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MANUFACTURER SEES FUTURE IN FROZENS

BEIJING (FNS) -- China's traditional wet markets have a long way to go before being supplanted by modern Western supermarkets, but as living standards rise in Chinese cities, increasingly time-pressured housewives are beginning to look at a previously unavailable commodity: prepackaged convenience foods.And with nearly 60% of urban households now equipped with refrigerators, frozen foods that can

BEIJING (FNS) -- China's traditional wet markets have a long way to go before being supplanted by modern Western supermarkets, but as living standards rise in Chinese cities, increasingly time-pressured housewives are beginning to look at a previously unavailable commodity: prepackaged convenience foods.

And with nearly 60% of urban households now equipped with refrigerators, frozen foods that can be purchased in advance and stored for indefinite periods are a particularly popular choice.

Beijing LongQi Food Co., a medium-sized food processing plant on the northwestern outskirts of the city, is successfully riding the

growing trend. It originally opened in 1974 as a soft drinks manufacturer for domestic consumption, but by the mid-1980s many newer companies had jumped on board. Faced with declining sales, the company needed expensive renovations with imported machinery in order to stay competitive.

In 1991, after long deliberation, management decided instead to go into frozen convenience foods, which were already beginning to crop up in the market. "Since we were already in cold foods, we wanted to stay in the same sector," said 36-year-old General Manager Hu Wan Cun.

From the beginning, LongQi emphasized both hygiene and the palate. "Beijing people like wheat and they're very particular about authentic tastes," said Hu. "We began experimenting with different products and testing the market. We worked both the new supermarkets and the traditional ones, bringing freezers into the old markets. At first it was difficult to convince most people about the concept of prepared frozen food."

But once bitten, consumers were hooked. LongQi currently offers 10 types of jiaozi, traditional Chinese dumplings, in 500-gram bags retailing from 50 cents to $1. The handmade dumplings normally take hours to make and are only prepared on special occasions and usually in great quantities. Other best sellers are wontons, Chinese ravioli and sweet rice flour balls.

Sales began taking off. "We didn't think things would move so quickly. It's better than our wildest expectations," declared Hu. LongQi frozen foods are already selling in 100 Beijing outlets. At ChengXiang market, catering to middle and low-end consumers, monthly sales have reached 20,000 bags and are still growing. "We would like to sell in the rest of China, but already orders exceed capacity."

By mid-1992, a joint venture was formed with a Macao company to inject a much-needed $1.6 million into upgrading the still modest 3,000-square-meter factory and equipment purchases, mostly of Japanese manufacture.

But LongQi has its sights set beyond the domestic market. Of the four or five larger frozen convenience food companies that have emerged in Beijing, so far LongQi is the only one to export -- and to the demanding Japanese market at that. Since May 1992, some 1,500 tons of packaged foods have been shipped to Tokyo and Osaka, where the name LongQi is rapidly gaining recognition.

"By the end of the month, we will be registered at the Inspection Bureau in Japan and our shipments will no longer need to be checked by inspectors from the central government here in China," said Hu proudly, pointing out the in-house lab that checks for any bacteria that may have been transmitted during the final food processing.

For Japan, LongQi prepares a series of more sophisticated Japanese snacks, including a variety of stuffed vegetable rolls and meatballs. "Already we sell these higher-value items in some of Beijing's better supermarkets," Hu said. "Gradually, we will introduce these new products to the local market, making taste adjustments if necessary."

Before entering the factory, workers and visitors don boots, facemasks, caps and coats.

Hygiene procedures are rudimentary but enforced earnestly, including the disinfecting of doorknobs, footbaths to rinse off boots and air cabinets to blow off excess dust.

But there is still no hot water in the washing-up area for the 180 mostly women workers, whose salaries average under $50 monthly, low by current Beijing standards. All foodstuffs -- some 6 tons daily -- are procured locally, as are packaging materials. Outside, workers off-load cabbages from a train wagon directly into the factory. "We're able to work year around because along with two other neighboring companies, we built a railhead leading right into the complex," said Hu.

Inside, labor techniques for the masked women are semiautomatic at best. Simple machines knead the flour and others form the meat fillings, three times faster than manually. But the final dumplings are still made entirely by hand, with each worker churning out 3,000 pieces daily, which are then laid into plastic trays and prefrozen in a spiral freezer. Goods leaving for Japan are trucked in refrigerated containers directly to Tianjin and then shipped on to Japan, the entire trip taking about a week.

LongQi is proceeding step by step. "So far, local people still like handmade dumplings, but eventually we will automate everything," Hu said. "We will track consumers' tastes and develop products accordingly."