Yen for Chinese food? It'll cost you.
In an attempt to control export quality, China enforces new licensing procedures. The result: expensive Chinese dinners.
The price of Chinese takeout food is about to go up. Chinese-Americans are already feeling the pinch, what with braised black bean dace – a popular fish imported from China – up from 50 cents to $1.39 a can and Chinese shiitake mushrooms up 60 percent over the past few weeks. Soon, price hikes are expected to hit anyone who ventures into a Chinese restaurant, thanks to the soaring prices of ingredients imported from China.
That's the unexpected fallout from China's crackdown following scandals involving tainted food exports.
As of Sept. 1, the central government there has stepped-up inspections of food exports, raised fees, and instituted new licensing procedures. Chinese food manufacturers have to file for licenses, and exporters have to obtain certificates of approval from several government agencies. The extra inspection fees and administrative delays, which boost storage costs, are beginning to ripple throughout the world.
"It's a huge blow to the industry," says Chan Hei, manager of Kam Man Food Products Inc., an importer who runs a chain of a dozen supermarkets in greater New York. His company, one of more than 200 Chinese-American food importers and wholesalers nationwide, buys more than $4 million worth of food from China every year just for its flagship store in New York's Chinatown.
Imported Chinese food and ingredients will cost 10 to 20 percent more at retail over the next few months, estimates Mr. Chan.
Not everything will rise in price. Many Chinese vegetables and fruits are already grown on Long Island, N.Y., in New Jersey, and in Florida.
But many staples of a typical Chinese dish do come from China. The price of a five-gallon canister of cooking oil has leaped from $14 to $25.50, says Amy Lin, manager of the Peking Garden on Broadway in Harlem.
Ms. Lin and other managers of Chinese supermarkets and restaurants say they will increase prices incrementally to delay the impact on consumers. In the long run, however, they say they can't absorb the cost increases themselves.
Besides the price surge, many merchants are experiencing delays in shipments. Imported moon cakes, traditional fare for this month's midautumn festival, are running short.
"The new procedures are a nightmare," says Wu Jinxi, manager of A & C Supermarket in Flushing, N.Y. Some of the orders he placed have stalled for as long as two months. "The Chinese and US customs have to fax the paperwork to each other before they can release the cargoes at the ports. Any error down the line or problems with food quality could cause the whole cargo to be destroyed or sent right back to China."
The uncertainty over future supply is also causing wholesale and retail prices to rise. The price of imported candies, baked goods, instant noodles, and rice noodles have already jumped more than 15 percent, says Mr. Wu. The hardest hit items are frozen products and canned food that uses native Chinese ingredients.
Although China supplies less than 6 percent of America's food imports, its share of the trade had been growing. Last year, the US imported $4.3 billion worth of food (including seafood), up 26 percent from 2005. Through June of this year, imports were on track to rise another 26 percent. But that was before the scandals over tainted dog food, juice, and fish caused US food inspectors to stop shipments and China to crack down.
Other forces are also pushing up the price of Chinese food exports. Increased labor costs in China, a gradual appreciation of its currency, and internal demand for food commodities and processed food have already boosted prices.
A recent spike in soybean prices within China means that exports of soy sauce and soy milk will soon follow suit, says Tony Li, marketing manager of Summit Import Corp., a large Asian food-import distributor based in Jersey City, N.J. "If the trade turmoil continues, we will import from Taiwan and other Asian countries instead."
Indeed, the tainted-food crisis may give manufacturers new incentives to set up factories in the US to produce Chinese-style food. Some skeptics warn that rampant corruption in China may undermine government efforts to stamp out tainted food. On the other hand, some US-based importers are optimistic that the situation will improve.
"We are going through the bad-rep period [that] Japanese products went through in the '60s and '70s," says Chan of Kam Man. "Once we weed out substandard manufacturers, we can regain American consumers' faith in China-made products."
For its part, the Chinese government is holding firm.
"It's a long campaign," says Kuang Weilin, deputy consul-general of the Chinese consulate in New York. "Safety is a top priority and pricing is secondary."
That stance means tough days ahead for Lin and her New York eatery. Like many Chinese takeout restaurants, the Peking Garden has fed working-class Americans for less than $5 a meal. Serving largely African-American and Hispanic customers, her business cannot withstand the price woes, Lin says.
"For those who come every day, they may eat Chinese only once every three days, if my menu [price] goes up," she says. "It'll be much cheaper to get a slice of pizza instead."