2024-09-26 Baking the way in China's "German town"
Taicang, a small city in Jiangsu Province, eastern China, is known for its deep connections with German enterprises. Home to over 500 German-invested companies, the city has grown to become a prime destination for German entrepreneurs. Among them, Erwin Gerber stands out with his thriving bakery. In this episode, we'll explore how Erwin has crafted his path to success in Taicang, blending German tradition with Chinese opportunity.
About an hour's drive from the bustling city of Shanghai, you'll find a small city called Taizang. While it may not have the fame of its big city neighbour, Taizang is a hotspot for German businesses. Known as the hometown of German enterprises in China, it's home to over 500 German investor companies and around 3,000 German residents. And Erwin Gerber is one of them. Twelve years ago, Erwin and his wife, Tao Xiaoying, moved to Taizang and together they opened a small German bakery, bringing a touch of traditional German charm to the city. Over the years, what started as a modest shop has grown into four branches, with their authentic German bread reaching far beyond local markets. And they are now on the brink of launching a brand new factory. It's four o'clock on a Saturday morning. While most of us are still snoozing, Erwin Gerber has already started his day. Baking bread. And this hour, a cup of coffee and some uplifting music are his perfect companions. Dressed in his regular white t-shirt and a pair of glasses, the nearly 60-year-old skillfully moves around his workshop, busily placing trays of bread into the preheated oven. From palm-sized rolls to large country sourdough loads, from hearty wheat and rye breads to various stick-shaped varieties, these were all prepared the night before, and Erwin's job is to bake them to perfection for the morning. With four decks, this massive oven can handle multiple trays at one time. Soon enough, the workshop is filled with the aroma of freshly baked German bread. Timing is crucial, because by 5.45 a courier will arrive to pick up the freshly baked well-packed bread and deliver it to customers who have placed orders online. Erwin has been running his bakery business for almost a decade in Taizang, a small city located along the Yangtze River in Jiangsu Province. It's here that the famous Chinese explorer Zhong He embarked on his first voyage in the early 15th century, setting sail to Asia and Africa and paving the way for global interactions. And now, in the modern era, the city has embraced that legacy of globalization. Since 1993, when the first German company established itself here, Taizang has been welcoming more and more German businesses. It was in 2012 that Erwin and Tao Shao Ying settled down in Taizang. The couple had first met in Dubai while working for an international trade company, where an immediate connection sparked between them. During their time in Dubai, they frequently interacted with Chinese businesses. On one occasion, they traveled to Taizang for a business trip, and the city left a lasting impression on Erwin. So later, when they were deciding where to relocate in China, Taizang stood out as their top choice. It's close to Shanghai and its convenient transportation. We felt that the coastal city is more suitable for us. Unlike the bustling first-tier cities with high-rise buildings, Taizang feels a lot more like the place where Erwin grew up. That's why we chose to settle here. As much as they love this tranquil city, for Erwin, the absence of German bread made him long for the tastes of his hometown. And his craving for those familiar flavors sparked the idea of starting to make German bread himself. When I arrived in Taizang the first time, there was no German bakery or some European bread that was not existing. My idea was to open a small coffee shop, to have German coffee, German cake. And after a while, we traveled around to Shanghai, to Suzhou, around this area. But we didn't find what I liked, so I decided the best way to do it, the way I like, it's to open a bakery. At first, Taoshao Ying was hesitant. She wondered if it was a good idea to give up the stable job and take on a new, highly challenging path full of uncertainties. But he was so passionate about it. I could sense his deep, innate desire to pursue this dream. It's something he had been yearning for, for years. As long as he was happy, we decided to go for it. In 2015, the couple took the plunge, hiring a German baker and launching their business specializing in traditional handmade German bread. But will it win over the hearts of local Chinese customers? Because the Germans don't put sugar in the bread, or they don't make fillings in the bread, it's very uncommon. So this was very not normal here in Taichung, so many people didn't understand why I did this, the bread is too hard. Traditional German bread is made with simple, natural ingredients, without any preservatives or artificial flavors. There is a wide variety of bread types, each with its own distinct flavor and texture. Some are made with sourdough, which imparts a tangy, slightly acidic taste. Some have a dense, chewy texture. Take the iconic pretzel, for example. It's a twisted, not light bread, sprinkled with sesame seeds. The dough is dipped in a lye solution before baking, which results in a deep, dark brown crust with savory, slightly salty flavor and a tangy texture. For many Chinese people, bread isn't as central to their diet as it is in some western countries. At that time, according to the couple, Chinese consumers were