ZHEJIANG, East China — On a cavernous factory floor, workers in blue overalls sort through huge piles of dog chews molded into the shape of candy canes.
Workers carefully inspect and weigh each item, before bagging it for shipment. In a month or two, the festive dog treats will begin their long journey West, where they will hit supermarket shelves in time for the Christmas shopping rush.
The factory is one of dozens in Shuitou, a small Chinese town that has dominated the global market for an unusual product category: novelty pet accessories.
Shuitou is a classic example of a Chinese “specialty town”: a manufacturing hub that focuses all its energy on a specific industry. Other parts of China’s industrialized coast are full of businesses that make socks, chandeliers, or toilets. In Shuitou, it’s dog leashes, cat carriers, and pet clothing.
The town in China’s eastern Zhejiang province produces a whopping 4.5 billion yuan ($630 million) worth of pet products a year, which are exported to more than 60 countries. In some areas, Shuitou is completely dominant.
Almost 60% of the world’s dog chews are made here. One factory alone produces 50 million ties a year. More than four out of five American pet owners use products made in Shuitou, local businesses say.
And the industry is still growing fast. Unlike other parts of China’s economy, the pet industry has thrived during the pandemic. Companies in Shuitou reported double-digit revenue growth, as people around the world adopted cats and dogs to keep them company during the lockdown.
Building a ‘pet town’
Shuitou’s emergence as a pet industry juggernaut began a decade ago, when the town was looking for ways to revive its sagging economy.
In the 1980s and 1990s, the area became famous for a completely different industry: rawhide. Known as the “leather capital of China,” the town is filled with hundreds of tanneries producing 4 billion yuan of leather a year at their peak.
But the industry also creates alarming levels of pollution. The leather manufacturing process uses large quantities of industrial chemicals, and factories often discharge these chemicals directly into local waterways.
In the 2000s, the town’s rivers flowed black and emitted a pungent smell. The pollution is so shocking that Chinese authorities have named and shamed Shuitou on a list of 10 places that have experienced severe levels of environmental violations.
The local government reacted by launching a massive clean-up campaign. It banned the most polluting part of the industry — chrome tanning — and introduced strict environmental standards. In the following years, the number of tanneries in Shuitou fell from over 1,000 to just eight.
The town urgently needed a new way to generate growth without the leather industry, and local authorities then set the goal of turning Shuitou into a “pet town”. They built a shiny new visitor center in the shape of a dog bone, and offered a range of subsidies to companies planning to invest in the pet industry.
Chen Zhenbiao, founder of local company Petpal Pet Nutrition Technology, is a key figure behind the change. Although the leather and pet industries seem separate, the transition happened naturally, he explains.
In 1992, Chen’s father ran a business selling chemicals to tanneries in Shuitou. Leather production produces a large amount of off-cuts, which are simply discarded by local workshops. But one day a client from Taiwan mentioned in passing to Chen and his father that Western companies were using those surplus materials to make dog chews.
“We didn’t know much about dog chewing before, but one of my classmates who worked at a foreign trade firm asked me if I could show him some samples,” Chen recalled.
Chen jumped at the chance. At the time, he was working as a middle school teacher, earning only 100 yuan per month. Once, he was so short of money that he could not afford to take his son to the hospital when he fell ill with a fever.
“My heart hurts,” Chen said. “I asked myself, if I continue teaching, will I be able to give my family a better life in a decade? What’s the way out?”
So, Chen left his school, borrowed money, bought some simple equipment, and made his first dog-chew sample — washing the skin to remove the acid, then cutting and drying it.
Her husband and father were far from impressed. At the time, they thought Chen was making a mistake by resigning from his stable teaching job. But it wasn’t long before Chen received his first order: A Canadian company paid 300,000 yuan for a batch of chews.
“At the time it was really a huge amount of money – it was unexpected and unbelievable,” Chen said with a smile. “They say our products are of good quality, but we don’t dry them well. We have continued to improve them ever since.”
The company never looked back. Petpal Tech now exports over 200 million chewing sticks to the US alone each year, and its factory in Shuitou employs about 1,000 people. It also operates facilities in Southeast Asia and New Zealand.
Today, Petpal Tech operates in a highly competitive market, as dozens of companies are now based in Shuitou. But global demand for pet products has grown over the past few years and shows little sign of slowing.
Yuanfei, a local company that makes dog chews, leashes, and pet toys, told Sixth Tone that the pandemic is the fastest growing period in its history. Sales in 2021 will reach 1 billion yuan, up from 378 million yuan in 2017. Meanwhile, Petpal Tech has seen revenues rise more than 36% over the past year.
New tricks
Local authorities and businesses, however, appear keen to reduce their reliance on foreign pet owners.
Although demand from pet owners remained strong, the pandemic still showed how fragile an export-led manufacturing strategy is. Petpal Tech has seen some of its overseas factories temporarily shut down due to lockdowns, Chen said.
The company plans to continue expanding in Southeast Asia and the Middle East, but the main focus is now tapping into China’s domestic market.
The Chinese pet market is growing rapidly: consumers spent 270 billion yuan on their pets in 2021, up 8.7% year-over-year, and 40% of Chinese pet owners say they now consider their animals as members of their family.
Petpal Tech has expanded its product range to appeal to these domestic buyers. Instead of buying their dogs chew sticks, Chinese owners often prefer to pay high prices for healthy snacks such as sweet potatoes wrapped in duck meat, Chen said.
“We target people who love their pets and are not price sensitive,” Chen said. “As long as we make good products, there will be a market for us.”
Yuanfei, one of Petpal Tech’s rivals, also has plans to expand its domestic sales. It is currently struggling to convince Chinese consumers to buy dog chews, but it is investing in e-commerce with the hope of attracting more buyers, said Chen Qun, the company’s deputy general manager, who is not related to Chen Zhenbiao.
“Our practices and concepts of caring for pets are still different from those in Western countries,” he said. “We prefer to give the dogs a snack, and the process still needs to change.”
For the local government, the hope is that Shuitou can move beyond manufacturing to other pet-related industries. Officials say they want Shuitou to become a true “pet town” — a place middle-class pet owners really want to visit.
“We call ourselves a ‘pet town,’ but currently we lack the main characteristic of such a town: pets,” said Chen Le, director of Shuitou Town’s economic development office, unrelated to Chen Zhenbiao or Chen Qun.
There were very few dogs on the streets when Sixth Tone visited Shuitou in late May. But the town is trying to make itself more attractive to young pet owners. The mountainside next to a popular scenic spot is covered in pet-themed murals. The government has plans to set up dog parks, hotels for pets, and a dog show.
“If the pet-friendly accommodation doesn’t work as well as expected, people can still stay in homestays,” said Chen Le. “Expenditure and benefits are proportional.”
Petpal Tech also plans to move into this area. Last year, the company co-hosted two pet-friendly glamping events, where several hundred dog owners and their animals enjoyed a day of frisbee games, open-air movies and concert, and barbecue. It plans to hold another five similar events this year.
“This kind of activity is in line with the nature of dogs,” said Chen Zhenbiao.
Now 62, Chen Zhenbiao says he still has no plans to retire anytime soon. Pulling out her phone, she showed Sixth Tone a photo of herself celebrating the birthdays of three of her pet dogs.
“I started this 31 years ago to get out of poverty,” he said. “But now I am deeply moved by the love between people and their pets, so I work because I love it.”
Editor: Dominic Morgan.
(Header photo: Pet owners and their animals take part in a dog show in Pingyang County, Zhejiang province, 2017. Chang Kong/VCG)
