Pets in Hong Kong and China: A Booming Market

26/04/2022

Keeping domestic pets has become an increasingly popular lifestyle trend in Hong Kong and Mainland China in recent years. Although living space in Hong Kong is limited – less than 200 square feet per person on average – the number of households with pets has grown substantially over the past decade, and with it the demand for pet supplies and pet care services. This trend is projected to continue in the coming years, opening up new retail opportunities for specialised providers of pet food and supplies, particularly in the fast-growing e-commerce sector.

Market Environment in Hong Kong

According to the Census and Statistics Department’s most recent survey report in 2019, around 250,000 households in Hong Kong (9.4%) were keeping an estimated total of over 405,000 cats and dogs. However, the report notes that this number might be incomplete due to potential under-reporting by survey respondents, as well as the omission of dogs and cats kept outside of domestic households – for example on factory or construction sites, in stores, or in pet shops – from the statistics. In 2020, Euromonitor estimated the total pet population in Hong Kong, including smaller mammals such as rabbits and rodents, as well as birds, fish, and reptiles, at over 1.2 million.

While definitive statistics on the number of pets in Hong Kong are hard to come by, there are plenty of indicators which point towards steady growth in the pet care sector over the past decade. For instance, according to the Veterinary Surgeons Board of Hong Kong, the number of registered veterinary surgeons in the SAR has climbed almost 90% between 2010 and 2020, from 565 to 1,066 (equalling roughly one veterinary surgeon per sq. km).

Furthermore, the Hong Kong Government has undertaken considerable efforts in recent years to expand pet-friendly infrastructure across the entire city. In April 2022, the Leisure and Cultural Services Department (LCSD) announced that an additional 62 leisure venues in various city districts would be designated for use as “Inclusive Parks for Pets”, adding to the existing number of 41 such parks opened by the LCSD since 2019.

Government support for the promotion of pet adoption has also increased. The Agriculture, Fisheries and Conservation Department (AFCD) granted HK$2.9 million in funding to animal welfare organisations (AWOs) in 2020-21, and an additional HK$3 million in 2021-22. Furthermore, the Development Bureau has approved HK$18 million in funding to support two AWOs in building animal rehoming shelters on vacant government sites.

In June 2020, the Legislative Council approved funding for a new “Animal Management and Welfare Complex” in the Kai Tak Development Area, set for completion in 2024. The new complex will replace the existing animal management centre in To Kwa Wan and provide almost three times the current number of animal keeping facilities (from 120 to 350) as well as improved indoor and outdoor areas and medical facilities. The AFCD currently operates a total of four animal management centres across Hong Kong.

Coinciding with these efforts has been a growing public awareness towards animal adoption.  Between 2016 and 2020, the total number of dogs and cats received by the AFCD and handed over to AWOs for rehoming decreased by 60%. Meanwhile, the rehoming ratio of dogs and cats substantially improved from 19.5% and 20.8%, respectively, in 2016 to 38.1% and 36.7% in 2020. Although this trend was heavily disrupted in 2021 as Hong Kong recorded a net outflow of over 100,000 people, many of whom chose to leave their pets behind to the dismay of local shelters, the overall increase in responsible pet ownership is expected to be sustained in the years ahead.

Consumer Trends in Hong Kong and Mainland China

Hong Kong’s ageing population as well as two years of social distancing and home isolation have been recognised as significant contributing factors for the growth of the local pet industry. While many elderly people in Hong Kong find trusted companions in dogs, cats, or other pets, young couples and families with children are also becoming increasingly open to inviting animals into their homes. A similar trend can be observed in Mainland China, where the total number of domestic pets was estimated at around 190 million in 2020.

Many pet owners both in Hong Kong and the Mainland maintain close bonds with their pets, even to the point of considering them full-fledged members of the family. As a result of China’s continued economic development over the past decade, more and more “pet parents” are able and willing to spend increasing amounts of money on the health and wellbeing of their animal companions. In order to ensure the highest product quality and safety, premium brands from renowned international suppliers are often the first choice.

The pet market can be sub-divided into three main segments – pet food, products, and services. Pet food has been by far the largest growth driver in the industry. In Mainland China, pet food accounted for around 55% of the entire market volume in 2020 according to Euromonitor. The share of pet food is projected to further increase by 2024 to 60% of the total market size of up to RMB225bn. Meanwhile, pet services made up around 25% of the market, including veterinary and insurance services, as well as pet grooming and training. Pet toys, collars, and other accessories and care products had a combined 20% share in the market.

The pet industry in Hong Kong and Mainland China has been showing dynamic growth, particularly in the high-end segment. Consumer demand for a variety of products and services, from snacks and treats to animal wellness, has sharply increased on both sides of the border. The development of the pet industry has gained additional momentum from the shift towards e-commerce during the Covid pandemic, as supply chain disruptions and store closures have been driving consumers in Hong Kong, the Mainland, and around the world to conveniently shop for pet food and products online.

Seizing New Market Opportunities

While the online sales market in Hong Kong itself is comparatively small, the SAR is aiming to become Asia’s leading hub for cross-border e-commerce in future years, behind large-scale infrastructure investments such as the ongoing airport expansion. Hence, Hong Kong is a prime location for foreign brands in the pet industry looking to enter the Chinese consumer market.

On behalf of the Federal Ministry for Economic Affairs and Climate Action, GIC Hong Kong will be co-organising a virtual business delegation for German suppliers of pet food and pet products to Hong Kong and Mainland China from 20 to 24 June. The week-long programme will deliver first-hand insights into the latest development trends in both markets and connect participants with local buyers, distributors, and other potential business partners.

German brands in particular are held in high regard by customers in both Hong Kong and the Mainland due to their reputation for trustworthiness and quality leadership. Meanwhile, retailers are continuously looking for premium products that are highly recognisable and reliable. Specialised companies from Germany are therefore well-positioned to develop new business opportunities in these promising markets.

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By Hendrik Hillebrecht