Dog or cat? Preferences change in China and the market adapts

In China, pets are particularly popular with young urbanites in search of affection, home comforts and new landmarks. This craze for dogs and cats is driving sustained growth in the pet food and care market of over 13%, reaching an impressive 300 billion yuan (over 40 billion euros) by 2024.

This strong growth is accompanied by deeper transformations in the structure of the pet supplies market in China: changing consumer habits, changing purchasing preferences and distribution channels, the rise of Chinese brands… We take a closer look.

A recent shift in preferences in favor of cats in China

Until recently, dogs were preferred to cats in China. But since 2021, a turning point has been reached: cats now outnumber dogs in Chinese households. By 2024, there were 71 million cats in China, compared with 52 million dogs.

This shift in preferences when choosing a pet may reflect cultural and lifestyle changes. In ever denser cities and smaller apartments, young urbanites prefer cats, which are more independent and better adapted to city life.

This change has a direct impact on market structure. Although the market for dog food, care and accessories remains slightly ahead in value terms, amounting to 155.7 billion yuan in 2024 versus 144.5 billion yuan for cats, forecasts predict a reversal by 2026. Indeed, with annual growth of 10% for cats versus 4% for dogs, the cat market is set to overtake the dog market.

A substantial budget for pet owners in China

China’s pet budget is on the rise. Chinese owners are investing more and more in the well-being and quality of life of their pets. In 2024, the average annual expenditure was 2960 yuan for a dog, or around €410, and 2020 yuan for a cat, or almost €300, a steady rise from around 1800 yuan just a few years ago.

Over 52% of this pet-related spending in China is devoted to food, a lucrative segment that has become strategic for brands and retailers.

Rise of Chinese brands in the pet food sector

One of the major changes in the Chinese pet food market between 2017 and 2024 is the spectacular rise of local brands. Whereas in 2017, foreign brands dominated with 60% of the market, they now hold just 35%, while Chinese brands climb to 65%. In terms of foreign brand market share, American brands dominate.

The success of local brands can be attributed to a number of factors:

• A significant improvement in the quality of local products.
• Communication better adapted to the culture and expectations of Chinese consumers.
• A high-performance omnichannel distribution strategy.

As regards consumer preferences, in 2024, 28% to 34% of consumers said they preferred Chinese brands, while 44% had no clear preference – a figure down on 2023 (47%). Foreign brands, meanwhile, are preferred by 12% to 19% of consumers.

This phenomenon is emblematic of a national reconquest affecting many sectors in China, where consumers no longer systematically consider an imported product to be synonymous with superior quality.

E-commerce and social networks: the preferred purchasing channels for the pet food sector

The Chinese pet food market is largely digitalized.

• 35% of sales are made via e-commerce, with platforms such as Tmall and JD.com leading the way.
• 27% use Chinese social networks to promote their products, using KOLs (Key Opinion Leaders) for example, and to sell them.
• In contrast, retail sales through veterinarians account for only 15% of sales.

The Chinese consumer prefers speed, personalization and direct interaction with the brand. The most successful brands are those that have understood how to transform their communication into an experience: original packaging, educational or humorous video content, community engagement via WeChat or Xiaohongshu…

What opportunities are there for foreign pet food brands in China?

Faced with this changing market, foreign brands need to adapt their strategy. Importing quality products is not enough to establish a long-term presence on the Chinese market:

• Localize your offer to suit the specific needs of pets and their owners in China
• Forge partnerships with Chinese distributors and influencers to gain visibility.
• Invest in localized content: videos, WeChat mini-programs, educational live events on animal nutrition, etc.

China: the world’s leading pet food market?

China is fast becoming the world’s largest pet food market, driven by a growing love of cats, a demanding and connected urban population, and increasingly successful local brands.

For foreign companies, the challenge lies in fully understanding the market and the expectations of Chinese consumers. They also need to choose the right distribution channels and marketing strategy. VVR International’s experts help foreign companies seize the opportunities offered by China’s demanding and competitive pet market.

