Driven by a desire for companionship, especially during the Covid-19 pandemic, more and more Chinese consumers have opted to bring a pet into their households. One of the main drivers for the growth in pet ownership is the rising disposable income among Chinese consumers, allowing them to spend more on their pets. This has resulted in an increase in pet owners in China looking for pet products, with the largest sector being the pet food category, taking up over 50% of market value. In fact, the pet food market exceeded RMB 119 billion (£14.9 billion) in 2020, and is expected to double again by 2025.

Two other factors that need to be considered when it comes to the growth of pet ownership in China are the ageing population and the ‘singles’ trend (one-person households of single men and women) who are choosing to either not have children or start families much later in life. Both groups of people are increasingly seeking animal companionship, looking to their pets for emotional fulfilment and treating them as family members to whom they want to provide high-quality and nutritious food products and snacks.

As Chinese millennial and Gen Z consumers enter the workforce and increase their disposable income, adopting a pet has become a symbol of financial independence. Moreover, these consumers are influenced by the key opinion leaders they see on social media, who often present and encourage a lifestyle that includes a pet cat or dog.

With a rising standard of living, these consumers are becoming more concerned about health and sustainability, both for the products they consume and for the food products they provide to their pets. Therefore, pet food products that are imported, natural, or are customised according to animal type/breed, age, condition, and health, are seeing more demand.

Even though under 25% of Chinese households have pets compared to about 60% in the USA, the Chinese pet industry has become the second largest in the world, behind the US. The relatively low pet ownership rate indicates the huge potential that the Chinese market still holds for pet brands.

Cats vs. dogs

Although the animal of choice has historically been dogs, in 2021, first-time pet owners were slightly more likely to choose a cat (60%) over a dog (54%). By the end of 2021, there were an estimated 58 million pet cats and 54 million pet dogs in China, with cat ownership growing at a faster rate. Most dog owners prefer smaller breeds, especially owners living in urban cities. Moreover, dog owners are, on average, likely to spend more on their pets compared to cat owners, with an annual average spend of RMB 2,634 (£330) and RMB 1,826 (£229), respectively.

Sales channels for pet food

When it comes to sales channels, one trend that has accelerated since Covid-19 is the increased use of online channels to purchase pet products. In fact, online platforms are the main channels through which most pet owners purchase pet food and nutrition products, at 74.5% for pet food, 73.1% for pet snacks and 64.2% for nutritional products for pets. However, offline channels such as veterinary clinics and pet stores remain important, especially for pet supplements or pet nutrition productions.

Most popular pet food brands in China

Currently, there is fierce competition in the pet food market. Although previously dominated by multinational brands that entered the market early, recently, there have been a growing number of domestic Chinese brands that have gained prominence, with their focus on transparency and quality ingredients, in combination with competitive pricing. Some of the major players in the pet food market in China include Nestlé’s Purina and Royal Canin, alongside Yantai China Pet Foods and Gambol’s Myfoodie brand.

With that said, smaller brands have still been able to compete and expand through an emphasis on quality, safety and specific features, such as enhancing animal lifespan, the inclusion of specific nutrients, and ‘natural’ ingredients.

Cultural shift and pet humanisation

In China, there has been a cultural shift when it comes to how pets are viewed. Chinese consumers are increasingly humanising their pets and seeing them as valued and beloved members of the family. As a result, there is an increased willingness to spend among pet owners, causing a diversification of demand, not just for quality, but also for a variety of pet food and products. Pet food products are becoming increasingly specific for pets at different ages, and different sizes, with different health focuses or nutrition levels.

As can be seen, the Chinese pet industry remains a huge market for foreign pet brands, with the potential to continue increasing alongside the rate of pet ownership in China.

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Over the last 30 years, the status of pets in China has evolved from watchdogs and rat catchers to part of the family. The pet market in China reached an estimated RMB 206.5 billion (around £24 billion) in 2020. Although the proportion of pet owners in China is still only around 4-5%, the market has expanded significantly, growing at a year-on-year rate of 20% from 2015 to 2020. 

There are many drivers behind the rapid growth of the pet economy. One is demographic change. With more young people delaying marriage or deciding to stay single, many have sought companionship from a cat or dog. In fact, it is estimated that around 41% of Chinese pet owners are single and 46.3% of those were born after the 1980s. 

“Recent policies such as the declassification of dogs as pets not livestock and the ban on trade and consumption of wildlife in China is helping to change attitudes towards pet ownership,” says Matt Jackson, Director with KPMG’s UK-China Business Practice. In 2019, the Ministry of Agriculture explicitly announced that cats and dogs are not livestock and should be classified as domestic pets. Together with the overall increase in consumer income and standard of living, many middle-income households are more willing to spend money on a pet. Over half of pet owners reside in Tier 1 and 2 cities such as Shanghai, Beijing and Chengdu, and it is estimated about one third have an average income of over RMB 8,000 (£933) per month. 

