Western food decorators, who are increasingly losing their clients to cheaper imported Chinese goods, are facing another blow as the Western food chain closes its Westgate mall on February 13.
Westgate, with its vast shopping malls and restaurants, is the country’s biggest mall, with over 1,000 stores and restaurants.
The company announced its closure on Tuesday, citing “global economic challenges,” but said it is committed to working with the government to provide its customers with more affordable alternatives.
WestGate opened in 2006 with a model of modernism and convenience, with outdoor food courts and shopping centres, but is now struggling to cope with the influx of Chinese imports, especially pork, fish and seafood.
In an interview with The Globe and Mail on Tuesday afternoon, Westgate’s executive vice-president of operations, Mark Gorman, said the closure will affect the entire business.
“We have to be very careful with what we are able to offer,” he said.
“It’s going to impact our customers and our team.
“But we’re not going to offer the same experience that we had before.” “
We are still going to be in business,” Gorman added.
“But we’re not going to offer the same experience that we had before.”
Gorman declined to provide details on what will replace the mall’s Chinese-made products, which will include more than 80 per cent of the company’s products.
Gorman declined further comment.
The mall’s closure comes as other Western food companies are struggling to adapt to a new Chinese market, as food prices continue to soar and prices of imported goods, like pork, rise.
Chinese imports have been a major driver of the price hikes, with prices of fish and pork soaring in recent years.
Last week, food prices in the United States jumped 10 per cent, and in Canada rose 14 per cent.
Food prices in Asia also have been rising.
At a recent panel discussion, a leading U.S. food company warned of a “huge surge” in food prices.
For the next six months, Western food prices will rise five per cent above what they were last year, and by an average of 20 per cent a year, according to the panel’s president, Matt Cappell, who is a senior fellow at the Council on Foreign Relations and the author of “The World’s Food Bubble.”
Cappill said that food prices are rising because consumers have “lost confidence in what they can get for the same price.”
“It’s not that consumers are being fooled,” Cappll said, “it’s that they are being squeezed.”
Chinese shoppers are not buying Western goods, and are instead purchasing imported goods.
Last year, Chinese imports outpaced Western imports by about one-third.
A survey by the University of Michigan found that 70 per cent said they are worried about rising food prices and the loss of the traditional Chinese-style Chinese restaurant, as well as other items that are part of the shopping experience.
China has long been criticized for its lack of food safety standards and a high-profile food scandal in 2014 that exposed how China was eating more pork than ever before.
The government has said the scandal was due to a lack of inspections and corruption.
According to Cappelli, food costs are rising faster than they are for the general population, because consumers are “less trusting of the government, less trusting of their government.”
Greens and other consumer groups have argued that Western food is the only option for many Chinese people, who need to make ends meet.
However, Gorman said the mall has a lot of work to do to ensure it is not losing customers, particularly if it will be forced to close.
“What we want to do is make sure that we’re doing everything possible to make sure they’re not losing their customers to the Chinese market,” Golfer said.
He said the company is working with China’s Food and Drug Administration to make improvements to its operations, as part of a partnership with the Chinese government.
As well, the mall will be closing its main entrance, but will keep many of its restaurants open, including those in the food court and on its indoor shopping centre.
Despite the problems, Cappello said the market has seen an explosion of Chinese tourists.
“This is a very different market than the one that existed in the early 1990s,” he added.
After years of decline, the market is now growing again, and Gorman hopes to see more Chinese visitors.
Follow Peter Dejong on Twitter: @PeterDejongCBC