China's Pet Economy Stalls as Listed Firms See Profits Plunge

China’s pet economy stands at a turning point. Market heat cooled rapidly after 2025. In the first half of 2026, earnings at listed companies deteriorated across the board. According to reporting by Huxiu’s Banma Consumption©, the industry has shifted from overheating to cooling. Stagnant exports and a domestic war of attrition have coincided. Sluggish growth in pet ownership and aging are also advancing.

In H1 2026, Guaibao Pet’s net profit fell 49.57% year on year, while Zhongchong’s fell 37.63%.

The structure that once supported the golden age has changed. The shift to proprietary brands lifted revenue. But price competition has eroded the profit base. The market is said to have entered a new normal of low growth.

Background to the Simultaneous Deterioration

at Listed Firms

Results for H1 2026 were grim. Guaibao Pet posted operating revenue of 3.543 billion yuan. That was up 10.01% year on year. Net profit attributable to parent shareholders was 191 million yuan. That was down 49.57% year on year. Higher revenue coincided with a sharp drop in profit.

Zhongchong showed a similar pattern. From January to June 2026, operating revenue was 3.281 billion yuan. Net profit attributable to parent shareholders was 127 million yuan. That was down 37.63% year on year. Almost all other listed companies also deteriorated with virtually no exceptions. Some fell into declines in both revenue and profit.

The reversal in share prices was also sharp. Market leader Guaibao Pet topped 120 yuan last May. It has now fallen below 40 yuan. The entire sector has been pushed back to its former levels. Gains from late 2024 to mid-2025 have vanished.

Signs of change also appeared on the sales front. During the 2026 618 shopping festival, overall growth slowed. The top ranks became fixed. No new brands broke into the top 10. Excitement had already begun to cool from the second half of last year. The change surfaced as earnings in H1 2026.

Capital has also turned cautious. Last October, Yiyi announced the acquisition of Gaoyejia. The target included Xu Cuihua. Four months later, the deal was called off. The reason was that the target’s results missed expectations. The market cooldown directly affected the outcome.

Impact of Stagnant Overseas Exports and

Falling Unit Prices

The drag on earnings lies in overseas business. Major players have emphasized the domestic market and proprietary brands. Even so, their foundation remained overseas. The history of industrial development defined that structure. In Shandong and Zhejiang provinces, contract manufacturing came first. The base in chicken and poultry by-products and daily goods was leveraged. Growth came through OEM and ODM models.

Export statistics for 2025 showed stagnation. China’s pet food exports totaled 10.102 billion yuan. That was down 427 million yuan year on year. Export volume was 361,300 tons. That was up 26,300 tons year on year. Volume edged up, but value declined.

The impact of falling prices is severe. Export prices in 2025 fell 11% year on year. The price drop hurt more than the slowdown in total volume growth. Geopolitical factors and intensifying overseas competition overlapped. Pressure mounted on companies built on contract exports. Even firms that shifted to the domestic market could not avoid instability at their base.

Guaibao Pet’s history illustrates that trajectory. It was founded in 2006 by Qin Hua in Liaocheng, Shandong Province. He previously worked at chicken processing giant Fengxiang Group. At first, like others, it used contract exports as a foothold. It later shifted to branding. In 2013, it created the mid- to high-end brand Maifudi. In 2018, it launched the premium cat food Fuleijiate. In 2021, it acquired the U.S. premium brand Waggin’ Train. In 2024, it launched the ultra-premium dog food Wangzhenchun.

By 2025, the share of proprietary brands exceeded 73%. The share of contract business fell to 26%. Gross margin on proprietary brands exceeded 40%. Some even topped 50%. Contract business stayed around 30%. The company’s overall gross margin exceeded 40%. At times it far outpaced industry levels.

The Reality of Intensifying Price Competition

in the Domestic Market

A war of attrition also spread in the domestic market. Domestic brands rose as a group. Zhongchong owns Wanpi and Lingxian. Zhenzhi is also under the company. Peidi rolled out Jueyan and Haoshijia. Chineng is also part of its lineup. Tianyuan Pet owns Petstar. Yuanfei Pet launched three brands at once in 2024. They include PIKAPOO and Halewei. Yiyi also operates Leshipet and others.