The cultural and creative industries market in China

China plays a central role in international trade, industry and technology, and now also in art and culture. Indeed, since the early 2000s, aware of the potential of these fields for the country’s economic growth and influence around the world, the Chinese government has been supporting the sector through a number of policies and massive investments. China’s creative and cultural industries are multiplying and diversifying their activities. The expansion of the middle class in China, accompanied by a general increase in purchasing power, is contributing to the growth of the cultural and entertainment sector. As per capita disposable income rises, people are more inclined to increase their spending on leisure, cultural and artistic outings. These dynamics support players in the sector and create new opportunities.

The emergence of the art and culture market in China

The contemporary art market

In the early 2000s, China’s economic expansion was accompanied by an opening up to the world of contemporary art. Marginal in the early 2000s, China is now at the centre of the world contemporary art market. By 2021, China will be the world leader in contemporary art, ahead of the United States, with a market share of nearly 35.5%.

This meteoric rise can be explained by a number of factors.  Between 2005 and 2008, the government introduced policies to make the contemporary art market more flexible and facilitate sales. The aim of these policies was to legitimise and promote Chinese contemporary art internationally. The aim was also to promote national creation within the country by lifting the ban on exhibiting works of contemporary art in public museums, which had been in place since 1989.

Over the last twenty years, an affluent class has developed and expanded. Made up of entrepreneurs, often urban dwellers with substantial incomes, this affluent class is developing a taste for art, which is expressed in leisure activities as well as in the purchase of works of art. In China, for example, the number of contemporary art collectors continues to grow. This dynamism is also illustrated by the significant growth in auction sales by internationally renowned Chinese artists such as the visual artist Zeng Fanzhi, born in 1964.

The arts and culture sector at the heart of China’s strategy

In recent years, the Chinese government has initiated a policy of financial support for the creation of public and private contemporary art museums across the country. These massive investments have helped to develop cultural infrastructures across the country: between 2000 and 2019, 42 new contemporary art museums were created. In addition to these public institutions, the State has also contributed to the opening of 88 private contemporary art museums over the same period.

Numerous public initiatives aimed at promoting the cultural and creative industries are being carried out at national, regional or local level, such as the creation of creative clusters in major cities like Beijing and Shanghai. At the heart of megacities with intense economic activity, the aim of these clusters is to bring together players and companies in the creative sector in a restricted area in order to create synergies, stimulate creativity and develop ambitious, innovative projects. These zones bring together companies in the sector and benefit from support to stimulate innovation.

This development of creative and exhibition spaces to showcase the country’s creative wealth has helped to boost the contemporary art market. Private players – art galleries and art centres – have multiplied, supported by the development of major contemporary art fairs such as Art Basel in Hong Kong, which bring together art market players, artists and collectors from all over the world . This combination of political will, the commitment of private players and the growing interest of the Chinese public is contributing to the dynamism of the arts and culture sector in China.

The creative and cultural sector: economic leverage and influence

The importance of the cultural and creative industry sector is not only economic, but also geopolitical. China is exporting more and more cultural products such as films, animation and visual arts to foreign markets. These exports help to promote Chinese culture around the world, strengthen its influence and shape a certain image of China.

A number of major international events take place in China every year, helping to establish its importance in the field of cultural creation. At the crossroads of entertainment, production and technology, video games occupy a strategic place in the Chinese economy and in its influence on the cultural and creative industry sector. The number of players involved and the number of dedicated events bear witness to its importance and dynamism. The China Joy (China Digital Entertainment Expo & Conference), for example, which takes place every year in Shanghai and brings together the main Chinese and international players in this creative industry, is considered to be one of the biggest video game trade fairs in Asia. At its 17th edition 5 years ago, China Joy brought together more than 1,360 Chinese and international exhibitors and attracted nearly 365,000 visitors. This success illustrates the importance of the video game and digital entertainment sector in China in recent years.

What opportunities are there for foreign cultural and creative industries (CCIs)?

For the year 2021, the Chinese government’s annual budget allocated to the “culture, tourism, sport and communication” sector was EUR 2.45 billion, with EUR 433.28 million allocated directly to culture and tourism (services, museums, halls, libraries, artistic dissemination, management).^[6] This amount testifies to the importance of the sector in the Chinese economy. This vast market, with its many players and diverse activities, offers great opportunities for foreign companies. By contributing their know-how, their cultures and their unique artistic and cultural offerings, they have everything they need to establish themselves successfully in China.

