West China’s ramen economy

Summary 

Ramen is the better-known Japanese term for la mian, pulled noodles originally from west China’s Qinghai and Gansu provinces. The dish has become popular across China and worldwide. Qinghai has developed its ramen economy in recent years, enabling 72,600 people in 12,600 households in the city of Haidong to lift themselves out of poverty. A recognizable Qinghai noodle brand has emerged, and its industrial chain continues to develop and expand.

Challenge/Problem 

Haidong is a prefecture-level city in eastern Qinghai province situated at the east bank of Qinghai Lake, located in the transitional area between the Loess Plateau and the Qinghai-Tibet Plateau. The region’s geography can be a hurdle to development and has contributed to the city’s severe poverty. Until recently, approximately 175,000 people in 48,000 households lived in poverty. Five of the city’s counties were designated as deeply impoverished and were earmarked to receive assistance from intensive national relief and development programs. Haidong’s residents have experienced some of the widest and most severe poverty in Qinghai province.

The government has implemented strict environmental protection policies in relevant areas, and in some cases, the regulations safeguarding the area’s vulnerable water table make farming not viable. The local drainage system is also complex due to the presence of the Yangtze, Yellow, and Mekong rivers, which all originate in Qinghai province – and the environment can easily be damaged. 

Solution 

Ramen is a popular dish in Qinghai. It includes wheat noodles made from thin strands of dough as well as sliced beef, vegetables, chili sauce, and other fresh ingredients. It is easy to make and has a huge market. Haidong natives have received support from the government encouraging them to participate in the ramen economy by starting their own businesses. Qinghai ramen has become something of a brand and symbolizes the region.

The initiative included the following elements:

 1. Ramen was chosen because it is closely connected with local Haidong culture, and ramen restaurants are relatively inexpensive to operate. There is also a high demand for noodles in China. 

2. On-the-job training is available for vetted candidates living in poverty. Haidong decided to offer full pay and other assistance during training in order to improve capacities and motivate people to participate.

3. Interest-subsidized loans are provided to people who complete training programs so that they can open their own restaurants. The system was an instant success and initially helped 1,270 households lift themselves out of poverty.                                                            

4. The Haidong government implemented a financial reward system in order to encourage people to become involved with the ramen business.

Nearby resident Gao Wen, a member of the Hui ethnic minority group, used to be a migrant laborer and struggled to feed his family of six. Gao eventually began working as a waiter in a ramen shop and vowed to start his own restaurant. He participated in the government-subsidized training system in 2016, earned more than 40,000 yuan (US$5,632) and received a subsidy that enabled him to open his own restaurant.

This solution applies to any region or locality that wishes to reduce poverty by using a local product or service to develop its economy.

Results 

As of August 2019, Haidong’s ramen economy:

• Employs more than one-third of the people from rural areas in Hualong and Xunhua counties;
• Contributes more than 40 per cent of per capita net income for people from the two counties’ rural areas;
• Has resulted in more than 11,300 people in 8,731 households in Haidong (who formerly experienced poverty) using loans to start businesses in other cities;
• Brings in 5.811 billion yuan (US$818.19) of annual revenue;
• Has achieved 1.911 billion yuan (US$269.07) of net profit per year;
• Has yielded more than 902 million yuan (US$127 million) of earnings for people in Haidong who formerly lived in poverty.                   

Vocational training and business start-up assistance in Haidong have contributed to:

• More than 72,000 people in 12,800 households lifting themselves out of poverty;
• Ramen restaurants becoming more standardized, more sanitary, and more professional;
• Ramen has a role in 37 percent of poverty reduction in Haidong over the past decade;
• Entrepreneurs from Haidong running one-third of all ramen restaurants in 200 cities in China;
• The ramen economy employing 173,000 people; and
• Ramen restaurants opening in more than a dozen other countries and regions.

Lessons Learned/Potential for Replication 

1. When undertaking an approach similar to Haidong’s, it is important to identify a profitable industry and understand the culture surrounding it. The ramen economy was ideal because there were few barriers to entry and high demand.

2. Government support can boost this kind of project; training and other initiatives are crucial components. Making low-interest loans and start-up funding available, as well as implementing policies to incentivize participation, are essential to ensuring the success of new businesses. These kinds of measures were taken in Haidong and have greatly boosted outcomes.

3. Systematic branding is important. Ramen is a common dish in China, but branding and marketing can be an issue for any food-related business. Haidong established a system that includes start-up training and has promoted the region’s ramen in order to maximize its popularity.

Next Steps 

The Haidong government plans to pursue standardization and sustained development of the ramen economy by: 

• Exploring new opportunities in countries participating in national development strategies;
• Building an industrial development base and a national support service center to refine and extend the industrial chain; 
• Establishing a technical college that can train chefs and management personnel and confer accreditation;
• Fostering ramen culture to enhance the productivity of the ramen economy; and
• Strengthening the relationship between local authorities and business owners from Haidong via joint management and oversight.