The positive investment climate in Shanghai is seeing more Malaysian F&B operators flocking to the metropolis.

A SURVEY conducted by the Shanghai chapter of the Malaysian Chamber of Com­merce and Industry (Maycham) revealed that the metropolis has become a favourite destination of investment for Malaysian food and beverage operators.

As of the end of last year, 24 Malaysian-linked companies opened 98 food outlets with more than 2,000 staff members in and around Shanghai.

Most of them served Malaysian cuisine while others were involved in Japanese and Western restaurant, dessert, snack and cafe business.

Compared with 2002, there were only two Malaysian-linked companies active in the F&B sector in the city, namely Luna and the franchisee of Coffee Bean & Tea Leaf in China.

Twelve out of 22 companies rated the prospect of doing business in the city as “good” while four of them described the prospect as “so-so”.

Canton Fare, which gave a poor rating in the survey, eventually closed its outlet in the East Nanjing Road pedestrian mall district in January, citing exorbitant rental.

Another restaurant Xenri No Tsuki also ceased operation in January but was looking for a new location to reopen in future.

Despite the few cases of business failure, more than 75% of the respondents said they received good response from consumers and expected to open more outlets in the next three years.

“Overall, most operators expect good business prospect,” said May-cham Shanghai secretary-general Ong Chee Keong.

“With the rising cost, operators had to increase prices to counter it. The consensus is that the key to survival and making money for F&B operators is to choose the right location at the right price.”

It is learned that an operator would have to pay a monthly rent of between 180,000 yuan (RM89,600) and 200,000 yuan (RM99,500) for a location in the central commercial district while the rent in a prime spot at places such as the famous Xintiandi would be around 400,000 yuan (RM199,110).

According to the survey, four operators, namely Luna, Coffee Bean, Cloud 9 and Secret Recipe, cashed in an annual sales of above 50 million yuan (RM24.9mil).

The sales of three other operators ranged between 10 million yuan (RM5mil) and 30 million yuan (RM15mil).

Five others generated sales of between six million yuan (RM3mil) and 10 million yuan while another four registered between three million yuan and six million yuan.

The respondents said the cost of purchase of food supply and goods made up 29.8% of their sales while salaries and rental were 20.5% and 19.7% respectively.

They said among the major challenges they would have to overcome in doing business in the city were rising labour cost and rental and the difficulty in finding good location and quality staff.

To better control the cost, they said they had taken measures such as visiting exhibitions to source for cheaper supplies, keeping optimum stock, reducing food wastage, opening more outlets to create economies of scale and signing yearly contracts with suppliers to reduce changing of cost.

As for staffing problem, they said they would retain their employees by giving them higher pay and commission, and hire good trainers to curb staff turnover. They would revise their business model not to depend too much on highly-skilled staff but rather automation.

Ong said the operators hoped that Maycham Shanghai would help them organise events at their outlets to bring in more sales, introduce good suppliers to keep the cost low and facilitate the import of Malaysian food ingredients.

“They want Maycham to play its part in promoting the Malaysian image through more activities and programmes and creating more awareness of Malaysian cuisine and culture among the Chinese.

“Maycham believes that the F&B sector in Shanghai is big enough to have more Malaysian operators. We can join forces with more awareness programmes on Malaysian food and other non-Malaysian cuisines offered by Malaysian operators.

“The market size of the industry was around 94 billion yuan (RM46.7bil) in 2010 with the fast food sector growing more than 20% annually,” he said.

He added that the operators reckoned the importance of the Malaysian Kitchen Programme initiated by Malaysian External Trade Development Corporation (Matrade) but they hoped that such roadshows would be held as frequently as every month.

Malaysian trade consul in Shang­hai Mansor Shah Wahid said Matrade would work closely with Maycham and Malaysian operators to promote their restaurants through brochures on the programme and provide them with financing facilities through Exim Bank.

“We can see that for the past one-and-a-half years, more Malaysian-owned restaurants are opening up and the present ones opening new branch outlets.

“Naturally, we believe that Malay-sian operators are looking at this industry positively,” he said.

The first week of the return of the Chinese to work from a long Chinese New Year break, Matrade has heightened its promotion of Ma­­laysian food by holding a two-week Ma­­laysian Kitchen Festival at Sogo shopping mall in Shanghai with the participation of the operators, until March 6.

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