Dispatches from China: China is ‘going to the dogs’

The expression “going to the dogs” originated in China. In ancient China, dogs, trash and criminals were not allowed within the city walls. Being thrown out of a city was like being treated like a dog, and was not something anyone aspired to in the past.

However, perhaps times have changed.

In 2011, the global expenditure for pets exceeded $81 billion, including $50 billion of which was spent by 72.9 million U.S. households that have pets. Today, a dog’s life includes: being welcome at the Carlton in New York, the Showboat Casino in Atlantic City and any number of “pet friendly” establishments, where oversized pet pillows, plush doggie robes, complimentary canine gift baskets and masseurs specializing in four-footed relief await.

Doggie regular and fashion attire and accessories are available in the more select shopping areas of Los Angles, New York, Milan, Paris, Tokyo and Beijing. Other pet services and products on the market include personalized grooming and care services, manicures, beauty treatments, day care, yoga, psychics and physiatrists, digital identification tags, full veterinary insurance, organic food, special diets, monogrammed attire, alternative medicine, weddings and funerals.

To provide these services, in addition to mom-and-pop operations, companies such as Paul Mitchell, Omaha Steaks, Origins, Harley Davidson, Old Navy, Mars and Nestle Purina  are queuing up for parts of the pet pie.

According to the 2011-12 APPA (American Pet Products Association) National Pet Owners Survey, the total U.S. pet industry still clocked a 5-percent increase in a dismal economic year.

However, enter the emerging pet markets of China, 28-percent growth; Brazil, 17-percent growth; India, 10-percent growth and Mexico, 8-percent growth. Similar growth is reported in Russia and Japan.

So what has this to do with China?

Starting from practically nothing 20 years ago, China now has 60 million dogs and cats. The rapid urbanization process, the one-child policy and increasing disposable income has created the perfect storm for pets. The loneliness of those who have moved away from their family villages and neighborhoods, the need to replace/augment the “one child” and the financial ability to afford status luxuries such as a dog or other animal companion, have spawned a pet phenomenon.

People are buying dogs for as much as $1.5 million and indulging these “second children” in much the same way as their Western counterparts.

It is a trend which is still probably in its infancy. According to Euromonitor International, “Top 10 largest economies in 2020,” July 7, 2010, between 2010 and 2020, the number of households in China with an annual disposable income above U.S. $10,000 (in nominal terms) will almost quadruple – from 57.1 million households in 2010 to 222 million by 2020. U.S. $10,000 is by Chinese standards middle class.

Doing some simple extrapolation, based on the notion that the number of dogs and cats could also quadruple, there could be almost 240 million furry friends requiring all of the wonderful things a modern pet has come to expect. It is a staggering number, but one which pales in comparison to the percentages of pet ownership in the United States, which has as many pets as people.

Putting aside statistical probabilities, it is clear that, assuming China’s economic process is able to survive any economic and political hiccups between now and 2020, the pet business will be huge.

Why is this subject mentioned in a number of these Dispatches and why today?

The answer is simple. New markets that are dynamic and recession-resistant should be your target markets for new products and services.

Clinging to existing product lines and services, as the dynamics of the market change, is not a proactive way of addressing your businesses future. If you look carefully at what is being offered in the pet market, you will see it covers everything from food, manufactured products, to financial, medical and personalized services.

For those who have expertise or are creative, China and the rest of the emerging pet world represent potential gold mines. You just need to stake your claim and start working quickly, because with opportunities like these, the rush will be on.

Keep in mind that while the pocketbook is willing, knowledge and experience are in short supply. Pets are new to the vast majority of Chinese, so their deficits tend to be in training and caring for their companions.

So if you think the world is going to the dogs, perhaps it’s the right time to follow.



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