The Wall Street Journal: China's Next Economic Ambition — Becoming the 'Super Factory' for the Muslim World

The Chinese city of Yiwu has long been known for supplying cheap goods to the world. Today, in Yiwu’s wholesale markets, buyers can find prayer rugs, Quran stands, Muslim apparel, Ramadan lanterns, and crescent-shaped decorations. Many of these goods can be customized, repackaged, and rebranded according to the needs of bulk buyers.

These products reflect a much larger commercial market. After becoming a leading global producer of solar panels, electronics, and electric vehicles, China is now steadily expanding into the consumer goods market for Muslim customers.

According to the latest available data from research firm DinarStandard, in 2023, China exported $32.5 billion worth of halal-related food, clothing, pharmaceuticals, cosmetics, and other products to the 57 member states of the Organization of Islamic Cooperation (OIC). This export volume has made China the largest supplier of goods to the organization, surpassing India and Brazil.

According to DinarStandard’s latest report, the State of the Global Islamic Economy, Muslim consumers spent $2.6 trillion in 2024 on food, clothing, pharmaceuticals, cosmetics, media, and travel, with this figure expected to grow to $3.56 trillion by 2029. Halal food spending alone reached $1.53 trillion.

For Chinese manufacturers facing weak domestic demand and higher trade barriers from the U.S. and Europe, this market is an attractive growth opportunity.

Many of the largest Muslim consumer markets are located in Southeast Asia, the Middle East, and Central Asia, and China has spent years building ports, railways, and trade links in these regions. Chinese factories can supply everything from frozen meat and candy to lipstick, medicinal capsules, and sports headscarves. DinarStandard data shows that the global market for Muslim apparel alone is worth $347 billion.

In China’s pursuit of these consumers, there is an unsettling contradiction. The Chinese government is seeking closer economic ties with Muslim-majority countries, while simultaneously facing international condemnation for the mass detention and suppression of Uyghurs and other predominantly Muslim ethnic minorities in the Xinjiang Uyghur Autonomous Region. China denies human rights abuses and says its policies are aimed at combating terrorism and extremism. The UN Human Rights Office concluded that some of the abuses documented in the region may constitute crimes against humanity.

The term 'halal' means compliant with Islamic law, typically involving animal slaughter procedures and requiring that consumer goods contain no pork or alcohol. But the rules extend far beyond that. Some cosmetics, medicines, and supplements contain gelatin, animal fats, alcohol, or other ingredients, and the source of these materials is crucial for devout Muslim consumers. Additionally, products may come into contact with prohibited substances during storage or transportation.

China’s advantage lies in its ability to quickly and cheaply produce a wide variety of goods. A factory producing regular cosmetics or packaged snacks can make minor adjustments to meet the needs of Muslim customers. Chinese suppliers can also manufacture private-label products for companies in Indonesia, Malaysia, Saudi Arabia, or the United Arab Emirates. These foreign companies understand local markets well but lack the manufacturing scale that China possesses.

More difficult is proving that products are truly halal. There is currently no unified global certification standard. China has several local standards and certification bodies, but lacks a unified national halal certification system. As a result, exporters must meet the requirements of different regulatory, religious, and certification bodies in each market they enter. They must trace raw material ingredients through layers of suppliers, separate production lines, and pay audit fees for each market. Even then, certification obtained in one country may not be valid in another.

Indonesia illustrates how regulations are becoming increasingly strict. As the world’s largest Muslim-majority country, Indonesia will expand its mandatory halal certification on October 18 to cover a broader range of products, including imports. As companies prepare for this change, Indonesian regulators have been collaborating with foreign certification bodies.

For Chinese brands that want to sell directly to consumers, not just manufacture for local companies, the stakes are especially high. Low prices may win orders, but not necessarily consumer loyalty.

'We replaced all alcohol-based fragrances and set up a dedicated production line. We changed our equipment cleaning process three times,' said Lin Wei, founder of a Zhejiang-based cosmetics company operating a showroom in Yiwu International Trade City.

Certification costs could become a dividing line, separating Chinese companies that remain anonymous OEMs from those able to build recognized brands. Large manufacturers may have an advantage, as they can afford dedicated production lines, international audits, and the cumbersome procedures required to enter multiple countries.

'Certification brings quality trust, which can greatly reduce consumers’ decision-making costs,' said Duan Yunchao, chairman and CEO of Hunan Zhongma Jiakai International Trade Services, which helps Chinese companies expand overseas.

China has repeatedly proven its ability to dominate industries where scale, speed, and cost are paramount. The halal economy presents a different test: religious credibility, cultural awareness, and supply chain transparency may be as important as price.

China’s next export boom may not come from another futuristic technology, but from its ability to convince consumers that the food they eat, the medicine they take, and the cosmetics they use were made strictly according to the rules they believe in.

(This article is translated from MarketWatch. MarketWatch is operated by Dow Jones, the parent company of The Wall Street Journal, but MarketWatch operates independently of the Dow Jones news agency and The Wall Street Journal.)