Anti-graft campaign takes a bite out of catering sector's growth in China

PUBLISHED : Monday, 10 February, 2014, 3:45am
UPDATED : Monday, 10 February, 2014, 3:45am

The mainland's catering sector grew at its slowest pace in more than two decades last year as diners avoided splurging on luxury restaurants during an anti-corruption campaign targeting official excess.

Catering in the country grew 9 per cent last year, the weakest growth in 21 years, Xinhua reported, citing the China Cuisine Association. It did not give the growth pace for earlier years.

Restaurants earned 2.54 trillion yuan (HK$3.23 trillion) last year. Among those suffering the biggest hit were high-end establishments, which reported annual revenue lower than in 2012, Xinhua said.

China's slowing economy has also dealt a blow to the catering industry, as cost-conscious diners go for cheaper spots with healthy, local food over multinationals like McDonald's and Yum Brands which have also been hit by food-safety scandals.

Companies dealing in pricey liquors, expensive cigarettes and luxury hotels were among those hit by the central government's anti-corruption campaign.

The crackdown has been led by President Xi Jinping as he looks to rejuvenate the Communist Party's image, marred by years of scandals and open displays of ill-gotten wealth.

The war on graft led government officials to close some 30 private clubs in a single week at the famed West Lake resort in Hangzhou , Zhejiang province.

The clubs - many of which had been operating for years - included one owned by Alibaba chairman Jack Ma Yun, and another backed by Hong Kong novelist Louis Cha Leung-yung, according to state media reports.

Ma along with seven Zhejiang-born businessmen, including NetEase founder William Ding Lei, provided the money behind Jiangnanhui, a high-end, club designed by artist Ai Weiwei and opened in 2006.

Only 400 people have been allowed to join Jiangnanhui and each needed to pay at least 200,000 yuan for a life-long membership, according to reports.