Pets Market

Changing demographics and evolving emotional needs have created a new generation of Chinese pet lovers and booming demand for related products and services

  

By Lead Leo Research Institute

It seems that Chinese people are more willing to spend these days on their pets than on themselves. E-commerce giant JD.com reported that spending on its platform for pet-related products jumped more than 2.1 times year-on-year on the first day of China’s “Double 11” shopping spree late last year. And corporate information provider Qichacha also revealed that registration of domestic pet product companies increased by 10% year-on-year to 24,700 in 2023.

The rapid rise of China’s pet market is being fueled by both the macroeconomic recovery and the profound impact of social structural changes on consumer demand. The report “Overview of China’s Pet Products Industry in 2024” released by Lead Leo Research Institute points out that in 2023, the proportion of Chinese over 65 had already risen to 15.4% of the population, and that such aging has fueled demand for keeping pets as companions among the elderly. Coupled with the downsizing of families driven by growing numbers of people choosing not to marry and sub-replacement fertility levels, “furry kids” are increasingly becoming important members of small families to meet their emotional needs.

According to the report, the number of pets, mostly dogs and cats, in China grew from 87.46 million in 2017 to 121.55 million in 2023, increasing by 5.8% annually over that time. In addition, the number of young pet owners is also growing. Pet owners born in the 1990s accounted for 46.6% of the total in 2023, and those born after the year 2000 accounted for 10.1%.

The role of pets is also changing among pet owners, whose increasing consumption per pet is driving up overall spending on their furry companions. For example, annual spending per pet dog has grown from 1,946 yuan ($270) in 2017 to 2,875 yuan in 2023, and spending per pet cat has also risen from 1,483 yuan to 1,870 yuan over that time.

As owners pay more attention to the quality of their pets’ lives, they prefer to treat their pets as “family members,” and are more willing to purchase pet products and services to improve their pets’ quality of life. Such enthusiasm is expected to continue driving growth of China’s pet spending market.

From the “Goods Economy” to “Pet Economy,” stocks from sectors related to emotional consumption are expected to be a new highlight among Chinese consumption trends. However, the limited number of pet-related stocks don’t seem to be receiving similar treatment as actual pets. Among them, New York-listed Boqii (BQ.US), was delisted from the main board of the New York Stock Exchange in 2023 after its market value shrank below the minimum required level. Its peer Dogness (DOGZ.US) has also been suffering losses and declining revenues for years despite still being listed.

The report points out that companies with brand advantages, high product quality and strong innovation ability may eventually stand out in an expanding market also filled with intensifying competition. Most domestic pet product makers started as original equipment manufacturers (OEMs) making products for other firms. However, by accumulating advantages in R&D, production techniques and quality control, and a deeper understanding of the industry, they are gradually establishing their own brands. The rise of domestic brands is expected to see these companies gain a greater share of the market in the future.

LeadLeo Research Institute is an original content platform for research on banks and companies and an innovative digital research service provider with nearly 100 senior analysts. You can contact the platform at: CS@leadleo.com

This commentary is the views of the writer and does not necessarily reflect the views of Bamboo Works

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