast, to make it more authentic," Yu Feng said. Weilong's skillful marketing also boosted the visibility of the entire latiao industry. "I told him (Liu Weiping) that he did a great thing for the whole industry," Zhang Yudong said. He believed that the unexpected popularity of latiao had a relatively direct stimulus on industry sales, but he also worried that the internet celebrity status would deepen consumers' perception of latiao as junk food. In the latiao industry, there is a saying: "South Yufeng, North Weilong." Unlike Weilong's flexible marketing strategy, Yufeng has invested great effort in developing high-end products. Zhang Yudong introduced that three to five years ago, the gluten cooked food industry experienced explosive growth, but he chose not to expand production. Instead, he painfully cut two-thirds of his product categories to concentrate on "improving quality and raising prices." "We can't always have a factory mindset, getting excited when we see good sales in the market," he said. He explained that the industry is now facing severe homogenization competition, and companies without brands have low profits. If they had expanded blindly at that time, the current situation would be dangerous. After the strategic contraction, Yufeng invested more than 30 million yuan to build a laboratory and cooperated with universities in Wuhan on industry-university-research projects, and is stepping up the development of a spicy and numbing gluten product with zero additives. "People who make gluten know more about wheat than those who make flour," Zhang Yudong said. The product has already achieved zero additives in flour and edible oil, and they are still working on the chili part. At the same time, they have completed experiments to replace one flavor additive with five natural spices.