Pet Healthcare Industry Taps into a 15 Billion RMB Blue Ocean Market with the Rise of 'Community + E-commerce + O2O' Integrated Model

Recently, Tianfeng Securities released an industry report on pet healthcare. The report analyzes the “pet healthcare” sector—a sunrise industry—from perspectives such as industry landscape and business models. VCBeat (WeChat Official Account: vcbeat) has selected excerpts as follows.

■ The pet industry features a large market size and rapid growth

In 2014, the market size of China's pet industry reached RMB 105.8 billion, with a compound annual growth rate (CAGR) of 59.5% from 2004 to 2014. Among this, the pet healthcare market was valued at approximately RMB 15 billion, growing at a rate of around 30%. The pet industry in first- and second-tier cities in China is already well-developed and is gradually expanding into third- and fourth-tier cities.

The U.S. pet market is more mature, with the industry’s market size reaching $58 billion in 2014 and $60.3 billion in 2015, currently growing at a rate of 4–5%. According to data from the American Pet Products Association, pet food accounted for 38% of the entire U.S. pet industry in 2014, making it the largest segment, followed by veterinary care at 29%.

China’s pet market is growing at a significantly faster rate than that of the United States, with pet healthcare services accounting for a relatively low proportion; thus, the pet healthcare industry still has substantial room for future growth.

■ Pet Healthcare—The Integrator of the Future Pet Industry

Products and services in the pet industry primarily include healthcare, grooming, pet food, and supplies. The upstream segment of the industry chain is dominated by pet food, while the downstream segment focuses on veterinary care. China has initially established a comprehensive pet industry chain, characterized by rapid development and ongoing expansion and diversification.

Pet healthcare features high technical barriers and possesses the scalability to integrate upstream and downstream segments of the industry chain, making it more likely to emerge as the consolidator of the future pet industry.. Pet healthcare places high demands on medical technology, hardware infrastructure, and staffing; comprehensive hardware facilities form the foundation for delivering pet medical services, while a professional medical team serves as an essential guarantee for service provision.

Pet ownership in China is gradually shifting from recreational purposes to emotional companionship, with growing consumption potential in veterinary care. When pets fall ill or require medical attention, owners typically seek treatment at nearby veterinary clinics based on recommendations from friends or information obtained through relevant media channels.

For veterinary hospitals,Licensed veterinarians are the core resources of hospitals., are the guarantee of medical service quality. The hospital's hardware facilities, management level, and charging standards also have a potential impact on users' consumption. For pet owners, consumer stickiness is built on the brand foundation; the hospital's reputation, treatment outcomes, and service quality will all influence users' subsequent consumption behavior.

■ Brand—The Core of Veterinary Healthcare

Pet owners are gradually shifting from relying on veterinarians to relying on brands.In traditional pet diagnosis and treatment, pet owners have placed greater emphasis on the service capabilities and quality of care provided by veterinarians. However, with the advancement of veterinary medicine, differentiation among veterinarians has become less pronounced in basic services such as physical examinations, preventive care, and diagnosis of common illnesses. This is because these foundational services do not present high barriers to entry; licensed veterinarians tend to offer comparable levels of competence. Significant differences between clinics emerge primarily in surgical procedures and specialized services. Consequently, brand reputation now holds greater importance in consumers’ minds, becoming the primary factor influencing pet owners’ choice of provider.

Brand building is influenced by multiple factors. For veterinary clinics that demonstrate strong clinical outcomes and adhere to standardized service protocols, pet owners are more likely to develop trust and user stickiness after their initial visit, thereby becoming loyal clients of the animal hospital.

1.  Clinical Proficiency of Veterinary Physicians.Licensed veterinarians are required to hold nationally recognized professional credentials. The training provided by pet hospitals directly impacts the quality of diagnosis and treatment, while veterinarians, as the primary point of contact for pet owners, are better positioned to build trust and establish a competitive brand advantage.

