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June 23, 2014

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42 THE JOURNAL OF COMMERCE JUNE 23.2014 SPECIAL REPORT ASIA TRADE PUTTING THE "Y'll" IN GLOBAL COMMERCE. Alb Stte Port Authority THE PORT OF MOBILE By Greg Knowler GOIN' TO THE CATS AND DOGS Still recovering from its reputation for tainted products, China is rapidly becoming a big importer of pet products THE RETAIL PET product industry has become a serious and rapidly growing business in China. Retail sales of pet products reached $1.3 billion last year, and the Hong Kong Trade and Development Council expects that figure to reach $2.2 billion in 2018 with an annual growth rate of 11 percent. Urbanization and the growing middle class with improving income levels are giv- ing the pet business enormous momentum. Fish and birds are the largest groups among China's 290 million pets, but there are 100 million dogs and 40 million cats in homes across the mainland, and they domi- nate the accessories and toys market. Not long ago, the only accessories a dog or cat owner needed to buy were a col- lar, leash, bowl and maybe a fake mouse or squeaky toy ball. China's pets now are pampered and treated as family members. Anyone who has spent five minutes in Hong Kong or the mainland will have noticed dogs in prams, wearing sunglasses, waistcoats, hats, shoes, ear warmers or being carried in expensive handbags. Then there are the pet toothbrushes and shampoo for different color hair, spa services and "paw-ticures." The products have to be made somewhere, and pet owners are demanding when it comes to quality and design of pet products, shor- ing up demand for imports, according to the TDC. People in major cities such as Shanghai and Beijing have stronger spending power and are less price-sensitive, going after high- quality brands. Pet owners in Guangzhou and Jiangsu are more price-conscious. A forwarder with offices in Shanghai and Hong Kong said he had noticed fast-ris- ing demand for pet products in China, with many high-quality and expensive items being imported. "Pets are a luxury item in China, and people with money want only the best for their pets," he said. "The high-end goods are imported, but much of the basic bowls and leashes and collars can be sourced locally." China's pet consumption is concentrated in the largest cities, which account for about 60 percent of the pet market, according to the TDC. Outside the major cities, there is low demand for pet health products, veteri- nary, bathing, grooming and other services, leaving huge room for growth. Another contributor to the increasing popularity of pets is new regulation that, among other initiatives, reduces dog-licens- ing fees from $285 a year to $42. With consumers increasingly hop- ing to avoid tainted products, much of the industr y 's pet food is imported or locally made foreign brands. Food safety scandals have dominated the headlines

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