Why is billionaire Jack Ma focusing on food business in China through a new startup ?
Jack Ma is backing a startup aimed at sale of pre-packaged food, imports and exports, and edible agricultural products
Chinese billionaire Jack Ma is backing a newly formed startup, whose name in English translates to "Hangzhou Ma's Kitchen Food." According to a report by CNN, the new company is based in the eastern China city of Hangzhou, Ma's hometown. The startup will involve sale of pre-packaged food, imports and exports, and edible agricultural products. As per the report, the company has registered capital of 10 million yuan ($1.4 million).
Citing Qichacha, a corporate data provider in China, the report claims that "Ma's Kitchen" is wholly owned by an entity named Hangzhou Dajingtou No. 22 Arts and Culture, of which Ma has 99.9% ownership.
The demand for ready-made meals has risen exponentially in China. According to Euromonitor International, the market for ready-made meals in China was worth nearly $9.9 billion last year, an increase by about 28% as compared to the numbers in 2018.
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Experts believe that Ma is focusing on grabbing a chunk of this huge business opportunity involving the sale of pre-packaged food.
"Packaged meals are becoming increasingly popular. Consumers in some cases are choosing these meals as they are trading down and not dining out as much, but are also choosing them for access to variety and due to time constraints," explained Ben Cavender, managing director of China Market Research Group, a strategy consultancy.
Cavender highlighted how Ma can make use of his association to e-commerce to innovate and add value to the business.
"If, instead, this ends up being more about sales of fresh foods like fruit, there is also demand for a wider variety of high-quality options and reasonable prices, and this is a space where his ties to e-commerce … would add value," Cavender added.