   
   

2. Facilities and Equipment at Veterinary Hospitals.Veterinary hospitals should be equipped with common diagnostic imaging devices, such as veterinary-specific magnetic resonance imaging (MRI) systems, X-ray machines, and color Doppler ultrasound units, and must have departments including operating rooms, examination rooms, clinical laboratories, and inpatient wards.

   
   

3. Standardized Service Pricing.Matching services with transparent pricing makes it easier to gain consumer trust.
   

■ Pet Hospitals—The Primary Form of Veterinary Care

Pet hospitals in China can be divided into two categories:Small-scale private storeandLarge and Medium-Sized Hospitals。Small-scale clinics typically serve local pet markets or suburban areas, featuring basic equipment, assembly-line workflows, and lower average revenue per customer. In contrast, medium-to-large hospitals are well-equipped, capable of delivering high-quality diagnostic and therapeutic services, and command higher average revenue per customer.

There are over 10,000 veterinary clinics in China. Classified by fixed assets, 90% of these clinics have fixed assets valued at under RMB 10 million, while the remaining 10% have fixed assets exceeding RMB 10 million. In terms of clinic size, those with a relatively large footprint, typically ranging from 200 to 300 square meters, number fewer than 4,000.

Currently, there are two main types of medium-to-large veterinary hospitals:Pet Hospital Brands Collaborating with Universitiessuch as the Agricultural Hospital of China Agricultural University and the Animal Hospital of Zhejiang University;Pet Hospital ChainSuch as Ruipeng, Ruipai, Paite, and Meilian Zhonghe, which are primarily distributed in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, as well as some second-tier cities.

High-end hardware facilities required for large-scale veterinary hospitals include imaging diagnostic equipment such as dedicated veterinary MRI, digital radiography (DR), and color Doppler ultrasound systems, as well as in vitro diagnostic devices including ventilators, dental scaling units, blood gas analyzers, hematology analyzers, and biochemistry analyzers. Additionally, basic infrastructure such as waiting rooms, examination rooms, and operating rooms must be available.A professional and standardized clinical environment, coupled with high-quality medical services, helps veterinary hospitals attract pet owners seeking care for their pets, thereby increasing the average revenue per customer.

■ Licensed Veterinarian — The Executor of Pet Medical Care

In 2008, China revised and implemented the Animal Epidemic Prevention Law, which for the first time established the licensed veterinarian qualification examination system in legal form. As of 2015, among the 76,868 licensed veterinarians who had obtained practicing qualifications, 39,808 held the title of Licensed Veterinarian, and 37,060 held the title of Licensed Assistant Veterinarian. The number of applicants in China is approximately 50,000 per year.The annual pass rate is only around 10%.。

China is a major country in animal husbandry. Based on the standards of developed countries and calculations by international organizations, the demand for personnel engaged in animal diagnosis and treatment activities in China exceeds one million. However, at the current stage in China, the number of registered practicing veterinarians actually engaged in diagnosis and treatment activities...Veterinarians Account for Less Than 2%, the gap is enormous。

In June 2016, the Veterinary Bureau of the Ministry of Agriculture released the “Draft for Comments on the National Plan for the Development of Veterinary Health Services (2016–2020),” focusing on strengthening the veterinary workforce. However, in the short term, veterinarians’ income levels and social status remain mismatched with China’s current national conditions, and the shortage is expected to persist over the long term.

Pet hospitals require veterinarians and nursing teams with extensive diagnostic and treatment experience as well as expertise in veterinary medicine. Veterinarians specializing in pet care must possess clinical experience with small animals. The veterinary profession encompasses numerous specialties, including livestock veterinarians, poultry veterinarians, and small-animal veterinarians. Small-animal veterinarians constitute only a fraction of the overall veterinary workforce, thereby exacerbating talent shortages. In China’s veterinary education system, insufficient clinical exposure for students remains a significant challenge; theoretical instruction is prioritized over practical training, resulting in weak hands-on skills among graduates. Consequently, undergraduate and junior college graduates require a certain period of training before they can provide pet medical services. Leading pet healthcare chains in China, such as Ruipai Pet Hospital Group and New Ruipeng Group, have successively established partnerships with veterinary colleges. By introducing relevant courses and programs to enhance practical competencies, these companies have created effective channels for attracting veterinary talent.

