China's catering industry is making a strong recovery a year after two epidemics sent it into freefall.

An 18 percent growth in total earnings is expected this year - stark contrast to damaging results from last year when SARS struck, according to a report from the Ministry of Commerce.

The catering industry sale witnessed a 24 percent growth in the first six months, hitting 337.4 billion yuan (US$40.76 billion), recovering from the outbreak of avian flu which struck at the start of the year.

The ministry estimated that the sales for the second half year will reach 390 billion yuan (US$47 billion). The prediction was based on a first/second half year ratio of 46 to 54, according to the ministry.

That will add the annual earnings to about 720 billion yuan (US$87 billion), compared to the 606.6 billion yuan (US$73.3 billion) reported last year.

Sales will be more prosperous in the second half of the year because of more holiday spending timetabled for the period.

Consumers will dine out more frequently in the summer holidays, the National Day and the Christmas Day, the ministry predicts.

And business banquets will contribute to increasing industry earnings during the busy autumn season.

According to the ministry report, the catering industry witnessed 62.7 billion yuan (US$7.6 billion) worth of business in January this year - the best on record.

Guangdong Province, which is famed for its cuisine, ranked first in catering spending table recording in the first half of 2003 47.45 billion yuan (US$5.7 billion), a rise of 14.8 percent year-on-year, and accounting for 15.7 percent of its local consumer goods retail.

Shandong, Jiangsu and Zhejiang provinces ranked second to fourth, with catering earnings all exceeded 20 billion yuan (US$2.42 billion).

By city, Guangzhou, Shanghai and Beijing topped the half-year catering sales table with 14.7 billion yuan (US$1.78 billion), 14.62 billion yuan (US$1.77 billion) and 8.65 billion yuan (US$1.04 billion) respectively.

The industry as a whole saw its sales reach 163 billion yuan (US$16.7 billion) in the second season, jumping by 34.2 percent. The growth rate was high because of the impact of SARS last year which saw a small base.

The catering industry experienced its worst time in the second quarter 2003 because of the epidemic.

Then its revenue rose by a meagre 2.1 percent last April year-on-year, and suffered from a negative growth rate of 15.5 percent last May.

The industry usually has an annual growth rate of 15-17 percent.

According to the ministry report, the catering industry is recovering from the SARS impact and has regained its confidence.

The industry's business climate index in the second quarter continued to increase by 4.8 percentage points compared to the first quarter.

The government has offered many supporting measures to the battered catering industry.

The Ministry of Finance and the State Administration of Taxation reduced or waived taxes and fees levied during a recovery period.

But the catering industry was again battered by bird flu in February this year as consumers refused to eat chicken and other related products.

The loss was much smaller than that of SARS and the industry has been quick to recover, according to the ministry report, which estimates bird flu pulled back industry sales by 5 percentage points in February.

(China Daily August 13, 2004)