As urbanization and changing lifestyles make more Chinese citizens into pet owners, China's petfood industry is expanding to meet the need for a wider-variety of petfood and pet product offerings.
Pet owners in China now have a variety of petfood brands from which to choose, making quality and branding even more important for petfood companies that want to make their products stand out in this growing marketplace.
The petfood industry in China differs from other Western markets because it still remains dominated by large, multinational companies like Mars and Nestle. In 2005, these two companies made up more than 90% of the petfood market in China, according to Chinadaily.com. However, as China's market grows, some Chinese producers are starting to produced petfood with the same quality as foreign companies, but are selling it at a lower cost, according to pet industry analyst Zhou Jianfeng of Gerson Lehrman Group.
"Chinese citizens raised nearly 150 million pets last year, but only 10% of them used processed food, indicating the enormous growth potential for the industry," Jianfeng said.
Some Chinese companies are also looking for partnerships with companies and research institutions in Europe, including Care Pet Food, based in China's Sichuan province. Care Pet Food had a 30% share of the domestic market for petfood in 2010 and also started to export its products to Europe, Southeast Asia and other overseas markets. Li Zenggui, general manager, said that European companies have more experience in petfood production with decades of research, but that Chinese companies know more about the demands of Chinese pet owners.
"By combining these two strengths we can ensure that the petfood produced not only has a high nutritional value, but also conforms to the requirements of domestic pet owners," Zenggui said. "Despite their early entry, many foreign companies do not have research and development centers in China and therefore lack first-hand knowledge of the Chinese market."
Nory Pet, a petfood company established in 2002 in Shanghai, specializes in producing petfood with Chinese herbal medicine as one of its main ingredients. The director of the company's brand promotion department, Yang Qingfeng, said the company hopes to increase its 7% market share in 2010 to 10% over the next five years, as it looks to expand overseas.
"The petfood industry started relatively late in China and most of the domestic manufacturers are unknown in the overseas markets. This is a major obstacle for market expansion," Yang said. "We will enhance our marketing awareness and learn brand management experience from our foreign competitors."
Despite these obstacles, petfood market analyst Jianfeng said he expects China's annual petfood sales to reach 50 billion yuan (US$7.8 billion) in the next five years, continuing to be one of the fastest growing consumer goods industries in China.