American Fast Food in Asia or the Chicken Story

KFC in a traditional traditional Minnan style structure
http://www.vagabondjourney.com/

I recently was reading some blog posts by other bloggers and came across some interesting postings of American fast food outlets in Asia, notably China. Many writers complain about the ubiquity of fast food brands across the globe, seeing them as the ultimate symbol of American imperialism. Some may say they dilute local culture, threaten culinary heritage and encourage unhealthy dietary habits. 

But there is more going on than you may think between China and the US as far as American fast food exports and foreign imports. The more I looked into the fast food expansion in Asia the more interesting it became to me.

Yes you can get a Big Mac in Beijing

In China American chain restaurants like KFC, McDonald’s, Pizza Hut, and Starbucks, as well as many Chinese fast-food chain restaurants that are (surprise) similar looking to some American brands have sprouted up everywhere in China. The Chinese chains have picked up on the American concept of inexpensive, standardized food items served in disposable paper and plastic convenience. China has also adapted the fast-food approach to its own cuisine. Chinese street food vendors offer dumplings and noodle soup served in a bowl lined with plastic. This allows the bowl to be reused by just putting a new plastic bag. Slick, no need to wash the bowl between customers. Street food in Asia is a wondrous sight if not amusing at times.

Last year I mentioned in my "Fan with Soy" blog posts about seeing restaurant chains in Japan that are no longer found in the US, Bob's Big Boy, and about competing 7-11 stores on opposite corners in Bangkok. I also mentioned that Shaq was the spokesperson for Harbin Beer which is an NBA (yes, basketball) sponsor. The Harbin brewery is owned by Anheuser–Busch InBev, which has helped to export Harbin beer to European and North American markets.

Shaq as the spokesperson for Harbin Beer

Note the NBA logo at the bottom of the can

Harbin Beer probably wasn't really looking to be part of the InBev product line but was probably looking for some capital for expansion. Well they got that and meanwhile the US opened more fast food outlets under YUM!Brands, Inc in China. Yum! is a United States-based Fortune 500 corporation and operates four licenses Taco Bell, KFC, Pizza Hut, and WingStreet restaurants worldwide.

 

Yep, food on a stick or a stick on a stick.

Okay, so what is so bad about YUM!Brands? Well again not much unless you think about the absurdity of some of the locations. The company opened its first restaurant in Ulaanbaatar, Mongolia in May, 2013. For Mongolia, KFC is the first western fast food to open its doors in the country. The company is planning to open 15 more restaurants in Ulaanbaatar in the next 5 years, including the country's first drive-thru service. Mongolia?!?

Now this expansion in China and the rest of Asia hasn't translated in absurd profits for either McDonalds or YUM!. When fast-food giants McDonald’s Corp. and Yum! Brands Inc. reported fourth-quarter and full-year results for 2013, both chains said that US sales were flat at best for both periods. When McDonald’s reported January same-store sales Monday morning, US same-store sales were down 3.3% compared with January 2013 sales.

McDonald’s reported that same-store sales in China were flat in the fourth quarter, while Yum! said that its sales in China were down 4% in the quarter and 13% for the full year. Both companies have been hit by concerns over avian flu and tainted chicken supplies that surfaced late in 2012. Yum! was hit harder, and it has taken the company a full year to climb back to its relatively small sales decline last quarter. With some 3,700 stores in China, more than half of YUM's business now comes from KFC China, 44% revenue and 50% profits, to be specific. And now it occupies half of the total fast-food industry in China. For every million people in China there are only 3.5 YUM! restaurants, compared with 58 in the US.

But for the suppliers of chicken both here in the US and China there is another hidden story. Here is an article by BETTINA ELIAS SIEGEL about processed chicken sold in the US.

USDA Misinforms Parents About Chinese-Processed Chicken in School Meals

SEPTEMBER 25, 2013

On August 30, the USDA announced that it will allow four Chinese facilities to process poultry raised and slaughtered in the United States, Chile or Canada, and then export the cooked poultry products back into the United States.  The USDA’s move is widely seen as a preliminary step toward eventually allowing China to export its own raw poultry into this country, in exchange for China’s opening up its lucrative beef market to American beef producers.

Given China’s troubling food safety record and the fact that its own government official essentially admitted that China can’t live up to the food safety standards of more developed nations, there are those who speculate that the timing of the USDA announcement – the Friday before Labor Day weekend — was not unintentional.  But whether or not the agency was trying to bury this news, the announcement quickly led to an outcry among journalists, environmental watchdog groups and Congressional representatives, including New York Senator Charles Schumer (D), Ohio Senator Sherrod Brown (D) and  Connecticut Congresswoman Rosa DeLauro (D).

In the days following the announcement, a few readers asked me if the new USDA policy means that Chinese-processed chicken will appear on American school lunch trays.  On the USDA’s Food Safety and Inspection Service (FSIS) website, I found this helpful Q & A:

Will chicken processed in China be included in school lunches?

No. The USDA’s Agricultural Marketing Service ensures that products included in [sic] school lunch program are produced, raised, and processed only in the United States, its territories or possessions, the Commonwealth of Puerto Rico, or the Trust Territories of the Pacific Islands.

To parents with little knowledge of how school food programs operate (i.e., the vast majority), this statement from FSIS would seem to settle the question — and provide solid reassurance for those concerned about Chinese-processed chicken being fed to their kids at school.

But the FSIS statement is in fact quite misleading.

