Editor’s Note:
As chain-ification in China’s foodservice sector accelerates, BA Capital continues to focus on the F&B supply chain. On the demand side, we look for iconic hero products in foodservice and packaged food; on the supply side, we seek companies with industrial maturity and efficiency moats.
As a leading player in China's frozen potato processing industry, Kaida Hengye has capitalized on structural tailwinds by identifying French fries as a breakout product category. At the same time, the company has steadily strengthened its full-industry-chain capabilities, boosting efficiency and competitiveness. Today, Kaida not only leads the domestic industry but is also expanding rapidly in international markets.
Notably, Mr. Liu Chang'an, the founder of Kaida Hengye, was awarded the prestigious title of National Model Worker in 2025 for his exceptional contributions to agricultural industrialization and rural revitalization.
How has Kaida identified market tailwinds and built its edge across the entire value chain? The following is a transcript of Mr. Liu Chang'an’s keynote speech.
Capturing Market Opportunities and Expanding Overseas
Hello everyone, I’m pleased to share Kaida Hengye’s growth story. On one hand, we’ve benefitted from structural opportunities in China’s potato sector. On the other, we are actively building a competitive advantage across the full potato value chain.
First, domestic demand for frozen potato products is growing rapidly. Western-style fast food chains are expanding, and French fries—one of the highest-margin products—are seeing increasing sales. In parallel, Chinese cuisine is incorporating more potato sticks and hash browns, both as ingredients and snacks.
Home consumption is also rising. The spread of air fryers—now in over 56 million Chinese households—has significantly lifted at-home demand for potato products. The development of cold chain logistics has further enabled consumer (C-end) demand for frozen items.
Historically, China relied heavily on imported frozen fries. But with the rise of high-quality, cost-effective domestic products, adoption is now expanding into lower-tier markets. There’s still considerable room for market and scenario growth.
Internationally, a major shift has occurred: China has transformed from a net importer to a net exporter of frozen fries. East and Southeast Asia have become the fastest-growing export markets thanks to lower tariffs and China’s clear advantages in cost-efficiency, geographic proximity, and delivery speed.
As for Kaida, we focus on three product categories: frozen fries, snack fries, and fruit & vegetable crisps. Snack fries and veggie crisps fall under the broader category of leisure food, where per capita consumption in China is still far below developed markets. This segment is expected to grow at ~10% annually, offering strong upside potential.
In summary: With rising living standards and deeper reach into lower-tier markets, China’s potato and snack categories are poised for high growth. Internationally, top Chinese producers can expand rapidly with cost and logistical advantages.
Full-Chain Integration to Build Competitive Advantage
Kaida Hengye operates three core industrial parks: our Beijing headquarters, and two large-scale facilities in Inner Mongolia—both located in China’s national potato production zones. This geographic positioning supports our full-chain strategy for frozen potato products.
In primary agriculture, we have developed proprietary potato varieties optimized for China’s climate and higher processing yield. This enables low-cost, high-quality raw material supply.
Why do we need to develop our own potato varieties? We have been working on cultivating a plump, oval-shaped potato with relatively square ends, which significantly improves the yield rate of French fry cutting. At the same time, this variety ensures higher dry matter content and greater yield, allowing us to reduce costs by 5% through the development of a single variety. Kaida has always emphasized collaboration with research institutes and experts, and we currently hold over 60 patents.
In the production stage of the secondary industry, we’ve built multiple production lines meeting international advanced standards.
On each line, uniformly cut potato strips become frozen fries. Short or irregular cuts are repurposed into hash browns or potato flour—hash browns even command higher prices than fries. This upcycling of byproducts is only possible at scale, and further enhances value-add.
Our location in Inner Mongolia also provides a natural cost advantage—low ambient temperatures reduce cold storage energy use.
We now offer a comprehensive product portfolio: frozen fries, shaped and irregular fries, sweet potato fries, snack fries, and vegetable crisps. This product mix combined with our high-value-for-money positioning, means our comprehensive product costs are 15% lower than the industry average in some categories.
In the sales stage of the tertiary industry, we’ve developed a three-pronged sales strategy:
- Branded chain partnerships
- Traditional distribution
- International trade
Going forward, we will remain committed to full-chain development in potato products.
