China Develops the Halal Catering Market

One city is seeking considerable economic benefits from Muslim food.

Yinchuan, the capital of the Ningxia Hui Autonomous Region in northwestern China, is reaping huge benefits from the thriving Halal food trade—compliant with Muslim law—engaging in trade between China and Arab countries. Over the past two decades, Yinchuan's economic development relied heavily on exporting machinery and tools, activated carbon, clothing, electrical and cashmere products to Australia, Europe, Japan and the United States. But the 2008 global financial crisis severely curbed the region's export revenue, and its dependence on the export economy led it to rethink overseas trade.

Yinchuan Mayor Ma Li said, 'To restructure the city's export market and products, our goal is to export Halal food to Muslim consumer groups worldwide and develop a new market growth point, especially the Middle East, Southeast Asia and parts of the Central Asian markets.' Ningxia is China's only provincial-level autonomous region inhabited by the Hui people, who have close cultural, religious and commercial ties with Muslim countries. Ma Li also said, 'Although Yinchuan's GDP cannot currently compare with China's coastal cities, focusing on developing the specific markets we are familiar with is an effective way for an inland city like ours to increase trade volume.' With the rapid development of economic globalization, regional integration and bilateral trade, the economic and trade ties between Yinchuan and Arab countries have become closer. Yinchuan customs data show that last year the total trade volume between Yinchuan and the Arab region was US$1.42 billion (EUR 1.06 million), up 3.5% from the previous year. Yinchuan's Halal food industry exports accounted for 47% of last year's total exports.

Tian Yunhe, chairman of Ningxia Jingyitai Halal Food Co., Ltd., said that business travelers and tourists from Arab countries to Yinchuan are interested not only in the daily necessities they previously bought, such as shoes and clothing, but also in Yinchuan-made Halal food, which has found a larger market in the Middle East, especially during important Muslim festivals. Tian said, 'The annual Muslim pilgrimage to Mecca causes a significant rise in food demand in Saudi Arabia. Every year the catering service industry has to import a large batch of food from countries such as China and Pakistan, because imported food from these countries is cheaper than from Qatar, Jordan, Egypt and Algeria.' 'Although high-end halal food attracts many wealthy Muslims during the pilgrimage to Mecca, convenient halal fast food is still the first choice for most Muslims from around the world.' Tian said that in this important religious market, being cheap, fast and having a direct sales network are necessary factors to win long-term customers. Our company spent five years jointly developing convenient-food freezing technology with China Agricultural University and Ningxia University, and is the first company in Yinchuan to provide Halal food to Mecca. To increase market share, the company, together with 380 employees, began a project last year: to deliver 10,000 metric tons of frozen food to Mecca within three years. Our company's total trade sales in Saudi Arabia last year reached RMB 4.2 million (EUR 514,000), up 14% from the previous year. The company has built a warehouse next to King Abdulaziz International Airport in Jeddah near Mecca.

Ningxia's agriculture and animal husbandry department noted that Yinchuan enjoys higher-quality raw materials for developing the Halal food industry than China's coastal provinces, including 303,600 raised yellow cattle and 158,000 raised cows whose milk yield reaches 440,000 tons per year, plus 5.34 million sheep and 7,467 hectares of organic rice fields. Yinchuan Laoheqiao Halal Food Co., Ltd. is a Halal meat supplier accounting for 21% of Yinchuan's total Halal meat exports to the Middle East. As Arab market orders have increased since February, the company plans to build a new slaughterhouse in northern Yinchuan in October. Our company currently has a slaughterhouse, a small leather factory and a 38.1-hectare cattle-and-sheep feeding area. 'Muslims only eat livestock that comes from a slaughterhouse and whose neck has been cut by a sharp knife,' said Ma Tianyi, deputy chairman of Yinchuan Laoheqiao. 'More than 70% of our employees are Hui, and we strictly follow Muslim customs, including the feeding of cattle and sheep and when and under what conditions slaughter is carried out,' Ma said. The company's premises have 42 hectares of livestock feeding land in the Yellow River and Helan Mountain area. Last year, 53 tons of standard Halal mutton were delivered there to four Middle Eastern countries, including the UAE, Qatar and Kuwait. Ma said there are also many attractive North African markets worth developing, but to do so the company needs to propose new development strategies and consider market positioning. 'If we do not understand Arab consumers' needs, culture and thinking, it is difficult for us to further develop business relationships and long-term cooperation with them,' Ma said. The company is evaluating the possibility of setting up a sales office in Amman, the capital of Jordan, next year. However, Muslims' varying understanding of Halal food has become an obstacle to business. To solve this problem, China has begun bringing Halal food certification to the world stage for broader awareness and understanding. The Yinchuan Ningxia Halal Food Certification Center has signed agreements with foreign counterparts such as Australia, Egypt, Malaysia, New Zealand, Qatar and Saudi Arabia to strengthen mutual recognition of certificates. The Middle East market is not the final goal of Yinchuan companies. Some enterprises are also very popular in Southeast Asian Islamic countries, where economic growth provides better prospects for increased Halal food consumption.

For three years, from flour pastries to condiments and butter, Hongshanhe Muslim Food Co., Ltd. has exported a wide range of Muslim food to Malaysia and Qatar. The company plans to establish a 3,330-hectare planting area in southern Ningxia by the end of the year to grow chili peppers and other vegetables to support production. Hongshanhe Vice President Wang Xiang said that Halal food worldwide is consumed not only by 1.5 billion Muslims but also by at least 500 million non-Muslims. 'But China's Halal food exports account for only a small percentage globally, indicating that China's Halal food industry still has much competitive room in the global market,' Wang said. To attract more Muslim consumers, Hongshanhe spent US$450,000 last year to build a new English company website and advertised through magazines and the internet to promote the company's products in Malaysia and Qatar. The total value of HALAL food already shipped to Malaysia and Qatar reaches US$21 million.