The region was selected by the central government in Beijing as the production base for Muslim food due to local resources and regional advantages because of the large Muslim community. Ningxia generated 16 billion yuan ($2.5 billion) worth of halal food in 2010, up from 14 billion yuan ($2.2 billion) in 2009 with an increase of 14 percent. Both the central government in Beijing as well as the region's provincial government support Muslim businesses with the hope that the export market share of the Chinese halal industry would increase in the future. The Ningxia region exported only $10 million worth of halal-certified foods and beverage products last year, which officials say is too low.
Since the market is underdeveloped, there are huge benefits for new startup companies in the region. Take for example the Yishun Yuan Agriculture and Trade Company in Ningxia. The company, owned by the Yishun Group, started its operations in the region in October 2010 with a 200 million yuan investment. “We have generated a turnover of 200 million yuan since, and we are not even at full capacity yet,” Di Yanqi, the company's owner and chairman, told Today's Zaman. “We are planning to increase turnover to 700 million yuan within two years' time,” he added.
The Yishun Yuan Agriculture and Trade Company is already a market leader in the halal meat industry in the region with over 50 percent of the share. It employs 240 people in an integrated-meat processing plant on 14.6 hectares of land in the Desheng Industrial Park, located between the Yellow River and the Helan Mountain. It maintains a total of 38.1 hectares of separate breeding grounds for livestock, raising both cattle and sheep. The success of the Yishun Yuan Agriculture and Trade Company comes from the parent company Yishun Group, which already owns three subsidiaries in the Inner Mongolia region. It has meat processing, fur and textile companies.
The certification was checked rigorously by the Islamic Association of China, which keeps a full-time imam at the production facility and on the company's payroll. “I need to recite prayers every time a cow or sheep is about to get slaughtered to comply with halal standards,” imam Yaqube Ma told Today's Zaman. The company also needs to abide by the rules set by the Ningxia International Trade Center to maintain International Halal Food Certification. “We already meet the HAACP [Food Safety Management System Certification] and ISO9001 [Quality Management System Certification] standards,” Yanqi underlined.
However, 47-year-old Yanqi notes the rising food costs, saying he has to pass expenses on to his customers eventually. “Corn prices have gone up 20 percent since last year, while hay prices jumped 25 percent,” he said, adding that input prices began to increase by the end of 2010.
Nevertheless, the prices are still very competitive compared to other countries. While the price of 15 kilograms of lamb costs 500 yuan ($78) in Ningxia, a similar amount of lamb costs TL 360 ($197) in İstanbul, the largest city in Turkey. The added value for the processed lamb goes as high as 2,500 to 3,000 yuan. Yanqi's company exports 60 percent of its processed halal foods to countries like Indonesia and Malaysia. “I'm looking for market opportunities in Turkey as well,” he said.
The Ningxia region has developed its own regulations and legislation to support the halal food industry and officials are doing everything they can to increase the region's potential. In the last five years, there have been halal food festivals in Ningxia to promote the industry. More than 2,000 small and big companies are involved in the halal food and Islamic products market, while 300 patents were approved for companies involved in halal businesses. Ningxia's autonomous government has set up a logistics center in Dubai to help the region's companies connect with international partners. Officials say Ningxia companies exported 354.2 tons of halal beef and lamb products in 2010.
Yanqi said they also work with embassy officials from Muslim countries and can easily cater to their special requirements if necessary. “Muslim countries' embassy staff in Beijing is welcome to examine our production facilities and our processes,” he noted.