The “Pet Economy” is Emerging
The number of pet owners is increasing, the pet economy is attracting more and more attention and becoming a new blue ocean market for start-ups. The fourth Beijing International Pet Supplies Exhibition, which was opened on March 16, has shown the prosperity of pet economy.
This spring event is a big holiday for cats and dogs. Manufacturers, wholesalers, dealers and buyers of the pet supplies industry gathered at this exhibition, which opened a new chapter of industry development.
Great players, fierce competition
According to the exhibition organizers, this annual event is an important communication platform for industry players.
More than 800 exhibitors from around the world attended this year’s exhibition and displayed tens of thousands of pet products.
For example, Beijing Muhelin Pet Chain Agency displayed assorted pet products. “We want to use our diversified and professional services to meet customer demands and improve our brand reputation. We will allow each pet to en- joy the best professional and comfortable services and make sure each of our franchised store makes profits,” said a spokesperson of Muhelin Pet Chain Agency.
This exhibition attracted about 500 exhibitors from more than 10 countries and regions of the world, to display a wide range of pet supplies, including pet food, apparel, pet pad, toy, pet cosmetic, training and medical products. The exhibition would allow the audience to access the whole industry chain and one-stop purchase platform.
Liu Qipeng, spokesperson of Italy’s My Family handmade pet jewelry brand said they have learned a lot from their first exhibition. The pet jewelry brand is a blue ocean market in China and Liu is optimistic about his company’s future development.
Pet suppliers from Brazil, the U.S., the U.K., Japan and Germany also exhibited their new products at the event.
The opening day of the exhibition witnessed the congregation of visitors from around the country, showing the prosperity of the pet supplies industry and huge passions of pet-lovers.
Start late, Grow fast
According to 2016 China Pet Industry White Paper, China has 48 million pet dogs and 12 million pet cats. Data from S&P consulting shows that China’s pet numbers have increased nearly 900% in the past decade. Here is another pair of data: in the U.S. and European countries,
the ratio of industry value between large animal (normally meat animals such as cattle and sheep) and small animal (pet animals such as cats and dogs) is 1:1, while in China the ratio is 98:2. These facts combined show that the pet market has huge potential.
The pet food industry, which accounts for half of the pet supplies economy, has seen skyrocketing growth in market demands. More and more pet owners have begun to attach great importance to pet food quality. The import food has become their primary choice. The White Paper stated that pet food has the largest market share among pet food, accessory, medical product and services. The sales revenue of pet food reached RMB 45.7 billion, accounting for 37% of the industry. The businesses mainly sell canned pet food and import pet meals. The industry has very low profit margin because of fierce competition. According to the estimate by Yc.com, the pet food market will increase by 34% in 2017.
Besides, pet accessory sales revenue has reached RMB 19.6 billion in 2016, accounting for 16% of the market. These accessories mainly include pet produce, rail, outdoor equipment and tools. Although there are more and more pet accessory varieties, the industry rules and regulations have not taken shape. For example, there is no famous brands, agents or wholesalers. The product quality and model still need further improvement.
The total sales of the pet toy market reached RMB 12.5 billion in 2016, accounting for 10% of the total pet economy. China is the world’s largest pet toy producer and exporter, and China-made products have topped the world in terms of market share. There is a large variety of pet toys in the market and 56% of enterprises operate more than 10 toy varieties, mainly including scratching posts, climbing frames and interactive toys. According to an estimate by Yc.com, the pet toy market will increase by 20% in 2017.
Big international players have been grabbing the market shares in China, attracted by the local market and consumption potential. China’s pet food market has seen fierce competition. At the exhibition venue, our reporter also saw a large number of pet product brands, with a lot of interested buyers surrounding the booth.
Analysts say that China’s pet product market is integrating with the global market and Chinese pet economy is become more diversified with the industry chain further improving. But for Chinese enterprises in the whirlwind, the R& D capability and product quality will be determining factors for their final success.
Per medical service becomes popular
Pet medical industry is a fast growing industry in China. According to data from Euromonitor, China’s pet medical industry will increase by more than 50% in 2019. The whole industry value will reach RMB 15.8 billion. The industry development will far outpace the U.S., whose growth rate is only 4% in 2016. More importantly, Chinese investors are paying close attention to the industry.
Data shows that China has 11 thousand pet medical institutions, 70% of which are small-sized clinics. In the U.S., Banfield operates more than 1,400 pet clinics in the U.S., Canada and Mexico.
Last September, Ruipeng Pet Medical Group was successfully listed in the new third board (National Equities Exchange and Quotations), becoming the first listed company in the Chinese pet medical industry.
“As people’s livelihood is improving and the number of aging population is increasing, pet-related consumption will transform into rigid demands. Compared to the U.S. and Japanese markets, Chinese pet economy will further increase in size and number of pets, which will drive the development of the pet medical industry,” said Yu Xinyi, director of the Shenzhen Pet Medical Association.
Regarding the way of development for future Chinese pet medical industry, President of Bchongw.com Gao Rui thinks that the brands will become more concentrated and the pet hospital will have more detailed operation structure.
Regarding the bottleneck to the industry development, Yu Xinyi said the lack of talents is main obstacle to the industry. He said that in the past 95% students of the veterinarian department came from the rural regions, and most of them were female, while now 80% students are from urban areas and most are female. This is a transformation of ideas, but we still lack medical talents. “Now it always takes a long time to nurture a good hospital and the talents cannot match the growth speed of the market. This is really a big headache for us.”
Pet medical industry is a fast growing industry in China.