There is strong demand for foreign cultural products in a wide range of fields, including live performance, music and the support and creation of large-scale cultural projects (galleries, fairs and museums). What’s more, the development of world-class cultural infrastructures and facilities initiated in the 2000s offers major opportunities for dissemination and the creation of partnerships.

Finally, despite certain regulatory constraints and the government’s sometimes cautious approach to foreign investment, China welcomes and encourages the growth of the cultural and creative industries through public funding, which is seen as a new economic and job-creation engine. Nevertheless, investing in the Chinese culture and entertainment market requires a prior understanding of its specific features and the rules that govern it, particularly the import quotas for foreign cultural content, which still limit opportunities.

Finally, products and services need to be adapted to the Chinese market, not only to match the tastes and practices of the target audience, but also to comply with the rules governing the creation and distribution of cultural content in China.

Conclusion

The cultural and creative industries market in China is flourishing. Boosted by public investment, the emergence of creative clusters and the middle class’s appetite for leisure and culture, accelerated by the digital transition, it is continuing to grow rapidly while becoming increasingly international.

Are you in the Cultural and Creative Industries sector? Are you interested in the Chinese market? Did you know that there is a development support programme in China dedicated to CCIs?

Download the Cultur’export China programme brochure here

The Cosmetics Market in China: developments and outlook

The China Beauty Expo (CBE) 2024, held in Shanghai from 22 to 24 May, brought together more than 10,000 brands and 70,000 beauty products, from global giants such as L’Oréal and Shiseido to trendy niche brands and national leaders such as Proya and Bloomage Biotech. More than 1,500 companies from the beauty supply chain were also present on 100,000 m² of exhibition space. This event is a showcase for the vitality of this sector in the Chinese market.

Indeed, the Chinese beauty market is growing by leaps and bounds, making it one of the most dynamic and lucrative in the world. With a population of over 1.4 billion and a rapidly expanding middle class, demand for beauty products continues to grow. This article explores the key factors behind this growth, as well as the emerging trends that are shaping this market.

Focus on the Chinese cosmetics market

Is the growth of the cosmetics market in China sustainable?

China has become the second largest cosmetics market in the world, just behind the United States. According to data from Statista, the Chinese cosmetics market will be worth more than 390 billion yuan (around $60 billion) in 2023. It is interesting to note that, although China is the world’s second largest market, per capita cosmetics consumption is significantly lower than that of US consumers. In fact, in 2022, the average American will spend $333 a year on beauty products, while the average Chinese will spend just $41. The growth potential of the Chinese market is therefore considerable.

However, following strong growth between 2018 and 2022, with an average annual growth rate of almost 10.7%, the market is expected to fall slightly to around 7% per year over the next 5 years. This expansion is underpinned by several factors:

Urbanisation and rising incomes:

Migration to urban areas and rising disposable incomes have led to increased demand for sophisticated beauty products.

Growing awareness of beauty and well-being:

Chinese consumers are attaching increasing importance to their personal appearance and well-being, boosting demand for skincare and make-up products. The dietary supplements market is also benefiting from this growing interest in well-being (for more information, see our dedicated article: The vitality of the dietary supplements market in China – VVR International, strategic development, production, sourcing, distribution… )

Influence of social media :

Social media platforms such as WeChat, DouYin, Weibo and Xiaohongshu play a crucial role in the emergence of trends and the promotion of cosmetic products. In China, livestreaming on social networks is enjoying considerable success. During these lives, influencers test, comment and advise their followers on new products to buy. These livestreams are very popular, and can generate a lot of sales! (For more information on social selling and its influence in China, see our article: Focus on the extraordinary phenomenon of social selling in China – VVR International, strategic development, production, sourcing, distribution…)

Among foreign brands, France, Japan and Korea are the main importers.

Since 2022, France has dominated the imported cosmetics market, with a market share of over 24%, or 36.4 billion yuan (around 5.6 billion dollars). In China, the premium cosmetics market has historically been largely held by foreign brands, while Chinese brands have mainly exported products with low added value, creating a trade deficit in this sector. In recent years, however, there has been an increase in the power and quality of domestic cosmetics brands.

