No problem too large, no solution too impossible
THE willingness of Shanghai authorities to encourage business innovation in the city goes beyond the regulation flexibility shown to Starbucks Reserve Roastery.
The city’s food authorities have given the green light to three new catering business models, including Alibaba’s flagship fresh food store Hema Market and automatic vending machines selling freshly squeezed orange juice, freshly brewed coffee and pizza.
In all these cases, the business models were subject to existing food regulations, making it difficult to obtain a legal license to operate.
“Hema and automatic vending machines are new business models, and the fact they have been allowed to take root in Shanghai shows flexibility on the part of authorities in charge of supervision and management,” Zhang Zhunmin, deputy director of the Shanghai Food and Drug Administration, told Shanghai Daily. “We want companies to be innovative and are willing to help them if their business operations benefit the public. Our supervision and management are people-oriented.”
Outlets of Hema Market serve as both retail spaces selling fresh products and stations to deliver orders to residents living within a three-kilometer radius of the stores. It does take time, however, to pioneer new ideas.
Vingoo vending machines serving freshly squeezed orange juice first hit the Shanghai market in 2013, but they were subsequently ordered to cease operation because of licensing problems and the discovery of moldy and rotten oranges.
City authorities said the orange storage in the machine and defective disinfection posed a safety hazard. The company was told to upgrade the machines to eliminate public health risks.
Vingoo did as instructed and passed testing procedures. Its 120 orange juice vending machines were then allowed back on the market. The company continues to be the only operator of such machines, which can be seen in subway stations and department stores.
In another case, Wang Shunli, chief of Lingdian Space Science & Technology Co, which operates coffee vending machines, sought a license to expand into the Shanghai market. It obtained a business license last June, but then it ran into trouble getting a food operation license.
“We tried our best to think of ways to make it legal because we wanted to obtain the license as soon, but there seemed to be no precise standards,” Wang said.
When he submitted the application to authorities, he was told that if relevant information were provided and it passed evaluation, the company could acquire a food operation license “tailored” to food vending machines.
His machines grind the beans before producing each cup of coffee, and add milk and sugar as requested by the buyer. They are the first of their kind in Shanghai.
Wang is putting the machines primarily in department stores and office buildings, but only in locations that have security guards or surveillance cameras to address possible risks that authorities flagged. The cleaning mechanisms in the machines have also been upgraded to ensure food safety.
“Shanghai authorities were very professional and efficient,” he said.
Five companies operating automatic vending machines selling items like freshly squeezed orange juice, coffee and pizza have obtained the food licenses in Shanghai.
“We are changing our supervision and management mindset,” Zhang said. “It is part of Shanghai’s pioneering efforts in innovation. But food safety remains a top priority.”
Zhang said his administration will try to draft rules regulating new business model that is
Shared by companies. At the same time, authorities will remain vigilant.
In late October, automated noodle machines, popular in some Shanghai office buildings, were suspended by the city’s food watchdog for operating “beyond scope.”
The machines, known as Yo-Kai Express, automatically boil water for a bowl of noodles in 45 seconds, after customers select a flavor and make a digital payment.
Because the noodles are half-cooked before they are put into the machine and then fully cooked after a customer presses the button, the vending machines were technically considered to be serving up “freshly made food,” for which the company wasn’t licensed.
Shanghai’s food authorities are now drafting a new local standard on “freshly made food,” Zhang said. It will cover the production, operation and hygienic conditions of such food items.