Dog Cloning, E-Collars, Cat Seafood: China's Over-The-Top Pet Market Is Booming
The Chinese pet market is booming, driven by young city dwellers who are increasingly reluctant to have babies. Care, food, yoga classes, strollers, specialized detectives and pet-cloning are all part of a 35 billion-euro industry.
BEIJING — Short-legged and white-haired, Juice (or "Guozhi" in Mandarin) may not be a pedigree dog, but he's got excellent learning skills and a real talent for acting.
At nine years old, the little mongrel has already made a name for himself in dozens of Chinese film and TV productions. But as he grows older, his owner, animal tamer He Jun, worries about the stress of long shooting days and dreams of finding an understudy to match his star actor. "We were hoping to keep his excellent genes for longer," explains Jun.
The problem: the dog can't reproduce, having been neutered at an early age. He Jun eventually found the solution by knocking on the door of Sinogene, the first Chinese biotech company to provide pet cloning services.
"I was a little nervous at first, as cloning is a brand new, cutting-edge technology for me," says Jun. But the fear was soon dispelled: "Little Juice learned quickly, and can be trained just as easily as the original Juice."
Sinogene made headlines in 2017 when its teams successfully cloned a beagle. Since then, over 500 cloned dogs and cats have been created in the company's Beijing laboratories. The process is well-honed: skin samples are usually taken from the animal's inner thighs and, within a few weeks, Sinogene is able to isolate its DNA and fertilize an egg, which is then transplanted into a carrier female.
110 million dogs and cats in the city
To bring their little companion back to life, some owners are prepared to break the bank as it costs between $40,000 and $60,000 for a dog and over $30,000 for a cat. "The technology is still quite expensive, but I'm seriously thinking about it because my dog has really become an important member of my family," explains Ms. Huang, the owner of a Shiba dog. "To maximize the chances of success, it's best to carry out the genetic sampling when the animal is still alive and young," recommends Dai Shuang Lin, a Sinogene representative.
This cloning activity is still relatively uncommon, but Sinogene believes it has a bright future. After all, the Chinese pet market is booming, driven by young city dwellers. With over 110 million dogs and cats in its cities, China already has the largest number of pets in the world, surpassing the U.S. in 2019. Their care has given rise to an economy, almost non-existent some 15 years ago, that today is worth close to €35 billion according to estimates by the China Pet Industry Association. And this market has shown impressive resilience in recent years, despite COVID-19 and the slowdown in the country's economic growth.
Pet-related spending jumped by a further 20% in 2021, building on the momentum of previous years. "During and after COVID, the pet sector is experiencing one of the strongest growth rates in mass consumption, and remains one of the main focus points for strategic and financial investors," estimates PricewaterhouseCoopers in a study published in November. By way of comparison, in China, since 2019, grocery products have grown by just 2% a year and laptop sales by 5%.
If industry professionals and analysts are to be believed, there's no end in sight. "China's pet industry is still in its early stages," says Goldman Sachs, urging investors to take a closer look. China has more cats and dogs than the United States, but overall spending is still three times lower, the American investment bank points out in a hundred-page report published in 2021.
There's a new breed of owners.
Not only is the market adoption rate still limited compared with a Chinese population of 1.4 billion (16% of Chinese households own a dog or cat, compared with 25% to 40% in the USA and Europe), but the average expenditure per pet is still modest: the Chinese spend around €150 per year on each pet, almost four times less than Americans and half that of Europeans. For Goldman Sachs, there's no doubt about it: growth looks set to be spectacular in the years ahead.
COVID-19 bred cats
The Chinese market is undergoing a major transformation, driven by a new breed of owners. Many of them are young with university degrees and high incomes. Nearly half of all owners are under 35, according to the latest white paper from the industry's trade association. At a time when more and more young Chinese are delaying or even giving up on marriage and having children, many are turning to pet adoption. Despite the end of the one-child policy and the government's efforts to encourage births, China's fertility rate is one of the lowest in the world.
Couples are being put off by the rising cost of living, housing and raising children. Last year, the number of births fell below 10 million, accelerating the demographic crisis and the aging of the population. "Having a dog or cat is much cheaper than having a child, and it's also the ideal companion in the case of an only child," explains Dai Shuang Lin.
Last July, the hashtag "Single households in China surpass 125 million" went viral on Weibo, China's version of Twitter, after a TV documentary on the young single people behind the pet-sitting boom aired. Although there's no "baby boom" in sight, the prospect of young Chinese city-dwellers taking ever greater care of their cats and dogs is making the industry salivate.
