0
An advertisement for Choco Pie under Orion's Chinese brand, Haoliyou. The product has enjoyed enormous popularity in China for nearly 30 years. / The Beijing News (新京報)

South Korean food company Orion, which boasts an exceptionally strong global position in the Choco Pie market, continues to demonstrate an overwhelming presence in China. Its sales in the country are expected to approach 2 trillion won this year, far exceeding those of its Korean headquarters, as in previous years.

Orion, now much better known in China by its local brand name Haoliyou (好麗友), meaning "good and beautiful friend," first entered the Chinese market in 1995. When it began operations by establishing a factory in Langfang, Hebei Province, near Beijing, its friendly brand name played a significant role in attracting consumers.

However, according to Chinese food industry sources on Nov. 3, the company soon began to thrive as its excellent taste and hygiene standards gained widespread recognition. There appear to be good reasons why Orion continues to perform so strongly even today, when China's rapid economic development has significantly weakened the presence of Korean companies.

Orion now enjoys a virtually unshakable position and stands out as one of the few Korean hidden champions in China, maintaining a dominant presence in its industry.

One indication of its remarkable position is that many Chinese consumers regard Haoliyou as a domestic brand and take considerable pride in it. Orion's standing becomes even more striking when considering that some Chinese consumers mock the American brand Oreo (奧利奧), a competitor in the same industry, as a shanzhai brand — a knockoff or imitation brand that has become successful in the Chinese market.

Orion's performance is equally impressive in China's fiercely competitive snack market, where it is difficult even to determine exactly how many brands are competing.

Its revenue in the first half of this year is estimated to have reached approximately 4 billion yuan (804 billion won), up 24.4% from the same period last year. Given the extremely difficult conditions in China's domestic market, where consumer demand has weakened considerably, the performance could almost be described as miraculous. Operating profit also increased 33.7% to 719 million yuan.

It is therefore hardly surprising that Orion is expected to comfortably exceed 8 billion yuan in annual revenue and 1.5 billion yuan in operating profit this year, bringing it close to joining the 10 billion yuan (2.01 trillion won) sales club, a milestone that is difficult to achieve even in the Chinese market.

Even if it does not reach that milestone this year, it appears almost certain to do so next year. It would be surprising if the company's future outlook were anything other than positive.

There is good reason why Orion's Chinese subsidiary is pursuing an expansion of its potato flake production line in Shenyang, Liaoning Province, and the construction of a new dedicated snack factory in Langfang.

The company's continued success appears even more likely given its plans to further strengthen consumer confidence through a technical cooperation agreement signed in July with the Institute of Food and Nutrition Development, a national research institute under China's Ministry of Agriculture and Rural Affairs.

It is no exaggeration to say that even industry insiders reportedly do not know exactly how many companies in China are producing imitation versions of Orion's products.

                                                                                                            Hong Soon-do