Doing business in the Far East

With an estimated population of more than 300 billion dogs and cats, the region’s potential has in recent years attracted a number of independent companies eager to place their products. But these potential market players are usually confronted with some challenges. These include the cultural gap, differences in consumer behavior, the increasing role of social media in sales, and tight regulations that every product needs to comply with.

Partnering with the locals

Finding the right local agent to help you export products to the region is a necessity. But it is also a challenging task that all export departments need to deal with before placing their products in Asia – a pet care market valued at $27.1 billion in 2021.

Most of the negotiations are done face-to-face, something that obviously proved difficult during the COVID pandemic. “They would never start working with you if you don’t meet in person. They need to see you and trust your company and product,” says Paulius Ausmanas, Head of Exports at Lithuanian pet company KIKA Group.

Logistic partners are also a difficult aspect for the US pet care and wellness firm Cosmos Corporation. Of its exports, 30% go to the Asia Pacific region. “We continue to look for ways to partner with the right distributors in some of our larger Asian markets, to ensure we’re meeting market needs for localized packaging, for example, while also minimizing the complexity this would add to our own manufacturing processes,” Dan Finkbeiner, the company’s director of global distribution, points out.

Registration process

Regulations in most Asian countries also require a long registration process for each foreign product that is to be placed in the local market. Due to that high level of bureaucracy, companies need to be prepared for a considerable delay before their product can reach the consumer.

This process has been one of the low points for KIKA Group, especially in countries such as Thailand and Taiwan. “It is very difficult to get in. They have a very conservative approach,” admits Ausmanas. The company started exporting to the region in 2014, with Malaysia as the first country. Since then, it has expanded its product range to other countries, including Singapore, Hong Kong, Japan, Taiwan, the Philippines, Indonesia, Thailand and South Korea. Today, 45% of KIKA’s exports go to Asia.

Thailand could be one of the most challenging countries for European pet firms, mainly due to the increase in local brands that want to capture market share. The Thai government recently announced that it wants to become the world leader in pet food exports, surpassing Germany and the US. According to official figures, Thai pet food exports increased by 34.4% to $2.2 billion in the first 9 months of 2022.

Quality and safety

Many Asian pet parents – especially in countries in the east of the continent – behave differently from pet owners in the rest of the world. And this is something that foreign pet firms should take into consideration. KIKA’s Paulius Ausmanas explains that consumers in Taiwan, South Korea and Japan are quality seekers rather than price seekers. “They buy both premium and lower-end products, but are always looking for quality.”

Safety is another key point that foreign companies need to be aware of. Hao Zhongli, the founder of Yantai China Pet Foods, agrees that among pet owners in the region, there is “a strong demand” for pet food safety and scientific knowledge about the nutrition that they are giving to their pets.

“We’ve certainly found that consumers show a discrete preference for products clearly identified on-package as ‘Made in the USA’. We generally see this as ‘table stakes’ in the pet industry – meaning it’s a baseline expectation of consumers, without which your product could be excluded from consideration,” adds Dan Finkbeiner from Cosmos Corporation.

Natural pet food

In many countries in the region, such as Hong Kong, Singapore, the Philippines and Malaysia, the pet industry is rapidly gaining market share with new products claiming to be natural and healthy for pets.

“More consumers are looking for natural pet food, including fresh ingredients, high protein, meat content, no additives and natural processing,” Hao Zhongli, who started in the Chinese pet business in 1998, says to PETS International.

According to Euromonitor, it is natural, high protein and grain-free that are among the key pet food claims across Asia. The research firm believes that the pet food market in Indonesia and Thailand has the potential to drive these claims.

Innovation is also driving the pet industry in the eastern part of the region, and companies entering those markets are keeping that in mind. Online and social media are at the core of their business, and brand awareness is at the heart of every company’s marketing strategy.

“You need to have the ability to change and react quickly. If you don’t do that as a company, it is quite difficult to catch up with others,” Paulius Ausmanas acknowledges, saying that KIKA Group wants to grow its exports to the region to reach 60% of its total production.