The rise of Chinese brands:

Until the 2010s, the skincare and cosmetics market was largely held by foreign companies. In 2013, for example, they accounted for 72% of the make-up market, compared with 46% in 2022. Today, buoyed by changing consumer habits, local Chinese brands such as Giant Biogene (巨子生物), Syoung （水洋股份), Proya, Jahwa, BTN or even Bloomage Biotech are gaining in popularity, rivalling the international giants. Since 2020, they have held more than 50% of the local make-up market.

 This rapid development is due to three main factors:

• Firstly, these brands have been able to adapt more quickly than foreign brands to new consumption patterns and changing demand. Being closer to their consumers, they have observed and understood their changing habits. What’s more, they are often smaller companies, more agile in organising R&D and implementing marketing plans, and able to adjust their prices more easily. Companies such as Perfect Diary, Florasis and Chando have managed to capture the attention of consumers with products tailored to local preferences and innovative marketing strategies. What’s more, the distribution strategy chosen by these brands is often based mainly on online sales, which allows them to be more responsive (online sales are the preferred marketing method for these brands, as is the case with Proya, which achieves over 90% of its sales online).
• Secondly, young consumers are more inclined to consume national brand products. Generation Z represents almost 19% of the Chinese population, and includes many consumers of cosmetics. Born during a period of prosperity for China and its international influence, young people are proud to buy national brands, which creates excellent development opportunities for Chinese companies.
• Finally, the desired effects and specific functions of cosmetics have become increasingly important when it comes to purchasing products. Social networks and the internet have helped to raise awareness among the Chinese of skin problems and the various treatments available to deal with them. Domestic brands were quick to pick up on these new consumer concerns. They have been able to adapt, for example by increasing the number of partnerships with medical institutions in order to reinforce their image as experts in skin care. At the same time, they have consolidated their online distribution strategy.

Challenges and opportunities for foreign brands

French cosmetics: brand image and luxury

Brand image and the perception of quality play a crucial role in purchasing decisions. Chinese consumers are particularly sensitive to well-known brands and luxury products, which they associate with high social status and a guarantee of quality. Many French brands enjoy an image of luxury and quality that is highly prized by Chinese consumers. For example, brands such as Chanel, Dior and Lancôme enjoy strong recognition and loyalty from Chinese consumers. Made in France” is seen as a guarantee of prestige and quality, particularly in the skincare and fragrance segment.

Foreign brands can also capitalise on the growing interest in natural and organic products. Demand for products that are free from harmful ingredients and respect the environment is on the rise, paving the way for brands such as Caudalie and L’Occitane to promote their natural, sustainable formulas.

Adapting to the Chinese market: challenges for foreign brands

Enhanced regulations:

China is continuing to tighten its regulations on the safety and quality of cosmetic products. Brands must remain vigilant and ensure that they comply with these standards to avoid any risk of withdrawal from the market or penalties. Compliance with local regulations is essential to maintain the confidence of consumers and the authorities.

Establishing a suitable distribution network:

Beauty products are distributed in China through a combination of online and offline channels. E-commerce platforms such as Tmall and JD.com are still major players, but their leadership position is being challenged by social selling and the growing importance of livestreaming. Physical shops continue to play an important role, offering immersive shopping experiences and personalised consultations. In 2020, online sales of cosmetics accounted for around 38% of total sales in China. In recent years, the rapid expansion of cross-border e-commerce (CBEC) in China represents a major opportunity for foreign brands. Specialised CBEC online sales platforms such as Tmall Global and JD Worldwide give foreign brands direct access to Chinese consumers without the need to register their products. Participating in major online events such as the ‘Double 11’ can generate massive visibility and sales in a short space of time, however it is important to note that Chinese consumers will expect a strong discount on the price of products at these festivals.

Conclusion

In conclusion, the cosmetics market in China offers considerable opportunities for both French and foreign brands. However, success in this market requires an in-depth understanding of consumer preferences, an ability to innovate and personalise offerings, and constant vigilance with regard to local regulations. Brands that are able to navigate this dynamic and ever-changing landscape will be able to capitalise on the market’s continued growth and strengthen their presence in China. With a vast and diverse population, China continues to represent fertile ground for the global cosmetics industry, promising great prospects for years to come.