CGTN Europe interviewed Chen Jiahe, Chief Investment Officer, Novem Arcae Technologies
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00:00And let's get some more analysis on all of this with Chen Jiao He, who's chief investment officer at Novem RK Technologies and himself a keen pet owner.
00:10Well, it's actually a very big business. I mean, look at how many pets I have had before I got, you know, I got cats before I got a goose, I got a few turtles, all these kind of things.
00:19So many Chinese people are now having a huge amount of pets. It's not only cats or dogs.
00:25And what sort of services are available for pet owners?
00:28Things from the supply of food, taking care of your pets when you're away on holiday, you've got these kind of hotels.
00:36Or if your pet is not fitting for hotels, for example, some cats really don't like that.
00:41So you can hire some people to actually come over to your house and feed your cats, you know, this kind of service person.
00:48And, you know, the hospital, which is really, really facilitated right now, you can cost like 10,000 or 100,000 yuan per visit if you really have the money.
00:57And they have very high-end equipment.
00:59So there is a financial sector.
01:01You can buy insurance for pets.
01:03I mean, you know, if they got sick and they pay your medical bills.
01:07So it's kind of insurance business as well.
01:09But it's interesting that the popularity of pets comes as the human population of China is actually going down.
01:16Why have pets become so important in people's lives?
01:18The consumption economy, especially the discretionary consumption economy of China, is growing really, really fast.
01:26So the pet economy is one very important part of the discretionary consumption.
01:30People have more and more pets.
01:32They feed their pets better.
01:34You know, they give them better and better medical care.
01:37This economy is thriving.
01:38I mean, if you look at the, you know, the listed companies relating with the pet economy in China's stock market, I've been looking at them a few days ago.
01:47Most of the good companies in this economy is trading, where they are trading at about 50 times PE ratio.
01:54So it's really high.
01:55And their growth rate is about 10 to 20 percent every single year.
01:58So it's really high valuation that the capital market is giving them.
02:01So you can see the rapid growth here.
02:03And I understand some companies have actually diversified away from baby products, human baby products, to making pet products.
02:11Well, that's a very interesting saying.
02:13I mean, because if you look at the pet economy, one of the very important things is that if you want to make a lot of money in this economy, if you're a company or a business, you're not only providing the very basic service, you're providing the brand.
02:26So it's very important.
02:27You have to build up a very good brand.
02:29So, I mean, for companies, as you mentioned, the companies who produce human products, if they go to the pet economy and say, OK, we're producing this kind of things, the pet owners would be trusting that because you've been producing the human products.
02:43So we believe that you produce something good.
02:45But that's also causing one problem is that they might affect the human, the consumers who are buying the human products from these companies.
02:54They might feel, OK, I'm buying from a pet product company.
02:57So this is probably a bad thing.
02:58So they have to balance this.
03:00What is your outlook for China's pet economy?
03:05Well, this is definitely one of the best industries in China's consumption markets in the next one or two decades.
03:11You're going to see more and more pets.
03:13They're going to have a lot of consumption on that as well.
03:15You know, pet food, medical care, pet toys, all sorts of things.
03:19So it's going to be a large economy.
03:22And in order to win out in this economy, businesses have to build up good brands.
03:26I mean, if you only provide the very basic products, you're going to earn a very average return.
03:32But if you've got a very good brand reputation among the consumers, then your product will bring you a lot of profit.
03:37You're going to have to ruin it.