Deals Sparked By China’s Growing Pet Market – Turns Out To Be Investors’ Best Friend

China is transforming into a society that is not only one that own pets but also one that is willing to spend lavishly on them.

According to experts, a massive move to urbanization, the growth of the middle class and certain other demographic changes like the rising percentage of the elderly, and couples marrying and having babies later than before are the driving factors of this change.

In 2017, 17.5 billion yuan was spent on pets in China while it is anticipated that the number would touch 46.3 billion yuan ($7 billion) by 2022. The annual rate of growth is 20 percent, according to estimates from Euromonitor.

In comparison, the value of the U.S. market is about $44.4 billion in annual sales in 2017 but has a very low growth rate of just 2 percent.

The growth in the Chinese pet market is good news for local Chinese companies and new entrepreneurs in addition to global pet food giants like Mars Inc and Nestle SA.

Chinese revolutionary leader Mao Zedong, had banned owning pets in China because it was considered too much of a bourgeois pursuit and the country also has an annual dog-meat festival in the southern Chinese town of Yulin. And therefore, growth of ghe pet market in China is an amazing shift.

“There is huge growth potential in the Chinese market,” said Liu Yonghao, the chairman of Chinese company New Hope Group at a recent event in Beijing. Closer bond with their pets is being developed by the younger people, he noted.

“They are willing to spend lots of money on the pets because they have become like part of the family,” he said.

A $1 billion deal for taking over Australian pet food maker Real Pet Food Co has just been completed by a consortium that includes New Hope a well as a Singapore’s state-owned fund Temasek and private equity firm Hosen Capital. the consortium aims to launch the Australian brand into China.

local and global firms are being drawn like magnets to the increasing popularity of pets.

Because of the fact that Chinese consumers are seeking to choose premium products, therefore for Thomas Kwan, chief investment officer of Hong Kong-based fund manager Harvest Global, the pet market in China would be one of his personal picks for 2018.

The questions pet owners are asking now: “Can you buy them healthy foods? Can you give them a good lifestyle?” he said.

Demographic shifts are driving the pet market in China.

“Chinese society is aging, we’re experiencing declining birth rates, we have empty nesters and the youngsters from those empty nests,” said Zhang Tianli, co-founder of Hosen Capital. “Spiritual sustenance” is being discovered by people due to pets.

Local business has been boosted and imports enhanced by the boom in pet products.

Shanghai Bridge Petcare, Sunsun Group and Navarch. Yantai China Pet Foods are among the Chinese brands that are presenting very strong challenges to the global giants in the pet industry. the stocks of both the companies rose to 60 per cent after its their listing in Shenzhen in August.

“We once looked after a dog in our hotel for 47 nights, at a total costs of 17,000 yuan ($2,585),” said DogWhere.com’s marketing manager Wang Chao.

(Source:www.reuters.com)

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Categories: Economy & Finance, Entrepreneurship, Strategy, Sustainability, Uncategorized

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