As the licensed chicken meat supplier to 2008 Beijing Olympic Games and one of the largest chicken meat suppliers to KFC, Dicos and other fast food chain stores in China, DaChan Food (Asia) Limited (hereinafter abbreviated as DaChan), uses this amazing but seemingly overcorrecting traceability system to boost the food safety upgrade of entire domestic chicken meat industry. 

DaChan’s food safety traceability system means that on the package of every piece of chicken meat, there is a reassurance code. Consumers can visit and log in the website of DaChan’s “Sisters’ Kitchen”, and immediately obtain the thorough information about a chicken’s life, including the breeding farm, breeder, time of brooding and market availability; the production information about the lot of feeds; the information about the electric slaughtering, the lot of fresh chicken meat products and quality inspection; the information about the deep processing of food. This does not intend to let you acclaim or salute the chicken feeders. DaChan hopes that by doing so, consumers can enjoy the safe food featuring traceability with reassurance.

You may think that the traceability system is the hype. But, the system of anti-counterfeiting via telephone, the current universal standard of the alcohol industry, was deemed to be the hype in those days. In fact, it may be the time to establish a new industrial standard to fight against the frequent occurrence of safety problems in the food industry of mainland China.

New directions of the Chicken King
DaChan may remain unknown to many residents in mainland China, but it is known to all in Taiwan. DaChan was established in 1957, starting its business from salad oil and specialized in the business of soybean, oil extraction and soybean cakes; in 1965, DaChan introduced complete formula feeds and built the animal husbandry factory to conduct feeds test. At that time, it was the golden time for the animal husbandry development in Taiwan. Since the feeds almost depended on the import, the introduction of DaChan’s complete formula feeds filled the blank that there were no feeds manufactured by local enterprises. After 1978, DaChan mastered the thoughts of feed management and veterinarian service, and then turned itself into a company offering all-round services to poultry and livestock feeding farmers from a mere seller of feeds previously.    

In 1990, Mr.  Mark Han Jia-Hwan was elected Chairman of the board of DaChan, and began to carry out the “Eagle Plans”, which gradually establish DaChan to be the Chicken King. The Plans were composed of four parts: to extend DaChan’s business beyond the boundary of Taiwan, use the entry into the market in mainland China as the springboard and then head to the markets in Southeast Asia; to set up an electric slaughtering factory and develop the integrated chicken business; to greatly consolidate the feeds industry and enhance DaChan’s leading positions in both the production quantity and sales volume; to develop hi-tech animal nutrition products with full strength in the feeds company. 

In the following 3 years, DaChan concentrated on the development of chicken feeding industry. Mark Han mergered an electric slaughtering factory despite a strong objection, from which he started to realize his dream of integrated chicken business, and the mode of “company + farmers” developed gradually. Based on the feeds, serviced and advanced operating mode to cooperate with farmers, the development of integrated chicken business strode ahead quickly. 

The interim results of this year shows that, DaChan’s business includes the B2B business to supply fresh chicken meat to KFC, Dicos and other enterprises, accounting for 51.4% of the total income; the business to sell feeds to external clients, accounting for 43.6% of the total income; the business of processed food products (the sales of cooked foods), only accounting for 5% of the total income, among which the sales of cooked foods in mainland China only accounts for 2.9% of the total income. 

However, DaChan is not content with its achievement to be the No. 1 in B2B businesses only. The “Eagle Plans” initiated has implied the development route of DaChan. Mark Han believes that the construction of the terminal brand of “Sisters’ Kitchen” that directly faces consumers is not only the need to cope with competition, but also a natural choice. 

The brand of “Sisters’ Kitchen” includes three aspects actually. In Mark Han’s words, it is called triad. Firstly, the “Sisters’ Kitchen”-branded cooked foods. DaChan has a mature production line to process the cooked foods and is the supplier of cooked chicken foods to Japan all year round; secondly, the “Sisters’ Kitchen”-branded fresh chicken meat. As the supplier to offer the core fresh chicken meat products to KFC, DaChan has solid foundation; thirdly, the construction of terminal catering stores with the name of “Sisters’ Kitchen”. For the construction of terminal stores, DaChan has made great effort in its selection of the food types. DaChan does not choose the same fried foods as those of KFC and McDonald’s. On the contrary, it chooses roast chickens, kebabs, braised chickens, etc. “We find that it is a blank market to sell foods like roast chickens in the intermediate and high ends”. Mark Han plans to open 5 stores in November in Beijing. At the end of this year, DaChan plans to open more than a dozen stores.