A recent survey showed that Chinese people mainly purchase or adopt pets to make themselves happier and to de-stress. Many pet owners, especially Gen Z, crave an emotional connection and seek to fill this void with a furry companion. As a consequence, the number of pets and owners is on the rise, and it is important for businesses to think about the potential of this market. 

How can businesses take advantage of the pet market? 

Many young people are eager to provide the best lifestyle for their pets and this has enabled businesses to profit from this growing consumer group. Even businesses that don’t sell pet-related products and services have reaped the benefits. By featuring cute pets in their advertising, brands ranging from cosmetics to fashion to cars have tapped into the pet economy and succeeded in connecting with younger audiences. 

A good example is domestic Chinese cosmetics brand Perfect Diary. Last year the brand launched a ‘doggy’ eye palette and collaborated with the famous live streamer Austin Li to feature his pet, Never, in the campaign. By positioning a celebrity’s dog at the forefront of the campaign, Perfect Diary pre-sold 150,000 palettes during the first few minutes of Austin’s live stream. 

Cosmetics brand Perfect Diary has featured cats and dogs on its eye shadow palettes

Live streaming pet-related content can help brands reach a wide range of potential consumers, and many brands are using a ‘pet ambassador’ in their advertising. For example, home appliance manufacturer Midea opted to collaborate with a cat called Shengsu to launch the M6 robot vacuum cleaner. The cat’s profile has around 5.9 million followers on Weibo, and its content continues to get hundreds of reposts. The company chose to feature the cat in its campaign as it knew it could target household pet owners who frequently need to clean up pet-related messes and spills.  

For CBBC member company Emma Bridgewater, 70% of sales in China comes from mugs, with animal-themed mugs making up 5% of the sales mix (cats and dogs being the most popular). Even international fashion brands such as Prada and Louis Vuitton have released pet-related products and accessories. Simple luxury products such as a dog jackets and collars have become immensely popular items, especially among Gen Z and millennial consumers in Tier 1 cities.  

Louis Vuitton collaborated with the same pet key opinion leader (KOL) as Perfect Diary, Never, to advertise one of its pet carriers. This highlights that by cooperating with pet KOLs, fashion brands can capture consumer attention by featuring ‘cute’ pets rather than other animals. People tend to associate pets with joy, and by creating these types of campaigns, brands can reach out to both pet owners and animal lovers in general to target a more diverse market audience. 

Pet lovers = tech savvy

The main demographic of pet owners in China is also tech savvy. The rapid growth of the pet economy has accelerated with online shopping. Indeed, as seen in the examples above, animal-related content means more than just creating adverts featuring Fluffy. Many different brands have leveraged the pet economy to execute an omnichannel strategy that combines online and offline marketing. 

Social media will continue to be an essential tool for the pet industry and platforms such as WeChat, Weibo and TikTok will prove increasingly valuable. Brands of any kind should explore these opportunities and consider working with pet influencers or live streamers to promote their products. It is estimated that there is a pet live streaming session coming online every 5.4 seconds on video-platform Kuaishou. 

Moreover, many consumers tend to buy their pet supplies online, and this could be a good way for brands to target owners. It is believed that 71% of Chinese pet owners visit pet-related content online, and so it could be hugely beneficial if a brand features a cat or dog in a campaign. Furthermore, businesses that foster their own pet representatives or work with pet KOLs are more likely to be successful, but should be aware that this requires time and investment. 

Mugs plastered with cats and dogs are among British brand Emma Bridgewater’s most popular products in China

The untapped potential of the pet economy 

Last year the number of cats and dogs in China’s urban areas exceeded the 100 million-mark for the first time. The willingness of consumers to spend on their pets is also set to rise and in years to come it will gradually catch up with the US. As the trend to humanise one’s pet grows, China’s younger citizens are also becoming highly attuned to issues surrounding animal welfare. In addition, with more people delaying having children, there will be an increase in young millennials who wish to devote their energy to their furry companion instead.  

According to CBBC retail and e-commerce lead Pearl Zhu: “Aside from launching pet-related products and collabs, making your brick-and-mortar store pet friendly could also be a winning formula in China.  Empowering pet owners to take part in shopping and socialising without leaving their four-legged friend at home along could hugely facilitate a positive perception of a brand or company.”

 Overall, even if your business does not sell pet related items, the developments in China’s pet economy should not be overlooked.  

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