West China Ramen Economy – Implementing a Variety of Measures in Order to Develop the Economics of a Popular Regional Product and Decrease Poverty

ABSTRACT

Ramen is the more widely-known Japanese term for "la mian" or "pulled noodles", which are originally from Qinghai and Gansu provinces in west China. The name refers to the thin strands of dough that are made during the production process. The dish has become popular in cities all over China and in many other countries and regions. Qinghai has developed its ramen economy in recent years, which has made it possible for 72,600 people in 12,600 households from Haidong city to escape from poverty. A recognizable Qinghai noodle brand has emerged, and its industrial chain has continued to develop and expand.

BACKGROUND

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 geography is complex and can be a hurdle to development. This factor contributed to the city suffering from severe poverty until recently. Approximately 175,000 people in 48,000 households used to be poverty-stricken. 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.

Robust environmental protection standards have also constrained development in the area. The local drainage system is complex. The Yangtze river, Yellow river, and Mekong rivers all originate in Qinghai province, and the environment is sensitive and can be damaged easily. The government has implemented very strict environmental protection policies in relevant areas, and they have narrowed options for economic growth to some extent.

INTERVENTIONS

Ramen is a very popular dish in Qinghai. It is easy to make, has a huge market, and features local characteristics that are good for branding. Haidong natives have been encouraged to participate in the ramen economy and start their own businesses so that they can increase their incomes and have been supported by the government. Qinghai ramen has become something of a brand and symbolizes the region.

The following measures have been implemented in order to decrease poverty in Haidong and to help people who are from the area become more prosperous:

1. A popular signature product from the local area was chosen. Ramen is closely connected with local Haidong culture, there is a relatively low barrier to establishing ramen restaurants, and costs are fairly low. There is also a lot of demand for noodles in China. Plenty of customers will usually appear if quality and flavor are good.

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

3. Interest-subsidized loans are provided to people who complete training programs in order to augment savings that they build up so they can open their own restaurants. The system was an instant success and initially helped 1,270 households permanently escape from poverty.

4. The Haidong government implemented an award system in order to encourage people to be involved in the ramen business. It includes:

- 100,000-yuan (US$14,080) "model Qinghai ramen outlet" awards

- 500,000-yuan (US$70,400) "industry-leading business" awards

- 5,000-yuan (US$704) to 50,000-yuan (US$7,040) awards for inventors and designers

Hualong county resident Gao Wen is part of the Hui ethnic minority group and has benefited from the efforts that have been made in Haidong. He 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 once he had enough money. He participated in the government-subsidized training system in 2016, earned more than 40,000 yuan (US$5,632) and escaped from poverty, and received a subsidy when he returned to Hualong that made it possible for him to open a restaurant in the Qunke New Zone.

This solution applies to any region or locality that wishes to develop an aspect of its economy related to a characteristic product or service for poverty alleviation purposes.

RESULTS

As of August 2019, Haidong's ramen economy:

1. Employs more than one third of the people from rural areas in Hualong and Xunhua counties

2. Contributes more than 40 percent of per capita net income for people from the two counties' rural areas

3. Has resulted in more than 11,300 people in 8,731 households that were formerly impoverished in Haidong using loans to start businesses in other cities

4. Brings in 5.811 billion yuan (US$818.19) of annual revenue

5. Has achieved 1.911 billion yuan (US$269.07) of net profit per year

6. Has yielded more than 902 million yuan (US$127 million) of earnings for formerly poverty-stricken people from Haidong

Vocational training and business startup assistance in Haidong have contributed to:

1. More than 72,000 people in 12,800 households being lifted out of poverty

2. Ramen having a role in 37 percent of poverty elimination in Haidong in the past decade

3. Entrepreneurs from Haidong running one third of all the ramen restaurants in 200 cities in China

4. The ramen economy employing 173,000 people

5. Ramen restaurants opening in more than a dozen other countries and regions

LESSONS LEARNED

1. It is important to identify an appropriate featured industry that is profitable and has as many advantages as possible when taking the approach that Haidong took and to understand the culture surrounding it. Ramen is an easy industry to get started in, and there is a lot of demand for noodles in China. These aspects have benefited the undertaking.

2. Government-led initiatives boost this kind of project; training and other initiatives are crucial components. Making low-interest loans and start-up funding available and implementing motivation policies 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 many business undertakings related to food. Haidong established a system that includes start-up training and has also promoted the region’s ramen as a whole in order to maximize its influence.