This young generation, fed by social networks, is no exception to the global craze for cats. The preference is not new, but it's accelerating: in 2021, the number of cats in China surpassed the number of dogs. While the limited size of apartments and the active lifestyles of young people favor small felines, the "zero COVID" policy has amplified the phenomenon and discouraged potential dog buyers. Images of owners locked in their homes in Shanghai and forced to walk their poodles on the roofs of buildings or to lower dogs by ropes from their balconies have gone viral on social networks. At the same time, authorities in several cities faced criticism after videos of dogs being beaten by guards while their owners were taken to quarantine centers.
In Shanghai's Starbucks, pet owners can ask for a "Puppuccino."
Unlike their own parents, the members of this generation Z consider themselves to be truly caring parents to their pets. "Tiger is like a child to me, and brings me great joy," explains Nanjing resident Jia, 30, whose boyfriend gave her a tabby cat for Valentine's Day four years ago. "The family status of pets is becoming increasingly elevated," notes the trade association. "Today, pets are fully-fledged members of the family. For this reason, everyone is ready to make their pets healthier and happier, to celebrate their birthdays, take photos of them, have dinner with them on New Year's Eve, etc."
These "young parents" are willing to spend more to ensure that their pets are well-fed and healthy. Some want to share their own life experience with them, dressing them up, taking them to yoga classes and walking them in strollers or in backpacks with built-in portholes. In Shanghai's Starbucks facing the Huangpu River, pet owners can ask for a "Puppuccino," a small cup of free whipped cream.
Fashion accessories and beauty products
Customers shop at Pet Inn Here in Shanghai, China.
Beauty and fashion products
Accounting for almost half of the pet market, the pet food sector could see its sales increase sixfold between 2020 and 2030, predicts Goldman Sachs. Having entered the Chinese market in the 1990s, multinational brands such as Mars, Nestlé and Royal Canin are licking their lips. However, they are steadily losing market share to Chinese brands. "Many dog owners are turning away from imported products," confirms Li Litong, a 37-year-old blogger whose channel devoted to pets has 450,000 subscribers on Douyin (China's version of TikTok).
Facing the camera on her smartphone, Li Litong promoted several hundred products during a livestream session in the aisles of the Beijing Pet Show at the end of February. In three hours, she sold over €20,000 worth of items to spectators who placed orders with just a few clicks on their cell phones. Her best sale? Seafood croquettes from a Chinese producer. This in-depth knowledge of a highly digitized and constantly evolving domestic market is a real advantage for local players.
Besides food, Chinese consumers are also increasingly willing to spend money on fashion accessories, beauty products and electronics for their pets. This was not a foregone conclusion when Deng Dong created his cat and dog clothing brand three years ago, just before the pandemic.
"My mother was working in a textile factory and my wife in a grooming salon when we decided to start up," he explains. "Today, our business is flourishing and we sell everything from everyday clothes to long silk dresses worn for photo shoots, mainly to young customers in Beijing, Shanghai, Guangzhou or Shenzhen." The red velvet set featuring a white rabbit is a big hit in the Year of the Rabbit. "It's designed for small dogs, but if you want it for a hamster, we can do it," swears Deng Dong.
Founded in 2013 by IT engineers, Petkit has positioned itself in the smart object niche. Its first product was a connected watch collar for dogs, enabling owners to monitor their pet's sleep and health. Since then, the catalog has expanded to include some 20 products, such as an intelligent food dispenser, a smart water fountain and an automatic drying cabin. "This cabin sells well in China, but quite little abroad, where owners wash their cats or dogs less frequently," explains Li Peng Wei, Petkit's vice president.
The company is experiencing large amounts of growth. "Our sales quadrupled during the three-year pandemic, as people spent more time at home and were encouraged to spend more on their pets," adds the CEO. Chinese consumers are particularly keen to discover new products. "A significant proportion of our customers are in their thirties, with significant purchasing power and a strong appetite for technological products."
Medical care, detectives for lost cats or dogs, hotels with presidential suites for pets, insurance products, funeral services, and more: the boom in services seems limitless — and so does cloning, despite its high price tag and controversial ethics.
Forced to push back the walls to keep up with demand, last summer Sinogene inaugurated a new cloning site roughly the size of four soccer fields, in Jiangsu province, eastern China. Cells from more than 4,000 pets are currently stored in its laboratories.
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