Shu Ruosi points out that 40% of the world's food ultimately rots or is wasted

Sina Finance News - The 16th China Chain Store Conference and the 16th China Chain Store Exhibition (2014 CHINASHOP), hosted by the China Chain Store and Franchise Association, were held in Fuzhou from November 6-8, 2014. The image above shows Shu Ruosi, President of United Technologies Building & Industrial Systems North Asia, saying in his speech that 40% of the world's food ultimately rots or is wasted.

The following is the transcript:

Shu Ruosi: Ladies and gentlemen, good afternoon! I am here to introduce one part of the retail industry supply chain, especially cold chain. From the speeches just now, we can see that cold chain is a very important topic for us. If everyone looks at some of the photos on our screen, it is very clear that this is what we expect to see when entering a retail store. Whether it is Wumart, Jiajiayue, or McDonald's [Weibo], these are already commonplace for modern retail stores. They should provide us with multiple choices of meat, vegetables, and fruits, and must ensure the freshness and safety of food. But we may not realize that the apples we buy come from farms on the other side of China, cherries may come from the United States, and kiwifruit comes from New Zealand. Transporting these many varieties of fresh fruits to retail stores requires technology. And how to keep these foods fresh after they arrive at the store requires even more technologically sophisticated solutions.

But not all food is like the photo behind me. This is one of the challenges faced by the food supply chain. Even though we now have a lot of technology, globally 40% of food still ultimately rots or is wasted, and cannot reach consumers. Clearly this figure is very alarming, and wasting food is not only a social problem, but also causes great harm to our environment. From a social perspective, reducing waste can solve the global hunger problem. On Earth, one out of every 8 people goes hungry every day, with 875 million people in the world. Preventing food from rotting as much as possible can solve this problem. From an environmental perspective, two points must be considered. First, agriculture consumes 70% of the Earth's fresh water, and at the same time emits 14% of global greenhouse gases. If we calculate quickly, we can find that 40% of wasted food equals 3.3 billion tons of greenhouse gas emissions, as shown in the figure. In fact, these wasted foods, as a country, would rank only after the United States and China in greenhouse gas emissions, becoming the world's third-largest emitter.

Even though we know where the problem lies, we still tacitly allow this 40% of food to rot or be wasted. Then the challenges faced by the food supply chain are increasing day by day. There is also another issue, namely urbanization. In 2009, the global urban population equaled the rural population for the first time, and since then 65 million people each year have migrated from rural areas to cities. Taking China as an example, by 2030 the urban population will exceed 1 billion people, which means that in the next 15 years, 300 million people in China will migrate to cities, equivalent to the total population of the United States. It is very clear that urbanization development is good news for our retail industry. More and more people will move away from food sources, making food transportation an even more challenging topic.

Now let us look at the complexity of the supply chain. We all know that food comes from farmland or growing areas. Once harvested, handled, and packaged, the food is loaded onto refrigerated vehicles and sometimes sent to local markets. But many vegetables or fruits are sent to ports for export. At the port, food is loaded into refrigerated containers. After days or weeks of transportation, at the destination the food is loaded into cold storage for distribution. The food is delivered by truck or small van to supermarkets, and finally placed in freezer cabinets. All of this requires technology. We know that today's technology can help us improve the efficiency of the cold chain, use more energy-efficient products to reduce the spoilage rate of food transportation, and avoid producing unnecessary gases.

Let me take a little time here to talk about our company and what role our company plays in the entire food supply chain. Our company is United Technologies. Our company, United Technologies, mainly has two major businesses. One is the aviation business, such as Pratt producing and repairing aircraft engines, and Sikorsky is also world-renowned for manufacturing helicopters. Aviation systems manufacture many kinds of components. The other business, which I am responsible for, focuses on the urban environment, especially improving buildings and cold chain technology. Our brands include Otis elevators and Carrier, the leading brand in air conditioning and refrigeration. Carrier has long conducted business in China through a long-term relationship with Qingdao Haier. Our business is very diverse, and the idea of sustainability runs through the company, which is energy saving. In refrigeration, we adhere to economic and environmental sustainability. We use such technology to make it more environmentally friendly. Let us look at how we use technology to improve the cold chain. We now have a technology to remotely control the concentration of oxygen and carbon dioxide inside containers, so that food inside the containers ripens more slowly. This allows some foods that cannot withstand long-distance transport to be distributed to farther places. Transporting bananas from Ecuador to Europe takes three months, and to Asia even longer. All of this allows us to ensure that from the farm all the way to our shelves, the entire process is controlled under very strict conditions and keeps food safe.

At the same time, we also have container refrigeration technology that can effectively reduce the carbon footprint of the cold chain. This can reduce the carbon footprint of containers by up to 35%. Good, now let me discuss the last link in the food cold chain, namely the retail store link. In a retail store, once food reaches the store, retailers must pay attention to the following points. One is ensuring food freshness. The second is displaying it attractively enough for customers to buy. Third, while accomplishing the above two points, they must also take operating expenses into account. Of a supermarket's total energy consumption, 40% is used in refrigeration systems. Therefore, whether HVAC and refrigeration systems can save energy affects the environment and also affects commercial profits. Using carbon dioxide as a natural refrigerant for fixed equipment, businesses can use 35% of the energy consumption. This kind of system can be used not only for refrigeration, but also for indoor air conditioning and heating in stores. Speaking of energy saving, one of our recently developed technologies can integrate HVAC and refrigeration and put them into a single system. This can help businesses cut energy consumption by 40%, while reducing machine room space by 50%. In this way, businesses can use the saved space to display more products.

In terms of product display, store managers often face the dilemma caused by the conflict between energy saving and merchandise display. No business is willing to install glass doors on display cases, but existing technology can already increase the storage capacity of open display cases by 40%, while increasing display area by 10% and reducing energy consumption by 10%. Tests show that display cases using this technology can achieve China's Grade 1 energy efficiency, because we have now realized that in many stores we have seen, formats are getting smaller and smaller. Therefore, the challenge of displaying products is also growing. That is why this technology of ours becomes increasingly important and valuable in such an environment. Finally, let me give an example of one of our customers in China. In 2012, we installed this energy-saving system for the Ningbo branch of an international chain hypermarket, helping the customer save 25% in expenses and avoid more than 15,000 tons of greenhouse gas emissions. We know that reducing costs is a very important part of the supply chain, and for such customers, the annual savings on energy consumption are very considerable. It is worth noting that in Western Europe about two-thirds of large supermarkets use carbon dioxide systems, but in China stores like the one in Ningbo that use the same carbon dioxide system are the exception. Therefore, we hope to devote more effort in the future to promoting the widespread use of this technology in the country.

Finally, from past experience we know that through technology, appropriate education, and joint commitment from suppliers and retailers, we can improve our cold chain, thereby greatly reducing food waste and lowering energy consumption. So overall, thank you very much to the China Chain Store and Franchise Association for inviting us to participate in this conference, and congratulations on another very successful conference this year. Good, thank you!