China's International City | Hometown of Pet Food: Nanhe District, Hebei Province

Consumer Discretionary Author: Violet Chen Sep 15, 2023 09:55 AM (GMT+8)

China boasts to have many marvelous cities that keep low profiles among the public while holding pivotal shares in related industries and markets. These cities, along with surrounding towns and villages, form clusters centered around a certain industry. Through close collaboration, they have developed into significant forces at home and abroad.


In terms of going global, the efficiency of supply chains is always regarded as the core competitiveness of Chinese brands. Meanwhile, the smooth operation of supply chains behind the big picture lies in the backup of these cities. The series "China's international city"  will uncover the veil of the grand narrative of globalization and focus on the capillary-like cities of the manufacturing powerhouse, vividly showcasing the difficulties and changes in China's supply chain. This issue will focus on Nanhe, Xingtai City, Hebei Province.

Nanhe District, Xingtai City, Hebei Province is a traditional agricultural livestock feed processing area with abundant resources such as grain and livestock breeding. Under the leadership of the government, the region has vigorously developed the pet food industry. Currently, there are more than 40 large-scale production enterprises, accounting for 60% of the national market share, Nanhe is known as the "hometown of Chinese pet food".

In 2022, Nanhe District formed a top-down industrial chain from pet food to pet economy, with over 11,000 pet industry related market entities and an output value of CNY 23 billion, employing over 100,000 people. Four pet food companies have entered the top ten nationwide, which are Huaxing Pet (华兴), Yisa (伊萨), Rongxi Pets (荣喜) and Prominent (派得). Currently, the annual production of pet dry food is 1.1 million tons , accounting for 60% of the industry's production and sales. Nanhe has become the largest pet food production base in China.

At present, pet food in Nanhe District not only goes to the whole China, but also exports to multiple countries and regions such as Pakistan, Indonesia, Thailand, etc. Nanhe has successfully held five pet industry expos since 2017,  attracting more than 1,000 exhibitors from the United States, Japan, Italy, Beijing, Shanghai, Chongqing, and other places, with a transaction volume of CNY 18 billion.

From grain warehouse to pet food hometown

Nanhe District has a flat terrain, fertile land, and abundant water resources, its known as the "Jinan granary". Due to its unique advantages, Nanhe has developed agriculture, making it an advanced area in national grain production and a demonstration zone for creating high grain yield.

The pet industry in Nanhe originated in the 1990s, when there were over 50 livestock and poultry feed enterprises in Nanhe, with an annual output of over 400,000 tons. The traditional feed processing industry was relatively developed. However, due to factors such as market saturation, product homogenization, and low profits, enterprises were facing transformation. With the assistance of the local government, livestock and poultry feed processing enterprises have begun to layout new tracks, focusing on the research and development, production, and sales of pet food such as dog food and cat food. Since then, the pet industry in Nanhe has gradually emerged and quickly opened up the situation, completing a magnificent transformation from feed processing to the pet food industry.

As entering the new century, with the government's guidance and the rise of the pet industry, local livestock and poultry processing enterprises have seen the broad development prospects of the domestic pet market and were taking the lead in transitioning to the pet food industry. For example, Rongxi Pets (荣喜), formerly a chicken feed production enterprise, invested nearly CNY 100 million in 2002 to transform and produce pet food, and rapidly developed and expanded. With the transformation of leading enterprises such as Rongxi (荣喜) and Huaxing Pet (华兴), other small and medium-sized enterprises have also begun to follow suit and turn to pet food.

In 2017, after the country launched the "the Belt and Road (B&R)" policy, Nanhe seized this strategic opportunity to encourage and guide the pet industry to upgrade and develop new products to go abroad. In 2018, the exhibition center with a total construction area of 15,000 square meters built by Nanhe began to be put into use, showcasing pet products such as pet food, pet products, and premium agricultural products throughout the year, creating a never-ending "pet industry outlet".

Over 30 years of sedimentation, the pet industry in Nanhe has achieved four national giants: the largest pet food production base in China, the largest cat litter production base in China, the largest online and offline integrated sales base in China, and the largest pet food monomer manufacturer in China. The products are sold to more than 30 provinces and cities in China, and exported to Pakistan, Indonesia, Thailand and other countries along the "the B&R", even to the United States.

Expanding with the trend of e-commerce

Pet food sales in Nanhe are among the top in China, but the proportion of output value is relatively low, and the product profit margin is quite low. Most of the market share is contributed by mid to low-end brands, or even unbranded products, making it difficult to form economies of scale. At the same time, the sales channels of Nanhe pet enterprise are relatively traditional, mainly including offline brand agents, wholesalers and distributors, retailers, and individual consumers, there is still a big room for online sales to grow.

In response to issues such as warehousing, logistics, branding, and sales, Nanhe District has vigorously developed local warehousing projects for the pet industry, and has successively established Alibaba Nanhe Origin Warehouse and JD Logistics Origin Warehouse, forming an industrial upgrading plan where the origin warehouse drives talent training, brand marketing, and e-commerce live streaming collaboration. In June 2020, Alibaba combined with Nanhe Pet Industry Outlets to create a production warehouse of 11,200 square meters, forming a business model of "front store and back warehouse", with a maximum daily shipment capacity of over 100,000 orders. The project has greatly improved work efficiency, saved storage costs, and reduced logistics costs, more than 10% of packages can be delivered one day in advance.

Nanhe and Alibaba have signed a digital rural construction project to empower the supply chain with technologies such as the Internet of Things and big data, achieve the reconfiguration of industrial resources and products, effectively assist the development of the local pet industry and rural revitalization, and inject vitality into regional economic development. Nanhe Pet Industry has more than 8,300 e-commerce and marketers. With the help of e-commerce, Nanhe District has been identified as the national digital rural pilot project and the national "Internet+" agricultural product project pilot.

Besides that, Nanhe has implemented and invested in a pet industry park which is worth CNY 5 billion, covering an area of 6.1 square kilometers. An investment of CNY 650 million has been made to build a 200,000 square meter homecoming entrepreneurship building, e-commerce incubation base, and standardized entrepreneurship and entrepreneurship park factory, providing a platform and opportunities for more entrepreneurs who want to enter the pet industry.

Next, Nanhe will promote the upgrading of the pet industry, improve the existing product system, create a full chain development model centered around pet food, products, cosmetic, medical care, and funeral, develop a hundred billion level industrial cluster, and create the "Capital of China's Pet Industry" with international influence.

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