China Poodle ‘Babies’ Spur $1.2 Billion Pet-Care Market
Wang Xingru and her husband chose a fluffy brown alternative to parenthood named Jing Jing. Before welcoming the year-old toy poodle into their Beijing apartment last summer, the couple spent 5,000 yuan ($786) in veterinary fees, including shots and medication.
This month they paid 288 yuan for a fur-trim, perm and pedicure for the 8-inch-long (20-centimeter) pooch. The treatments add to a pet-care market in China that Euromonitor International Ltd. estimates will reach $1.2 billion this year, helped by a 35 percent jump in pet ownership since 2000.
“We don’t want kids because we feel it’s too expensive and tiring,” said Wang, 39, a legal officer for a state-owned company. “And I don’t want to become a full-time housewife.”
As rising disposable incomes and pet popularity bolster revenue for veterinary services and treatments in China, companies from Paris-based Sanofi (SAN) to Westbrook, Maine-based Idexx Laboratories Inc. (IDXX) are moving in, giving them a buffer from slower demand growth in their home markets.
In a ground-floor treatment room of the Guanshang Animal Hospital in Beijing, a 400,000-yuan ultrasound scanner made by Shenzhen-based Mindray Medical International Ltd. (MR) stands beside a glass table large enough to accommodate a Labrador. One floor above, laboratory technicians run blood tests on devices made by Idexx and Sysmex Corp. of Japan.
The state-owned veterinary clinic was the city’s first, built in 1992 to meet a sudden surge in demand from the growing number of wealthy Chinese, said Tian Haiyan, the hospital’s acting director. There are now about 300 pet hospitals and clinics in the capital, said Tian, who is also vice president of the Beijing Small Animal Veterinary Association.
Correction of urinary tract problems, removing foreign objects from overzealous chewers and cutting out of tumors are among the most common operations performed, she said. The hospital wants to invest 500,000 yuan a year on equipment to improve the services it offers for pets ranging from rabbits to exotic snakes.
“We hope to be able to conduct heart and brain surgery,” said Tian, who trained in Canada and Germany, during a tour of the three-story facility. “Many owners now are willing to pay for surgery when their pets fall sick -- it’s quite natural because they treat the pets like part of the family.”
About 33 million households in China keep a cat or dog, according to Euromonitor. Expenditure on pet care will reach 7.84 billion yuan this year, a 46 percent increase since 2007, the London-based consumer researcher said. It predicts the market will increase a further 64 percent by 2017, with 12.9 billion yuan splurged on pet food, health care and dietary supplements.
“People are going to spend more money, and veterinarians are getting equipped to support their clients,” Ali Naqui, Idexx’s vice president of international commercial operations, said in a telephone interview from Maine.
Growing affluence is resulting in pet owners buying more expensive products and services, said Vera Wang, a research analyst with Euromonitor in Shanghai. Sales of pet-care products will expand 9 percent this year, compared with 6 percent in the U.K., 4 percent in the U.S. and 3 percent in France, she said.
The number of dollar millionaire households in China climbed 16 percent in 2011 to 1.43 million, ranking the country third behind the U.S. and Japan, both of which saw their numbers decline, according to a Boston Consulting Group survey released in May.
Change of Heart
People in China are more likely to spend money treating their sick pet, where they may have had it put down in the past, said Guenter Forneck, a spokesman for Leverkusen, Germany-based Bayer AG.
“Our companion animal product segment is growing rapidly in China -- but from a very low base,” Forneck said. “Until a few years ago, Western companies hardly had distribution channels to speak of.”
The Chinese market for medicines for pets may reach about 100 million euros ($123 million) within five years at current growth rates, said Jose Barella, chief executive officer of Sanofi’s Merial animal health unit. By Comparison, Americans will probably spend $13.6 billion on vet care and $12.6 billion on supplies and over-the-counter medicines for their pets this year, according to the American Pet Products Association.
Sanofi, the global leader in the pet segment in animal health, has been selling in China for more than 20 years, Barella said in an interview. In the past three months, it doubled its sales force for pet shops there to 25 people, a “pretty significant” size for animal health, he said.
The French company recently began a television and pet shop advertising campaign for Frontline, its top-selling pet product in China, after giving the flea and tick treatment a more auspicious Chinese name that translates to “blessings and grace.”
Boehringer Ingelheim GmbH wants to enter the companion animal market in China “in the foreseeable future” to add to its livestock-feed business there, spokesman Matthias Kagerbauer said in an e-mail. The Ingelheim, Germany-based company opened a veterinary research and development center in Shanghai in March.
“Pet ownership expands with the aging of the population,” said Clint Severson, chairman and chief executive officer of Abaxis Inc., which sells diagnostic equipment for mostly U.S. vets. “As people throw the kids out, they move the pets in. You have more affluent people who own pets and they have an interest in keeping the pet healthy and alive as long as possible.”
More than 30 percent of China’s population will be older than 60 by 2050, from 14 percent now, according to United Nations forecasts and the official Xinhua News Agency.
Like Jing Jing’s doting owners, a growing number of Chinese are also avoiding parenthood. Singles will reach 27 million this year, up 1.9 percent from 2011, and couples without children will increase 1.4 percent to 49 million. The country’s overall population is expanding at less than half a percentage point a year, according to data compiled by Bloomberg.
When Zhi Zhi, a 12-year-old Papillon-Pekingese cross, suffered a bout of sneezing recently, owners Su Ning and Li Jiaxin spent 210 yuan for tests at Guanshang Hospital, including white-blood cell analysis and X-rays. Su’s biggest fear was that the dog needed an operation for a serious lung infection, he said.
“She’s been with us for so long,” said Su, a 36-year-old administrator for a private company, while waiting for the test results. Beside him, his wife cradled the aging dog in a checked blanket. “She’s like our child. It will feel like losing a loved one,” he said.
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