It is true that school districts participating in the National School Lunch Program (the “NSLP,” which also includes school breakfast and after-school snack programs) receive agricultural commodities from the USDA’s Agricultural Marketing Service, and it is true that these products are domestic.  But the USDA is well aware that school districts also procure significant portions of their school food from private vendors, and this method of school food sourcing is entirely omitted from the answer above — despite the blanket “no” response.

So the pertinent question is: Can private vendors sell Chinese-processed chicken to schools?

I emailed the FSIS and a USDA spokesperson agreed that “schools also make their own purchases” of school food, but she went on to note that such purchases are governed by a “Buy American” regulation which

requires participating schools to purchase domestically grown and processed foods, to the maximum extent practicable. A domestic . . . product is defined to be “. . .  a food product that is processed in the United States substantially using agricultural commodities that are produced in the United States.”

This regulation sounds like a de facto ban on Chinese-processed chicken.  But at the end of her email, the spokesperson also disclosed that under the “Buy American” rule:

[p]roducts that are processed in the United States and comprised of at least 51 percent domestic ingredients are considered domestic.

I have since expressly confirmed with the USDA that this definition of “domestic” would indeed allow Chinese-processed chicken into the school lunch program.  Here’s how:  if, for example, a manufacturer of frozen chicken egg rolls fully assembles the egg rolls in this country, but sources the cooked chicken in the egg rolls from a Chinese processor, the egg rolls are considered “domestic” so long as the Chinese-processed chicken doesn’t comprise more than 49% of the total product. School districts could buy these egg rolls without violating the “Buy American” rule and the egg rolls would not have to bear any country-of-origin labeling to disclose the location of the poultry processing.  And this scenario could easily apply to any chicken-based entree supplied to schools, such as chicken soup, frozen chicken burritos, chicken chili, chicken-stuffed ravioli, and more.

I also learned that there’s a second exception to the “Buy American” rule.  In the unlikely event that the economics of chicken processing shift, such that it becomes reliably cheaper for schools to source items like patties and nuggets using Chinese-processed chicken over domestically processed chicken, then schools can freely buy such products, regardless of ingredient percentages.

So the bottom line is this: despite the blanket reassurance to the contrary on FSIS’s website, it is entirely possible that Chinese-processed chicken will be used in school meals.

It’s also worth noting that, according to the USDA spokesperson, there is no analogous “Buy American” restriction on schools providing evening meals to students, nor does it apply to meals served in day care centers, as both of these programs are part of the Child and Adult Care Food Program rather than the NSLP.  (“School supper” programs are increasingly common; by 2015, an estimated 21 million students will be eating dinner at school.)  Accordingly, it appears that any Chinese-processed chicken product, regardless of ingredient percentages, can be used in these meals as well.

Whether Chinese-processed chicken presents a serious concern for parents is open for debate.  According to sources interviewed by Politico, few U.S. poultry producers have expressed interest in processing chicken in China at the present time due to logistical constraints.  If that situation changes, however, parents are unlikely to know about it.  Moreover, because no country-of-origin labeling is required on products containing Chinese-processed chicken, only school districts which expressly obligate vendors to use 100% domestically processed chicken will know exactly what they’re serving to kids.

In my opinion, though, parents ought to be far more worried about the possible lifting of the export ban on Chinese-raised and -slaughtered raw poultry.  If raw Chinese poultry enters this country and becomes reliably cheaper than domestic poultry, its use in school food could become widespread under the second exception to the “Buy American” rule noted above.  (And, at any rate, raw Chinese poultry could always be used, up to 49%, in manufactured food items regardless of cost.)  Given that some Chinese poultry farmers allegedly used large quantities of illegal drugs in raising chickens sold to KFC, and given the potential vulnerability of young school children eating such chicken, a lifting of the export ban on raw Chinese poultry is a cause for serious concern.

In the meantime, is FSIS intentionally misleading the public on this issue?  I can’t know, of course, but I suspect that in the rush to quell concerns about the August 30th announcement, the FSIS simply failed to vet its school food Q & A with the USDA’s Food and Nutrition Service, the branch of the agency overseeing child nutrition programs.  Regardless of motive, however, my own questioning of the agency (which began a full two weeks ago) has clearly brought the inaccuracy to its attention — yet, as of this writing, the original statement remains on its website.

So are these fast food outlets really contributing to bad dietary habits? Probably yes but considering the amount of disposal income in China and much of Asia not everyone nor is every meal being eaten in a fast food restaurant though I can't say the same happens in the US. Statistics do show an increase in obesity in some areas of China. Then there are other indicators that say it is not the fast food but other environmental factors that contribute to the increase in obesity.

Should the US be concerned about processing chickens in China then shipping them back? Again probably yes. But as the article says you may not know where your food comes from even if it is labelled. So the concern should be with the US regulations that allow this type of labelling or lack there of.

I will have to admit that as a traveller seeing a familiar US brand while travelling overseas can be comforting. But you may need to tone down your expectations. Some of the worst coffee I have ever drunk was from a McDonalds in Italy. I know I committed a sin in a country that can make good coffee. When I took my son to Amsterdam the first meal he wanted was from a Subway and I let him do it, though only once. And many of these familiar chains are filled with Americans looking for something like home. 

Sometimes it is lonely to be a Stranger in a Strange land.

Note the travellers not from China eating here.

And for some amusement follow this link to some of the most unusual McDonalds locations.

If you have read this blog post so far thanks as I know it is a long one. This may be the last "Fan with Soy" post using the Blogger platform as I am going to focus on the "Adventures in Europe - Part 3" blog and move to everything to a WordPress platform (as soon as I can figure out how to do it).