more accustomed to Asian-style breads which are soft, fluffy and slightly sweet. So when this German-style bakery first opened, it didn't make a huge splash. But for Erwin, the key principle is to stay true to the German way of breadmaking and maintain its authenticity. I mean, some Chinese don't like my bread. Some people also have only interests of, let's say, they want to try the bread and think, oh, it's too salty or too hard, it's their own experience. So it's not that you have to reach each customer. For me, the most important point is that you not change the way how to make the bread. And I didn't make something in change that maybe Chinese like it more than bread. Because most important was for me in the beginning, I have to like the bread. So it should be really authentic German bread. Then you find also your own customers, because also many people have a completely different view of looking for some more healthy bread or no-sugar bread. So you find the customers, maybe not the mass in the beginning, but we live in a very big country. So you find your customers, so the demand is there. Over time, they have gradually built a strong and loyal customer base. Erwin notes that even after all this time, many of their first customers still return to buy his bread. It's these regulars who have helped sustain the business, bringing in new customers through word of mouth. Over the years, we're going because we had actually very loyal customers. This loyal customer bring you more customers, and this makes actually, of course, the sales are higher, and we have the opportunity to grow. So we have actually our own interest group get actually bigger and bigger and bigger because about our customers. This is the best way to make marketing, because we have not marketing in this way that we spent thousands of RMB in the marketing. We don't do this because our customers is our marketing team. Yet the journey of starting the business was far from smooth. Looking back, Tao recalls that 2018 was the most challenging year. When we first started, our bread wasn't as popular as those that cater to Asian tastes, like Japanese bread. Additionally, we didn't have online sales channels to reach customers nationwide, so we decided to move a little farther to Shashi town, mainly because the rent in the city center was too high. Back then, we were losing 4,000 to 5,000 yuan each month, which added up to tens of thousands in a year, and even over 100,000 yuan. We couldn't sustain the losses any longer. Despite being open for three years, their sales volume wasn't quite satisfying. High rent and slow sales made it difficult for them to carry on with their business. Tao says they still remember living in a small, windowless room just upstairs from their production space for six months. It was a constant struggle to keep afloat. Ultimately, they had to close their first shop. It was hard to let go, after investing so much effort, but at that critical juncture, they knew survival had to come first. As they were not relying on walk-in customers, they believed that those who genuinely enjoyed their bread would be willing to travel to the new location. Then they moved their bakery to Shashi, an ancient town in the suburbs of Taizang. With a history of 1,300 years, Shashi is known for its traditional Chinese architecture, winding water alleys, and diverse bridges. What's even more important for the couple was that they were able to rent a larger production space at a significantly lower cost. Moreover, the new bakery's location at a popular tourist site led to an increased number of visitors. Now, in retrospect, the bakery founder says the most challenging moment at that time was actually the turning point for their business. It kick-started their expansion beginning with a proper workshop. To further expand our sales, the local market's supervision authority suggested that we apply for certification as a bakery workshop. This would enable us to supply not only individual customers, but also restaurants, hotels and clients from other areas. Additionally, we would be able to sell online. Obtaining the right food production license was essential. To meet the necessary standards, they had to invest in new equipment, make upgrades and renovate their facilities, all of which required significant funding. With the support of the local government, they eventually secured the certification which opened up new business opportunities for them. And of course this helps also the growing, because then you can reach not only people from Shanghai or from Taizang, you can reach actually everybody in China. So then, of course, you get more customers. The rapid development of e-commerce and fast delivery services in China has significantly boosted their sales. Their bread now reaches various parts of the country, including distant regions such as Hainan Province, Xinjiang Uyghur Autonomous Region and Liaoning Province. With a growing customer base and a solid reputation, their bread business has flourished. From its humble beginnings, the shop has expanded to four branches across Taizang. At their Shashi store, they are preparing to open a hostel on the second floor, offering a place for visitors to stay while exploring the ancient town. They also have a new factory of over 2,500 square meters, ready to start operations soon. Equipped with professional German baking machinery, this facility will enable efficient, mechanized, fast production of their bread. When asked about the secret to their success, the German business owner acknowledges that, without his