B2B business and B2C business have distinctive differences. Especially that the food safety has been drawing great attention from consumers in mainland China in the past years has continuously driven up the risks and costs in consumer markets. So, why does DaChan choose to enter the consumer markets at this special time? Mark Han explains that he believes the combination of traditional industry and high technology will bring brand new experiences to consumers. In other words, he hopes that in the trend that there has been more and more external focus on food safety, DaChan can rely on its advantage of the traceability system that has been used for years to make market breakthroughs and form the differentiated competitiveness.

Protein industrial chain
Mark Han expresses the reason that DaChan’s traceability system is not media hype simply comes from his confidence in DaChan’s protein industrial chain.
“In fact, DaChan has been doing this for years”, says Mark Han, “But previously, we are limited by several conditions, for example, the immaturity of Internet technology and Wi-Fi technology. Now, what we are doing is to copy what we have done in the past to the Internet so that many people can see it with their eyes”.

As the transparent cooking in catering industry is a higher standard, not all enterprises can afford the risk to show the transparent chicken meat industrial chain to consumers because if mishandled, it may be self-defeating. However, DaChan firmly believes that it is its own opportunity. Now, it is the time that its rigorous system that has been cultivated and tested during the supply of products to KFC and other enterprises is to be presented to the world. 

DaChan’s protein industrial chain starts from feeds at first. At the time when it entered the market in mainland China in 1990, DaChan firstly went into the feeds industry. DaChan’s feeds are in high standards. In order to guarantee the feeds quality, the raw materials are almost imported, including the imported soybean, the imported lees and the imported microelements, which has guaranteed the production of organic green feeds. Secondly, to control the scientific research. DaChan has set up its own scientific research and test center. Different from other feeds factories that simply categorize the feeds as pig fees, chicken feeds and so on, DaChan has achieved to categorize its feeds according to the different ages of chickens, which means that different feeds need different sizes of particles, different ingredients and production processes.

Besides feeds, breeder chickens factory and incubation factory are also key links in DaChan’s protein industrial chain.

No visit is allowed to DaChan’s breeder chicken factory, because even its employees cannot enter the factory without at least two sterilization procedures. All the ventilation, feeding, light and temperature of the factory are controlled by computers. For example, when there is any change to the temperature or moisture in chicken coops, the degree of the opening of windows are adjusted automatically. 

After selection and sterilization, the chickens from the breeder chicken factory will be sent into the incubation factory. In the incubation area, there are nearly 40 procedures for a hatching egg to be hatched into a healthy chick, and there are higher requirements and standards imposed on every procedure compared with those in other chicken feeding farms. Hence, the hatching rate of DaChan is 5% lower than 90%, the average hatching rate of the industry. Besides, at the time when the chicks are sent out of the incubation factory, the requirement is that there are 100 chicks in one case. But DaChan will put 102 chicks in one case so that the contract farmers will not suffer the loss arising from the death of chicks during transportation. 

The chicks from the incubation factory need the injection of vaccine and registration before they are sent to contract farmers. The conditions of chicken feeding farms of these contract farmers are not inferior to those professional ones in mainland China in terms of the requirement of feeding conditions, feeding levels and other aspects. For example, many chicken feeding farms are required to be sited on the flat ground that is surrounded on three sides by mountains and often uninhabited.

There are many links in the entire feeding process. There must be corresponding handover sheets or forms to fill in and strict procedures to observe from one link to the next. For example, when the hatching eggs are sent into the incubation factory, after procedures like selection, the person-in-charge needs to fill in an incubation card that carries the detailed information such as the weeks and the lot, which will be convenient for the trace of source. In addition, DaChan adopts “Five Concerted” policies, namely concerted supply of chicks, concerted supply of feeds, concerted supply of immunity services, concerted purchase and concerted processing to guarantee the quality of products from the contract farmers. Compared with the self-feeding mode, farmers do not need to invest too much, so it develops very fast.