Emerging brands grew rapidly by leveraging e-commerce. They built track records during 618 and Double 11. Late 2024 to mid-2025 was a boom period. The August Asia Pet Expo in Shanghai also hit a record high. Floor space and exhibitor numbers set records. But behind the growth, price-led competition advanced.

Listed companies’ earnings structures deteriorated. Gross margins declined. Meanwhile, selling expenses kept rising. Zhongchong’s gross margin fell 5.38 percentage points. It dropped below 30%. Guaibao Pet also saw profit halve despite higher revenue. Falling gross margins were compounded by rising expenses.

Competition in the domestic market also reflects spillover from abroad. Excessive competition overseas spilled into China. It was said that whoever wins the brand business wins all. It was said that whoever wins the Chinese market wins the future. That assumption collapsed after the second half of 2025. Collective hardship came to the surface.

Stalled Pet Ownership and Advancing Aging

What caps growth is the demand structure. The pet concept has only been widespread in China for 30 years. The China Small Animal Protection Association was founded in 1992. The idea of pets as companions spread. Before that, functional roles such as guard dogs and watchdogs dominated.

For more than 20 years after that, the market and industry ran on parallel tracks. The number of pets was huge and kept growing. But spending power was limited. Many remember generations raised on leftovers. The consumer market was limited. Foreign players such as Nestle Purina and Mars Royal dominated.

The turning point was the emergence of a new generation of owners. They elevated pets from companions to family. Emotional value drove more sophisticated consumption. Dog and cat food became widespread. The supplies market also expanded. An opportunity for industrial upgrading emerged.

Now that expansion phase is coming to an end. The 2026 China Pet Industry White Paper shows the current state. The urban dog and cat consumption market was 312.6 billion yuan in 2025. The industry has entered a stage where low growth is the norm. In 2025, growth in dog ownership fell to 1.6%. For cats, it fell to 1.9%.

Aging has also quietly advanced. Dogs and cats aged seven and older account for nearly 20%. Aging is expected to concentrate in the next five to 10 years. Growth cannot be sustained by raising unit prices alone. It is a structure matured early by capital. Some note it has entered a stage where a bumper harvest is hard to expect.

Constraints and Challenges in the Shift to

Medical Care

The industry’s competitive focus is shifting to medical care and health management. The aim is to avoid the war of attrition in food and supplies. Demand related to aging is also expected. But it is unlikely to become a new growth pillar. Even major medical companies are not performing well. Ruipai and New Ruipeng are examples.

In China, pet spending will never exceed human spending. The market ceiling is limited. There are limits to the expansion of emotional spending. Higher medical unit prices must be matched by ability to pay. Insurance and medical infrastructure are still developing. Monetization will take time.

Industrial upgrading has entered its next stage. The first half centered on branding and shifting to the domestic market. Sales and profits grew together. The second half will test efficiency and sustainability. Breaking away from price competition is the challenge. Supply networks to support care in old age are needed.

Editorial Opinion

Looking at short-term impact, continued price competition over the next three to six months appears unavoidable. The fixation of top rankings in e-commerce sales events will advance, forcing smaller new entrants to drop out. Companies will rush to review selling expenses and improve production efficiency. Falling export unit prices will also continue, advancing the selection of firms highly dependent on contract manufacturing.

From a long-term perspective, stalled pet ownership and aging will define the market. Growth through volume expansion will be difficult, and the shift to value-added areas such as health management and medical care will advance. However, expansion beyond human consumption will be difficult, requiring management mindful of the market ceiling. Whether companies can respond to qualitative changes in domestic demand will be the dividing line.

Questions from the editorial team follow. Can consumption based on emotional value be sustained even in an economic downturn. Is the information base supporting trust, such as food safety and transparency of medical costs, sufficient. How society as a whole should share the care burden for senior pets is now at issue. Designing a sustainable ownership environment will be the focus going forward.

References

• “ 宠物经济，未老先衰 “, by 斑马消费© — 虎嗅网, 2026-10-19T23:48:48.000Z (ARR)
• Source URL: https://www.huxiu.com/article/4898780.html?f=rss