China's feed industry in transition: the case of New Hope Group – an industry perspective

Abstract

Purpose

The purpose of this paper is to review the development of the processed feed industry in China through the lens of one of its most successful and earliest entrants, the Hope Group's “New Hope” enterprise. With the feed industry in China now facing a transition phase, the paper looks at the root causes of the problems facing China's feed industry, analyzes the transition strategy undertaken by New Hope and others, and discusses the opportunities for industry growth in the world's most populous country, where urbanization and standards of living are still on the rise and per capita use of feeds is still low by world standards (e.g. one‐fifth of that in the USA). The case also addresses the potential industry impact of mandates outlined in China's Twelfth Five‐Year Plan, such as the imperative to modernize agriculture and improve peasants’ economic well‐being.

Design/methodology/approach

The paper draws on expert knowledge of the CEO of New Hope Group's sister agribusiness company, West Hope Group, as well as New Hope Group annual reports and global economic data.

Findings

The study reveals future challenges to China's processed feed industry as being price of labor, raw materials, and energy rises; companies undergoing integration; and established companies shifting from product marketing to service marketing models.

Practical implications

This paper is useful for academics interested in industry perspectives, policymakers, practitioners, and business people considering investment in China.

Social implications

How China's processed feed and breeding industries modernize will impact the economic well‐being of each link in the nation's agribusiness chain (from small producers to conglomerates), the cost and quality of animal‐based proteins, and the world's “food vs. fuel” conflicts.

Originality/value

The paper offers a rare insider's look at one of China's largest private companies and a global player in agribusiness.

Citation

Fu, W. (2011), "China's feed industry in transition: the case of New Hope Group – an industry perspective", Journal of Agribusiness in Developing and Emerging Economies, Vol. 1 No. 2, pp. 162-178. https://doi.org/10.1108/20440831111167164