wife, none of this would have been possible. I was actually very lucky because I have my wife, she's Chinese, so she deals with all official or legal ways to get all the permits we need. When I want to do something, she is behind me or even in front of me and clean up the way. So, 100%. This makes also a success in the end because we work together. As international business partners and a couple, Erwin and Tao Xiaoying have learned to navigate their differences in both personality and culture. While Erwin is known for his straightforwardness, Tao is gentle and empathetic. Their contrasting personalities complement each other, creating a balanced and harmonious dynamic. When it comes to work, Tao also experiences a notable difference. She often finds herself working even during off hours, whereas Erwin places a higher value on work-life balance. I remember back then, I would manage the store from 8 or 9 a.m. while he baked the bread and would close at 8 p.m., meaning we worked non-stop for 12 hours straight. After the shop closed, we just wanted to unwind. We might go watch a movie or listen to some music to relax. It was our break from work. She really dislikes that I check my phone during these rest periods, but for me, I feel it's crucial to respond promptly to customers because they're really important. Tao notes that understanding and adapting to each other's cultural habits and expectations is a mutual learning process. She admires Erwin's commitment to high standards and his ability to handle the intense demands of the bakery, even if it means waking up at 3 a.m. Currently, we have one German baker who works on weekdays, so Erwin handles the baking on weekends. I tried to help out a month ago, but I found it really overwhelming. You have to wake up around 3 a.m. and work non-stop with a very tight schedule. Despite the pressure, he manages to maintain such high standards and intensity. I really admire his ability to meet these demands, even at his age. Soon, a new German baker will join their team, allowing Erwin to step back from frontline duties. Reflecting on the journey, Erwin admits that success didn't come easily, but they never gave up during the tough times. Instead, they supported each other every step of the way. The success comes, actually, also because you feel. We feel many times you have up and downs, and everybody says, oh, you have so big bakery and you have so good success. They only see this, but they never see the suffer you do in the first years. You have lots of financial pressure. You have lots of tears, because you have really afraid the business is not going in the way you want. This you never see under the water. You only see the pick from the iceberg, but you never see the failure you have. But the failures make you actually stronger when you have the right partner, when you not give up. This year marks the 10th anniversary of the comprehensive strategic partnership between China and Germany, and Taizang has been actively engaged with German enterprises for over three decades. The city took the lead in introducing the German Dual Vocational Training Program, which offers plenty of opportunities for on-the-job training and practical work experience. To date, the city has established 15 such training institutions, with over 10,000 professionals benefiting from this system. Also, the integration of German culture is evident throughout the city. A new commercial area, named after the Rothenburg, has been built in the southwestern part of the city. The half-timbered buildings with their colourful facades, wooden beams and pitched roofs invite visitors into a medieval German town, featuring various dining, accommodation and shopping options. And right there, you'll find one of Erwin's bakery shops. A delightful example of how this city has embraced a touch of German culture. The environment for not only German companies, I mean I can talk only about Germans, but I think the environment for especially small business or middle-sized companies, for European companies is very good in Taizang, because they offer lots of solutions. Taizang is a very small city, but actually a tract already set over 35 years, German companies from outside. So that's what actually happens at Taizang, growing as a German city in China. I think the point is, because many German companies like the city, it's not so big, but it offers all the opportunities you have. And you get a lot of support from the government when you like to open a business. And they help you with this, they give you the right opportunity, the right suggestion that you can actually do business here in the right way. Erwin shares that his favourite spot in the city is his bakery, where he can savour the warm bread that he loves so much. Tao adds that he would enjoy the same toast every single day, if he could, and never tire of it. A true bread lover indeed. Now, with two lovely children, a girl and a boy, the couple hopes to spend more time with their family. With his family and business in China, Erwin considers the country his home. I'm actually very proud to live in China, it's actually my first, let's say, my home. Now I not see this as my second home anymore, I have my family here, I have my business here, so when people ask me how you feel in second home, I say that's already my first home. I'm not a Chinese, but I see all the steps China do to make going happen in a very advanced way, it's nice to be a part of it. Erwin says he's not concerned about the next 20 years here, instead he looks forward to the future with confidence.