Chinese, too, scream for ice cream; foreign and Chinese firms answer.

There's a new generation of young people in China, and they're like young people in the rest of the world -- they're screaming for ice cream. A new generation of ice cream companies eager to answer the call, stepping up production to a million tons last year, from 900,000 in 1993.

With a population of 1.2 billion, China is potentially the largest ice cream market on Earth, and there's plenty of room for growth. Even in Guangzhou, capital of Guangdong province where the new consumer economy has sunk its deepest roots, the rate of consumption is just 23%. In interior cities like Taiyuan and Zhengzhou, it's a mere four percent.

Beijing, Shanghai and Guangdong, indeed, account for about 25% of Chinese consumption, because those are the areas of rising incomes, home refrigerators and changing tastes. In some of the outlying regions, by contrast, people still aren't adapted to dairy foods of any kind, and ice cream (as opposed to water-ice treats) can actually make them sick, due to lactose intolerance.

Of China's teeming masses, about half live either in cities or in rural areas close enough to cities to be served by urban food distribution networks. These 600 million people are the primary market for ice cream, and there are already some 200 plants to serve them -- about half dealing in foreign brands with the quality and promotion to go after the high end of the market.

Because refrigerated storage and transportation aren't well developed in China, imports of ice cream in any quantity are impractical. That means the current ice cream boom is a boon for domestic producers -- but they are being challenged by international companies, which have set up production facilities in China, on their own or in partnership with Chinese operators.

The foreign firm to enter the market with the biggest splash is Anglo-Dutch conglomerate Unilever, which is spending $100 million a year to bring Wall's ice cream to China, beginning with Beijing. The Switzerland-headquartered Nestle group has been involved in China for several years, but in August of 1994 it established a new $65 million production facility in the Tianjin Economic Development (TEDA) Area under a joint venture with TEDA Industrial Investment Co.

Pacific Dunlop Ltd., a diversified investment group, is following a different strategy, with the purchase of a 50% interest in a domestic manufacturer, Beijing-based Meadow Gold Investment Co. Ltd. Shortly before this magazine went to press it was learned that Nestle has acquired Pacific Dunlop's holdings.

On the retail side, China Satellite Launching & Tracking General Corp. has joined hands with Baskin-Robbins International to open the first (but surely not the last) Baskin-Robbins outlet in the PRC. All products are being imported from Canada, but Baskin-Robbins plans to establish a Chinese production base to reduce costs and prices as it opens more stores.

While Unilever and Nestle hope their brands will take the high ground, the market is growing so fast that there is room for everybody without any brand becoming dominant. If multinationals have the capital, natives often have other advantages. In Beijing, for example, New Continent boasts that it uses 100% Chinese equipment, and can sell quality ice cream for a third to two thirds less than its foreign-connected rivals. It's not above tapping into foreign expertise, however. As such, ice cream cakes are being made with the help of the USA's Carvel Co.

New Continent and Wall's each reportely accounted for about 30% of the 80,000 tons of ice cream sold in the Beijing market last year, but doubtless in different price segments.

Domestic ice cream companies tend to be local rather than national in scope, but that is changing. It may be big in Beijing, for example, but New Continent isn't even a player in Guangdong, where the largest domestic ice cream manufacturer is Meiyile Food Factory (40,000 tons a year), while another major player is Guangzhou Frozen Food Co. Ltd. (20,000 tons), a joint venture with Hong Kong-based International Foods Co. Ltd. But Beijing's Meadow Gold has also become one of the Big Three, at 10,000 tons, through a joint venture called Sino-Foreign Guangmei Foods Co.

Because it is so close to the Hong Kong border, Guangzhou imports foreign brands to meet a huge and growing demand -- not only Mountain Cream from Hong Kong itself, but others from Japan and South Korea. One Japanese concern, Meiji Milk Products Co., has launched a joint venture called M & F Yantang Dairy Products Co., which was to have opened a plant by now and is expected to begin selling ice cream by this autumn. Lawry's (Singapore) Ltd. has a 60-40 deal with Dongguan Sugar, Cigarette and Wine Co., as Dongguan-Lawry's Ice Cream Co., to set up both a plant and ice cream parlors in Dongguan, another city of Guangdong province.

Shanghai, which was once held down by Beijing because of its past as the financial heart of a capitalist China, is now regaining its luster -- in fact, Pacific Dunlop plans to move its headquarters there from Hong Kong. PacDun, as it is called for short, bought its first plant in Shanghai in 1986, but now it plans a joint venture with Meadow Gold.

Unilever is building its first plant in Shanghai through its Beijing joint venture, Wall's (Beijing) Co. Ltd. But the biggest player, accounting for a third of the city's 60,000-ton production, is Watson's & Yimin Food Co. One first in Shanghai, which is the yogurt capital of China: a frozen yogurt venture by TCBY of the USA and Top Green Int'l of Hong Kong.

Meanwhile, business was very good for Fuller Foods Co., Ltd. this summer. The Hong Kong-China joint venture ice cream and dairy products operation sold all that could be made at its new Pudong Shanghai factory (see story on next page) which is outfitted with state-of-the-art imported equipment.

Capitalism makes strange bedfellows, as witness that Dongguan joint venture and, even more so, the ice cream store operation in Beijing backed by a company otherwise devoted to satellites in outer space (maybe they could market ice cream nose cones!). One advantage of joint ventures between domestic and foreign companies: they can avoid the ruinous (60%-110%) duties normally charged for imported ice cream cabinets -- no small consideration, given that domestic output of such freezer cabinets is small and of poor quality.

Taiwan Sees, Tastes Lite

In Royal Dairy's Ice Cream

Low-fat, low-calorie ice cream with locally produced Litesse is now available in Taiwan under the Royal Dairy Lite brand. The producer -- a major milk product manufacturer -- offers rum grape, orange vanilla, grape and green tea flavors.

The product range is sold both in bulk three gallon (11.4 liters) and pint (475cc) containers. In addition, white grape, sorosis (a thick-skinned pineapple) and mango are distributed exclusively in bulk sizes. A chocolate flavor is in the works.

The lite ice cream reportedly contains 65% less fat and a drop in calories from 650 per pint package to 356. The formulation combines Litesse with sorbitol, aspartame, oligosaccharide and sucrose with a flavored skim milk base.

The Lite line is priced the same as its regular ice cream products. Further boosting the concept among consumers, a special program on light foods was recently broadcast on islandwide television.

Cool Wave in Thailand Comes in Cones

The heat is perpetually on in tropical Thailand, but nowadays one does not have to hold out for the refreshing water-splashing fun of April's Sonkran Festival to cool down with. Thais are licking their way to sweet ice cream satisfaction in increasing numbers as new products from Western companies enter the market.

Recently inaugurating its first scoop shop in Bangkok was Haagen-Dazs. Presiding at the grand opening ceremony -- which included lots of sampling of flavors -- was former prime minister Anand Panyarachun.

Haagen-Dazs is a European-sounding American label owned by UK-headquartered Grand Metropolitan Plc. Talk about global brand building! In Thailand the company's premium range is distributed through S&P restaurants and supermarkets by HD Distributors, whose chairman is Chris Killingstad.

Meanwhile, the list of international and regional ice cream makers on the Thai scene is getting longer. Wall's is especially ubiquitous, having taken over Foremost's operations in the Southeast Asian country. Then there's Bud's, River, United and Swensen's.

Furthermore, according to a report in the Bangkok Post, "not-quite-so-secret talks between a well-known Thai company and the New Zealand Dairy Board" have been taking place. Could the next big flavor sensation be a kiwi-durian fruit swirl?