China's catering industry suffers after cut in state-funded banquets

China's catering industry suffers after cut in state-funded banquets

CHINA - China's catering industry is expected to suffer a downturn after the government ordered an end to extravagant meals by people working for State-owned institutions and enterprises, a recent report said.

The sector experienced a period of fast expansion from the beginning of the 1990s, with annual growth of more than 13 per cent, according to a report conducted by Liang Da, a senior economist with the National Bureau of Statistics.

Liang said the annual growth rate of catering industry sales surged to more than 20 per cent from 1991 to 2012, when the industry revenue contributed around 18 per cent to the growth of total retail sales of social consumer goods.

According to the statistics bureau, the revenue of the country's catering industry reached 2.33 trillion yuan (S$467 billion) last year, a year-on-year increase of 13.6 per cent. Revenue from restaurants that make more than 2 million yuan a year hit 779.9 billion yuan last year, a year-on-year increase of 12.9 per cent.

Industry experts attributed the sizzling success to an improvement in people's living standards, the accelerating pace of life, a trend for dining out as well as an overall increase in business.

However, Beijing unveiled new rules at the end of last year in a bid to stamp out corruption and improve State efficiency. They included banning lavish meals and unnecessary overseas trips as well as over-the-top welcoming ceremonies and the imposition of road blocks to facilitate transport for VIPs.

It has not taken long for restaurants to feel the effects.

The week-long Spring Festival Holiday, which began on Feb 9 this year, is traditionally an opportunity for the Chinese to indulge in shopping sprees and dining out. This year the turnover of high-end restaurants in Beijing decreased by about 35 per cent. It fell by more than 20 per cent in Shanghai and 30 per cent in Zhejiang province, said the Ministry of Commerce.

Data from the China Cuisine Association revealed nearly 60 per cent of restaurants cancelled dinner reservations during the Chinese Lunar New Year. Most of them were high-end restaurants or five-star hotels.

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