How a Chinese Town Made a Fortune From the World’s Lockdown Pets

ZHEJIANG, East China — On a cavernous factory floor, workers dressed in blue overalls are sorting through giant piles of dog chews molded into the shape of candy canes.

The workers carefully inspect and weigh each item, before bagging it ready for shipment. In a month or two, the festive dog treats will begin their long journey to the West, where they’ll hit supermarket shelves in time for the Christmas shopping rush.

The factory is one of dozens in Shuitou, a small Chinese town that has come to dominate 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 has focused all its energy on one highly specific industry. Other parts of China’s industrialized coastline are filled with businesses making socks, chandeliers, or toilets. In Shuitou, it’s dog leashes, cat carriers, and pet clothing.

The town in east China’s Zhejiang province pumps out a massive 4.5 billion yuan ($630 million) of pet products a year, which are exported to more than 60 countries. In some areas, Shuitou is now completely dominant.

Around 60% of the world’s dog chews are made here. One factory alone produces 50 million leashes a year. More than four in five American pet owners use products manufactured in Shuitou, local businesses say.

And the industry is still growing rapidly. Unlike other parts of China’s economy, the pet industry thrived during the pandemic. Companies in Shuitou reported double-digit revenue bumps, as people around the world adopted cats and dogs to keep them company during lockdown.

Building a ‘pet town’

Shuitou’s emergence as a pet industry juggernaut began a decade ago, when the town was searching for ways to revive its flagging economy.

During the 1980s and 1990s, the area had been famous for a totally different industry: rawhide leather. Known as “China’s leather capital,” the town was filled with hundreds of tanneries that produced 4 billion yuan of leather a year at their peak.

But the industry also created horrifying levels of pollution. The leather-making process uses large quantities of industrial chemicals, and workshops often discharged these chemicals directly into local waterways.

By the 2000s, the town’s rivers were running black and emitted a noxious odor. The pollution was so shocking that Chinese authorities named and shamed Shuitou in a list of 10 places that had experienced egregious levels of environmental violations.

The local government reacted by launching a massive cleanup campaign. It banned the most polluting part of the industry — chrome tanning — and introduced strict environmental standards. Over 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 that was when local authorities set the goal of transforming Shuitou into a “pet town.” They built a gleaming 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 the local firm Petpal Pet Nutrition Technology, was a key figure behind the change. Although the leather and pet industries seem worlds apart, the transition happened quite naturally, he explains.

In 1992, Chen’s father was running a business selling chemicals to tanneries in Shuitou. Leather-working produces a large amount of off-cuts, which local workshops would simply discard. But one day a client from Taiwan mentioned in passing to Chen and his father that companies in the West used those excess materials to make dog chews.

“We didn’t know much about dog chews then, but one of my classmates working at a foreign trade firm asked me if I could show him some samples,” Chen recalls.

Chen leaped at the opportunity. At the time, he was working as a middle school teacher, earning just 100 yuan per month. On one occasion, he was so short of money that he couldn’t afford to take his daughter to the hospital when she fell ill with a fever.

“My heart ached,” Chen says. “I asked myself, if I continue to teach, will I be able to provide my family with a better life in a decade’s time? What is the way out?”

So, Chen left his school, borrowed some money, bought some simple equipment, and made up his first sample dog chews — washing the leather to remove the acid, then cutting and drying it. 

His wife and father were far from impressed. At the time, they thought Chen was making a mistake by quitting his stable teaching job. But it wasn’t long before Chen received his first order: A company in Canada 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 says with a smile. “They said our products were good quality, but that we hadn’t dried them well. We’ve kept improving them ever since.”

The company has never looked back. Petpal Tech now exports over 200 million chewing sticks to the U.S. alone each year, and its factory in Shuitou employs around 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 boomed the past few years and shows little sign of slowing down.

Yuanfei, a local company that manufactures dog chews, leashes, and pet toys, told Sixth Tone that the pandemic was the fastest-growing period in its history. Sales in 2021 reached 1 billion yuan, up from 378 million yuan in 2017. Petpal Tech, meanwhile, saw revenues soar over 36% last year.

New tricks

Local authorities and businesses, however, appear keen to reduce their dependence on foreign pet owners.

Though demand from pet owners remained strong, the pandemic still showed how fragile an export-led manufacturing strategy can be. Petpal Tech saw several of its overseas factories shut down temporarily due to lockdowns, Chen says.

The company plans to continue expanding into Southeast Asia and the Middle East, but a major focus is now tapping 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 to be members of their family.

Petpal Tech has expanded its product range to appeal to these domestic buyers. Rather than buying their dogs chewing sticks, Chinese owners often prefer to pay high prices for nutritious snacks like sweet potatoes wrapped in duck meat, Chen says. 

“We target people who love their pets and aren’t price-sensitive,” says Chen. “As long as we manufacture 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’s currently struggling to convince Chinese consumers to buy dog chews, but it’s investing in e-commerce with the hope of attracting more buyers, says Chen Qun, the company’s deputy general manager, who isn’t related to Chen Zhenbiao.

“Our habits and concepts of caring for pets still differ from those in Western countries,” he says. “We prefer giving dogs snacks, and the change still needs a process.”

For the local government, the hope is that Shuitou can eventually move beyond manufacturing into other pet-related industries. Officials say they want Shuitou to develop into a true “pet town” — a place that middle-class pet owners actually want to visit.

“We call ourselves a ‘pet town,’ but we currently lack the main character of such a town: pets,” says Chen Le, director of Shuitou Town’s economic development office, who isn’t related to Chen Zhenbiao or Chen Qun.

There were indeed 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 one popular scenic spot had been covered in pet-themed murals. The government has plans to set up dog parks, pet-friendly hotels, and a dog show. 

“If pet-friendly accommodation doesn’t work out as well as expected, people can still stay in the homestays,” says Chen Le. “The 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 a few hundred dog owners and their animals enjoyed a day of frisbee games, open-air movies and concerts, and barbecue. It plans to hold another five similar events this year.

“This kind of activity is in tune with dogs’ natures,” says Chen Zhenbiao.

Now 62, Chen Zhenbiao says he still has no plans to retire any time soon. Getting out his phone, he shows Sixth Tone a photo of himself celebrating the birthdays of three of his pet dogs.

“I started this 31 years ago to get out of poverty,” he says. “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 image: Pet owners and their animals take part in a dog show in Pingyang County, Zhejiang province, 2017. Chang Kong/VCG)

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