A.The market for instant rice vermicelli has shrunk sharply, beyond the imagination of the industry

There are three types of instant rice noodles (referring to boiling water brewing products) in China: self-cooked cross-bridge rice noodles, convenient Shahe noodles and traditional ready-to-eat rice noodles. Since 5~6 years ago, cross-bridge rice noodles have developed rapidly, accounting for more than 75% of the three types of products. The expansion rate of instant rice noodles is slow, and the market of instant rice noodles with traditional processes is shrinking, accounting for a small proportion, and the impact on the entire instant rice noodles market has no effect. In fact, cross-bridge rice noodles have become an important factor in the convenience rice noodle market. 

Since the financial crisis, various industries in China have been affected to varying degrees. Instant noodles, instant rice noodles, and instant potato vermicelli have also been greatly negatively affected, but the most affected is the instant rice noodles market, mainly the cross-bridge rice noodle market. The sales volume of each manufacturer decreased by 30%~70% compared with its highest sales volume. In the mainstream production enterprises, it is normal for their sales to drop by 30%~40%, and the situation is relatively good. Such companies believe that as long as the financial crisis has passed, it will recover. The production enterprises that fell by 50%~70% felt caught off guard and helpless, and suddenly felt that the prospects were bleak from the original overly optimistic market. Almost all the operators of instant rice noodle manufacturers attribute the global financial crisis and the rise in raw material (rice) prices to the global financial crisis. In fact, in addition to these fuse reasons, there are deeper reasons. 

B.The analysis of the reasons for the big decline of the rice noodle market

1. The negative impact of the global financial crisis

The global financial crisis has triggered a decline in China's export trade, causing some export-oriented production enterprises to reduce or suspend production, and a small number of enterprises have reduced employee wages. Most of the main consumer groups of cross-bridge rice noodles are composed of younger employees of these enterprises. This consumer group has shrunk, which directly affects the sales of cross-bridge rice noodles. This impact is felt most deeply by production enterprises in more economically developed regions. To give an indirect example: Dongguan City is one of the main sales markets for cross-bridge rice noodles. There are many employees from all over the country, and many of them live in rented houses. Local rental housing has been a very prosperous industry not long ago, but recently statistics show that the vacancy rate of rental housing in different areas of Dongguan has reached 20%~50%, which shows that many employees have left Dongguan City, directly narrowing the consumer group of cross-bridge rice noodles. Some employees who are still working, before the economic outlook is clear, will choose lower-priced non-brewed rice noodles instead of cross-bridge rice noodles.

2. Overestimating the speed of the development of rice noodles and blindly expanding production capacity will inevitably be bitter

More than a year ago, many operators inside and outside the industry predicted to varying degrees that instant rice noodles would continue to grow explosively. At that time, the author expressed a different opinion in an article, arguing that the explosive and sustained growth was an overheated estimate that defied the laws of the market. In 2006, the annual output value of cross-bridge rice noodles and brewed Shahe noodles was only about 500 million yuan, but since 2007, the new annual production capacity of production enterprises and newly put into operation equipment can reach 1 billion yuan. This means that the original production capacity and new production capacity will reach about 1.5 billion yuan. It is almost impossible to fully absorb this double capacity in two or three years. This was already evident before the financial tsunami, when the financial crisis was nothing more than a trigger for detonation, or it could be said that the excessive expansion of production capacity deepened and amplified the negative impact of the financial crisis. This shows why the market for instant rice noodles has been hit much harder than instant noodles. 

3.Abnormal sales tactics have produced a market bubble

As mentioned above, the production capacity of instant rice noodles has greatly exceeded the market capacity in the past 1~2 years. In order to quickly occupy the market and give full play to their respective production capacity, enterprises do not hesitate to use all formal and informal methods to promote their products. In order to obtain considerable sales incentives from production enterprises, some dealers report that most of them have received awards regardless of whether they can sell them or not. This disconnects production decisions from actual market demand. Decision-makers blindly expand production based on the optimism of the reported sales figures. When this vicious circle reaches a certain point, a market bubble will form. A large number of dealers are still purchasing a large number of products, and replacing them with new dealers is even more invoicing. The bubble that forms creates the illusion of the market. When the financial crisis hit, the bubble burst. Production enterprises should recover the backlog of products, so that the declining output will accelerate the decline, and the recovery of expired products will bring huge economic losses to the enterprise.

C. Respect the laws of the market, the future is still bright

It is undeniable that the difficulties encountered by the convenient rice noodle industry are directly related to the impact of the financial crisis, but the more important and deep reason is to ignore the law of market development. As long as the lessons are summed up, the production capacity will be gradually digested, and after the market bubble bursts, the hidden dangers will be eliminated, and the prospect will gradually embark on the road of benign development. In the future, some new developments will emerge: 

For many years, the bridge rice noodles have been growing at a double-digit rate every year, and it is estimated that after the crisis has passed and entered normal, it is possible to grow at a rate of 10%~20% per year. This rate of development shows that instant rice noodle production is a promising industry. 
In the future, there will be some large enterprises involved in this industry, and the market distribution will be reshuffled. No matter which one enterprise, in order to expand production capacity, it cannot rely solely on market growth to absorb all the new output, but mainly by striving for a larger share of the market pie. This means that you can only win through competition. Therefore, before expanding production or joining the industry, each enterprise must objectively evaluate its own competitive advantages and disadvantages, and make a choice accordingly. 

After the rice noodle industry withstands this shock, there will be some changes. The consumers of cross-bridge rice noodles were mainly younger industrial employees, and it would take half a year to a year to restore this group to the original consumption level. During this time, some new consumer groups will appear, which will be conducive to the expansion of the market in the future.

As large companies get involved in the industry, it becomes more difficult for small businesses to gain a foothold in the industry. Large enterprises will have greater improvements in operation and management, production technology and equipment, and product quality. In terms of product structure, the proportion of bowl and cup products will be greatly improved. On the one hand, there will be a new consumer layer; On the other hand, it means that the growth rate of the output value of this industry in the future will be significantly higher than the growth rate of output.