Across China: Moon cake town struggles on sluggish economy

The remote county of Shenchi in north China's coal-rich province of Shanxi has been producing moon cakes for the last 500 years. Once a thriving industry, it looks destined to suffer the same fate as the region's fading coal industry.

Qingqiuyuan Food Group, the largest moon-cake producer in Shenchi, said that demand for moon cakes -- usually given as gifts during Mid-Autumn Festival, which falls on Sunday -- had dropped markedly in recent years.

Qingqiuyuan once had two factories that produced moon cakes on an industrial scale now, however, one is shut, and the other only operates occasionally.

Ren Peng, who works at Qingqiuyuan, said the company expects to sell about 800,000 moon cakes this year -- a fraction of the sales seen in previous years.

Many other moon cake producers in Shenchi are facing the same, grim prospect. In years gone by, the county saw more than 100 million moon cakes produced annually, generating over 200 million yuan (31.4 million U.S. dollars) in sales revenue.

"We expect to sell around 20 million moon cakes this year," said Gao Jie, an official with the county food association.

The once-thriving coal mining companies in Shanxi, Shaanxi and Inner Mongolia were major buyers of Shenchi's moon cakes, Gao said.

"Most mining firms are either partly or completely shut down due to the economic recession and this has affected our sales," Gao said.

The number of moon cake producers in the county has also dropped sharply from 300 to 100 as many have been forced to shut down or merged with larger rivals, Gao said.

A change in attitude toward extravagance, following the launch of a government-led anti-corruption drive in late 2012, has meant that moon cake producers have had to change their market strategy.

Once a gift of choice for government employees or officials, expensive moon cake packages no longer hold the same appeal.

"Many firms have now begun to make cheaper moon cakes," Gao said.

Customers of Changxiangyuan, another Shenchi-based producer, drive hundreds of kilometers just to buy its affordable moon cakes.

"I bought Changxiangyuan moon cakes last year and they were so delicious that my friends and I came back this year," said Duan, a customer from the provincial capital of Taiyuan.

"We couldn't keep up with demand," said Han Fei, a manager with the firm. "[Last year] we sold up to 50,000 moon cakes a day, and we expect sales to be even better this year."

Han said the company mainly makes cheaper moon cakes for the general public and so its sales have not been affected.

"In the past, sales to mining companies and government offices only accounted for one fifth of our revenue," he said.

Yonghe Food Co. responded to the change by returning to the artisan routes of moon cakes, and now sells many hand-made cakes.

"We used to churn out high-end moon cakes, but sales dropped massively after the anti-extravagance drive," said Lyu Xiaozhong, Yonghe Food Co. owner.

Yonghe also opened an online shops to boost sales.

"Our daily sales online is around 3,000 yuan," said Lyu. "While this is not a huge amount of money, we are beginning to embrace e-commerce," he said. Endi