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Since the reform and opening-up, China's national economy has experienced remarkable growth, significantly improving people's living standards. As a result, dietary habits have evolved, with a growing demand for meat among residents. This shift has driven the rapid development of the feed industry. By 2012, China had become one of the world’s leading feed producers, with cumulative feed production reaching 194 million tons and an industry output value of 843.4 billion yuan—an impressive 32% increase from 2011.
With the introduction of the 12th Five-Year Plan for the feed industry, clear directions for future development were set. Challenges such as industry integration, technological innovation, energy efficiency, and environmental protection became central issues. Large-scale production and advanced feed technologies are now key to the industry's future growth.
The development of the feed industry is closely tied to the strength of individual enterprises. Only when companies grow stronger can the entire sector flourish. One of the major concerns for feed companies has always been how to improve profitability. Profit is essentially the balance between revenue and costs after taxes. Effective cost control is therefore essential in boosting profitability.
Costs include labor, production expenses, operating costs, and asset depreciation. From a management perspective, controlling these costs is crucial for enhancing both market competitiveness and long-term profitability. The question then arises: where can we focus our cost-cutting efforts to maximize profit?
Raw material costs make up a significant portion of feed production. With rising prices, the profit margins of Chinese feed companies have been under pressure. Over the past 30 years, from 1980 to 2010, profit rates dropped from over 20% to around 5%, with raw material prices being the main driver of this decline. In today's globalized economy, any market fluctuation can have far-reaching effects, making it imperative for companies to adapt and manage risks effectively.
In 2011, a severe drought in the U.S. caused a global shortage of soybeans and corn. As a major importer, China faced sharp price increases, nearly doubling the cost of feed ingredients. At the same time, China's economic slowdown led to a drop in stock indices, squeezing profits across industries and forcing structural adjustments in the real economy. Companies unable to cope with these challenges were eventually eliminated by the market.
The 12th Five-Year Plan emphasized the importance of using financial derivatives to manage market risks. For instance, if a company had analyzed the situation during the 2011 U.S. drought and used financial tools to hedge its purchases, it could have mitigated some of the cost pressures. Many large manufacturing firms have already learned to use financial instruments to control costs effectively.
Cost control is not limited to raw materials. Enhancing product quality through scientific research, improving feed conversion ratios, and optimizing formulas are also critical to profitability. Some leading feed companies have established their own research centers to boost innovation and competitiveness. However, due to the late start of the domestic feed industry, there remains a gap compared to international standards, highlighting the need for greater self-reliance and innovation.
While cost control and technology are important, sales remain a vital component of business success. Sales drive revenue, and increasing market share and product volume are essential for a company to grow. A strong sales team is the backbone of any successful enterprise. It enables companies to reach more customers, expand their presence, and ultimately achieve sustainable growth.
In today’s fast-paced digital age, traditional sales tactics may no longer be sufficient. Leveraging online platforms can help companies reach a broader audience, reduce operational costs, and enhance brand visibility. Using digital media for marketing is now a necessity for modern enterprises looking to stay competitive.
Every company has its own path to survival, but the author believes that focusing on core strengths—such as cost control, innovation, and effective sales strategies—is essential for long-term success. By continuously adapting and evolving, companies can ensure they remain resilient and thrive in an ever-changing market.