Core Viewpoint - The pet food industry in China is experiencing significant growth, with companies increasingly investing in their own manufacturing facilities to enhance control over production and supply chains, moving away from reliance on OEM/ODM models [5][6][11]. Group 1: Industry Growth and Investment - The domestic pet food production capacity has developed clear regional divisions, with Shanghai focusing on high-end products and Hebei on mass-market offerings, while other provinces like Henan, Shandong, Anhui, and Jiangsu are forming new industrial belts [1][12]. - From 2020 to 2022, the pet industry saw rapid growth driven by increased home consumption and e-commerce, with leading companies like Petty and Zhongchong reporting over 30% year-on-year revenue growth [5]. - In 2024, total investment in new pet industry factories in China exceeded 8 billion, with 45 large factories either in operation or set to launch, primarily located in industrial hubs like Shandong, Zhejiang, Anhui, and Jiangsu [9]. Group 2: Shift to In-House Manufacturing - Companies are increasingly building their own factories to gain better control over raw material procurement, production stability, and quality assurance, which is seen as a necessary evolution in the industry [3][8]. - The establishment of self-owned factories is a strategic move to address the shortcomings of the traditional OEM/ODM model, which has led to quality control issues and food safety risks [6][11]. - Major players like Jiajia Pet have invested significantly in new facilities, such as the Su Pet factory, which has a production capacity of 200,000 tons of staple food annually [3][8]. Group 3: Market Dynamics and Future Outlook - The pet food industry is entering a phase of differentiation, with a focus on high-end products as low-end production capacity becomes oversaturated [11]. - The market is expected to continue growing over the next 20 years, encouraging ongoing investments in heavy assets by companies [12]. - However, there are concerns that if market growth does not meet expectations, newly built capacities could become burdensome for companies [13].