China seen surpassing US as world's largest pet market soon
Major economies including China, Japan, the United States and Europe are trying to boost domestic consumption to restore growth, but the problem is that consumers are reluctant to spend money.
One exception to this trend is the pet industry. The demand for dogs and cats along with related goods and services has been steady, defying economic cycles.
In fact, it’s viewed as one of the most promising sectors apart from IT.
Currently, the United States is the world’s largest pet market. There are nearly 20 listed companies in the US that are engaged in pet consumption, ranging from dog and cat food and toys to pet healthcare and hotels.
The US pets sector has generated an average return of nearly 35 percent so far this year, far exceeding the 8.3 percent return in S&P 500, according to Reuters data.
Last year, pet-related consumption rose 3.9 percent to US$60.3 billion from the previous year, according to the American Pet Products Association.
Spending on pets is expected to increase by 5 percent this year, compared with a 3.2 percent growth in overall consumption.
That would mark the fourth straight year that pet spending is growing faster than overall spending.
Worldwide, an increasing number of couples are turning to acquiring pets instead of having kids.
Many who are single and don’t have a partner also choose to spend time and money on pets and treat them as if they were their children.
We’ve seen a similar trend emerging in China, particularly in third- and fourth-tier cities.
The country's expanding middle class is credited for boosting the pet market in these cities, where pet stores, pet grooming centers and veterinary clinics have mushroomed.
Last year China’s pet industry reached 97.8 billion yuan (US$14.65 billion), or about one-fourth of the size of its US counterpart, according to data from the International Pet Industry Summit held in Shanghai earlier this month.
The sector is expected to grow 35.4 percent this year after posting an average annual growth clip of 27.3 percent in the past few years.
China looks set to replace the US as the world’s pet industry soon.
China’s pet industry still has enormous growth momentum.
However, there are only very few listed pet companies in the country. Among these are Tianjin Ringpu Bio-Technology Co.(300119.CN), which runs veterinary clinics and sells pet vaccines, and Tianyuan Pet (838193.CN), which was recently listed on the “new third board”.
Perhaps the local bourse should try to get more pet-related companies to list in Hong Kong.
This article appeared in the Hong Kong Economic Journal on Aug. 29.
Translation by Julie Zhu
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