The “Pet Econ­omy” is Emerg­ing

China's Foreign Trade (English) - - Industrial Watch - By Lily Wang

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, 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, 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 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.

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