This is the integrated protein industrial chain that DaChan has been working on with great effort. Based on this, DaChan becomes the core supplier to KFC, Dicos and other fast food chain stores.

Since 2006, DaChan has begun to further upgrade and transform this system. In order to realize the seamlessness between links and the presentation of every link of chicken meat industrial chain to consumers by way of network, DaChan has increased the amount of veterinarians and quality inspection personnel at the primary level through technical innovation of basic feeding and circulation links, and set another 100 central control sites inside DaChan to collect and transmit the information about different links of the industrial chain, aiming to realize the network interaction and point-to-point control of the entire process.

And the traceability system opened to consumers at present is the window from which consumers can see the protein industrial chain.

Food safety competitiveness
When Mark Han took over as the Chairman of Alxa SEE Ecological Association (SEE) from his predecessor the chairman of China Vanke Mr. WANG Shi, he seriously said that he would make every effort to forge a traceable food safety system whose value would not be only limited to the profits of DaChan. He believes this is of significant strategic meaning to the entire industry.

In recent years, there frequently occur the food safety accidents. A series of accidents, such as Sudan, clenbuterol and melamine, arouse the worries about what we will not be able to eat tomorrow. 

Mark Han, an entrepreneur in the industry that is the focus of the public, admits “the protein from milk, meat and eggs is the most troublesome thing. It has longer industrial chain starting from the very source of feeds to incubation, electric slaughtering, food processing, transportation and storage, and every link also contains some procedures. Failure in one link will affect many downstream links, so it is very risky”.

Mark Han thinks that to bring food safety under permanent control cannot only rely on the conscience of enterprises or the severe punishment after occurrence of accidents. The key point is to set up a manageable, controllable and traceable system. Objectively speaking, DaChan’s healthy and rigorously managed industrial chain is forged with the high standard by many international clients who have sensed and witnessed such risks, and DaChan has spent large amount of costs and time in forging the chain. It is such a system that arms DaChan with the ability to guarantee food safety and then obtain the market share that other enterprises cannot get. 
Professor ZHENG Fengtian, the Vice President of Agriculture and Rural Development College of Renmin University of China, agreed with Mark Han. In his opinion, DaChan’s traceability system has offered original and systematic thoughts to the solution of food safety problem. It is very similar to that Europe began to promote the traceability system more than 10 years ago. Furthermore, the value of DaChan’s system not only facilitates the trace of responsibility when serious accidents occur, but also promotes the self-discipline and quality of each link inside the system.

Professor ZHENG also stresses that there is the possibility that the establishment of the traceability system may become an industrial standard, since the State is boosting the perfection of the establishment of safety system of the food industry. It is learned that the U.S is engaged in the legislation to require that all foods should be traceable, and thus becomes the first country to compulsorily set up food traceability system. Once it comes true, it will tremendously affect China’s food industry.

Mark Han admits that he cannot count on the possibility that his system may become an industrial standard. He believes that for an industrial standard, besides that it is formulated by the government and the competent authority, in many cases, the more it brings success to an enterprise, the more it will be accepted by the public. DaChan hopes to achieve such successes so as to set up an example and advance the entire industry,

This system that enables consumers to know about a chicken’s life has already brought key and positive impact on the quality of DaChan’s products and on the formation of major clients. But today, when it is launched to consumers at the terminal market, will it play a decisive and promotional role?

Mark Han makes an analogy “there are two tomatoes. We know that one is from your neighbor’s farm and do not know where the other one comes from. Under such circumstances, which one will most people choose?”  He does not deny the fact that there may be a few people who will truly inquire a chicken’s life. But, “can be inquired anytime” itself is the respect of consumers and the key that in the eyes of consumers, DaChan has become the “tomato from the neighbor’s farm” instead of the “tomato from nowhere”. In Mark Han’s words, the system itself can show the value of food safety.

In this sense, food safety itself is a kind of competitiveness, and DaChan is bringing the competitiveness that is hidden inside the Company into the light and turning it into a transparent system for consumers.

The social responsibility and business wisdom of DaChan has thus been perfectly integrated.