On June 10, the hashtag #China’s single households surpass 125 million# began trending on the microblogging website Weibo after the finance channel of China Central Television (CCTV) posted a video about how younger single men and women are driving a boom in pet keeping.
Younger generations are increasingly choosing not to marry and have children – a phenomenon reflected in the plummeting birth rate seen over the last few years – and many are therefore turning to man’s furry friends for emotional fulfillment. Rising incomes and improving living standards, occurring in tandem with increased urbanization, means people have more disposable income to spend on their pets – whether that is on food, healthcare, toys, or experiences – providing a huge opportunity for companies operating in these spaces.
With new pet owners who are young, well-educated, and wealthier, the pet industry is set to see explosive growth over the next decade. In this article, we discuss the growth of China’s pet industry and new trends and opportunities for foreign investors.
Overview of China’s pet industry
China’s pet industry has grown rapidly over the last two decades. Although the industry first began to emerge in the 1990s with the entrance of multinational pet brands, such as Mars Inc. and Nestle Purina Pet Food, as well as the launch of the first China International Pet Show in 1997, the trend of pet-keeping first began to take off in earnest in the 2000s. Cultural attitudes toward keeping animals as pets began to shift along with increasingly relaxed views on marriage and children, at least among the younger generations. The first domestic pet brands and animal hospitals began to develop during this period, with a focus on cats and dogs in particular.
The number of pets began to grow more significantly from 2010 onward, as millennials entered the workplace and increasingly formed so-called “dual income, no kids” (DINK) families, along with increased urbanization. Interest in more niche and exotic animals, such as reptiles, rodents, and aquatic animals, rose, and as China’s domestic e-commerce industry flourished, pet retail also began to move online, with platform companies, such as JD.com and Alibaba’s Taobao, offering pet products.
According to the 2021 White Paper on China’s Pet Consumption Trends produced by consumer research firm iResearch (the “iResearch white paper”), China’s pet industry was worth RMB 298.8 billion (US$44.4 billion) in 2020 and reached a projected RMB 348.8 billion (US$51.5 billion) in 2021, a year-on-year growth rate of 16.7 percent. The iResearch white paper also projects the industry to reach RMB 445.6 billion (US$66.1 billion) by 2023.
Trends in China’s pet industry
Increasing popularity of cats
The number of cats kept as pets overtook dogs for the first time in 2021. There was a total of 58 million cats and 54 million dogs in China at year-end, according to market research firm Intelligence Research Group. The popularity of cats is also growing faster than that of dogs, growing 19.4 percent year-on-year in 2021, compared to just four percent growth in the number of dogs.
Despite there being fewer overall dogs than cats, dog owners tended to spend more on their pets compared to cat owners. Data from the 2021 White Paper on China’s Pet Industry (Consumption Report) (“consumption white paper”) produced by the pet big data platform Pethadoop under the guidance of the pet industry branch of the China Animal Husbandry Association (not to be confused with the iResearch white paper) shows that the annual average spend per dog was RMB 2,634 (US$390.62), compared to RMB 1,826 (US$270.79) for cats.
The growth of the overall dog market also outpaced that of the cat market by a slim margin, reaching RMB 14.3 billion (US$2.1 billion) in 2021, up 21.2 percent from the previous year. The cat market was worth RMB 10 billion (US$1.5 billion) in 2021, growing 19.9 percent year-on-year.
Shifting online and offline trends
As is the case with many other retail and service sectors, the COVID-19 pandemic spurred a shift to more online consumption of pet products and services. According to the consumption white paper, pet owners reported online platforms as their primary place to buy food products, with 74.5 percent buying pet food online, 73.1 percent buying snacks online, 64.2 percent buying nutritional products online, and 80.4 percent buying other pet supplies online.
Pet products were reportedly one of the product categories that saw considerable growth in consumption during the otherwise underwhelming 618 shopping festival on June 18, 2022, with transaction volume on Jingdong Pets – the dedicated pet platform of e-commerce company JD.com – exceeding the total transaction volume in 2021 in the first four hours of the festival.
However, offline shopping still remained relatively high in 2021 and has shown of recovering significantly. As China achieved a great level of success in containing the spread of COVID-19 in the latter half of 2020 and most of 2021, offline shopping recovered significantly. For pet nutritional products, 47.9 percent of pet owners said they purchased them from animal hospitals and 32 percent purchased them from pet stores.
In addition, the relaxing of COVID-19 restrictions in 2021 also gave way to the recovery of offline pet services, most commonly pet grooming, fostering, training, and pet recreational parks. Pet training saw a 116.7 percent year-on-year increase in 2021, while pet grooming grew by 31.7 percent.
In addition, the purchase of the animals themselves is still predominantly done offline, although online pet transactions are also increasing. According to the iResearch white paper, the majority of people acquired a cat or a dog either from an offline store or from a friend, family member, or acquaintance. Only 19 percent acquired a cat online and 13 percent acquired a dog online in 2020, despite the impact of the pandemic on offline consumption.
Pet owners skew young and educated
The increase in pet keeping is overwhelmingly driven by young and educated consumers. According to the consumption white paper, almost 90 percent of pet owners hold a university degree, despite only 23.61 percent of the overall population receiving higher education. In addition, 46.3 percent of pet owners were born after 1990, and 22.9 percent were born after 1995. Pet owners are therefore, naturally, also higher earners, with 46.7 percent earning between RMB 4,000 (US$593) and RMB 9,999 (US$1483), and 34.9 percent earning over RMB 10,000 (US$1,483).
Moreover, the length of time that a person has been a pet owner is relatively short. 52 percent of pet owners in 2021 had kept a pet for less than three years, and 19 percent had kept one for less than one year. In addition, the average number of pets per person in China remained mostly unchanged from 2020, despite the overall increase in the number of pets. Both of these statistics indicate that the growth in the market is driven in large part by new pet owners, rather than existing owners acquiring more pets, which combined with the fact that pet owners skew young suggests huge potential for market growth among younger generations.