News of the disbanding of the once leading instant noodle provider Master Kong Taiwan has swept the business world on the first working day of the new year.

Hong Kong Stock Exchange listed Tingyi (Cayman Islands) Holding Corp, the holding company of Master Kong Taiwan, announced on Jan 2 that the major business of Master Kong Taiwan is the rental and import of manufacturing equipment for instant noodles. It is not involved in any food production. As the company has no substantial business operations, the board of Tingyi has decided to go through liquidation and dissolve Master Kong Taiwan.

Master Kong Taiwan terminated the production of instant noodles in October 2014 due to a food scandal involving the sale of tainted cooking oil. It was alleged that animal feed oil was added to cooking oil which was then sold for human consumption.

This has resulted in the decline of Tingyi. Its market share contracted to only HK$52.85 billion ($6.8 billion) on the last trading day of 2016 from its peak of HK$140 billion in 2011.

Tingyi clarified that Master Kong Taiwan has been operating only in Taiwan island. There will be no impact on the business in the mainland market.

As a leading brand of Taiwan-based food giant Ting Hsin International Group, Master Kong has been a well-known instant noodle producer since 1992. Statistics provided by global market consultancy Euromonitor International show that it has always taken 40-plus percent of the mainland instant noodles market throughout the past five years, compared to second best player's share of slightly above 10 percent.

However, the food scandal in 2014 resulted in lower sales in the mainland and continued contraction of its market share. Tingyi's third quarter 2016 financial report shows that revenue from the instant noodle business dropped 8.75 percent year-on-year to $969 million. In the first three fiscal quarters combined, revenue generated by instant noodle business dropped 12.01 percent year-on-year.

The sluggish instant noodle market in the mainland has been a major reason. The total retail value of instant noodles has been decreasing for three consecutive years since 2014, according to Euromonitor.

Meng Suhe, president of Chinese Institute of Food Science and Technology, pointed out that the difficulty for instant noodle producers is a result of slow supply-side reform.