■ Pet Owners—Younger Demographics, Heightened Consumer Awareness

Pet ownership is influenced by a multitude of factors, including the owner’s age, gender, marital status, and income level. The role of pets has partially shifted from mere entertainment to emotional companionship, leading to an increased willingness among owners to spend on their pets. According to the “2015 Survey Report on Consumer Behavior of Pet Owners in China” released by Goumin.com, both the number of pets and consumer demand have risen in China, with women accounting for 58.1% of pet owners and demonstrating a stronger propensity to keep pets. The demographic of pet owners in China is becoming increasingly younger, with individuals born in the 1980s and 1990s emerging as the primary group, representing nearly 80% of all pet owners. The internet-centric mindset of these younger generations has accelerated the integration and extension of the industry chain through emerging business models such as e-commerce, veterinary hospitals, and Online-to-Offline (O2O) services.

Pets play a significant role as companions. With single individuals and married couples without children accounting for over 80% of this demographic, more than 50% of pet owners regard their pets as children, while only 3.2% view them merely as sources of entertainment. The emotional attachment pet owners have to their animals strengthens their willingness to pay, thereby elevating overall spending on pet-related products and services.

99.8% of pet owners are willing to invest in and spend on their pets. Among them, approximately 50% spend between RMB 101 and 500 per month, and 59.9% of pet owners have purchased medications/health supplements or utilized veterinary diagnostic and treatment services.

■ The Development History of Veterinary Medicine

The development currently being experienced by China’s pet industry can also be divided into three stages:

(I)Seed Germination Period (1990–1999)

Early on, globally renowned pet food companies began entering China. During this phase, the domestic market was small in scale and primarily focused on the production and processing of pet food. Some Chinese pet supplies manufacturers, having been established only recently, started processing pet products for developed countries and regions such as Europe, the United States, and Japan. In more developed areas, trade in pet dogs and cats emerged, accompanied by limited sales of commercial pet food. The establishment of the first batch of specialized pet supply retail and veterinary service stores, represented by Sichuan Huaxi and Beijing Bo’ai, marked the nascent stage of the industry.

(II)Development Launch Phase (2000–2008)

Pet-related products and services have begun to develop intensively and comprehensively. For instance, pet products such as food and supplies; pet commerce and services such as veterinary care and grooming; pet trading; pet media; and pet exhibitions and associations are all experiencing rapid growth, making the market increasingly vibrant.

(III)Development and Growth Phase (Post-2009)

China’s pet industry is entering a stage of brand-oriented development, with pet consumption becoming increasingly normalized and the sector facing industrial upgrading. The integration of internet-based elements has accelerated industry consolidation, leading to vigorous online trading of pet products. Online sales on platforms such as Taobao, JD.com, and Aigou.com have already exceeded RMB 500 million, accounting for approximately 5% of China’s current pet industry retail sales. The pet market size on Taobao alone is projected to reach RMB 5–10 billion within five years.

■ Characteristics of China's Pet Industry

International experience indicates that the pet industry experiences rapid growth when a country’s per capita GDP ranges from USD 3,000 to USD 8,000. With the improvement of living standards among Chinese residents, the pet industry has developed rapidly. Currently, a considerable number of cities in China have reached this economic level. The pet industries in major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen are already well-developed, marking the onset of vigorous nationwide growth in China’s pet sector. China’s pet healthcare industry exhibits the following characteristics:

1.  The industry landscape is highly fragmented.China’s pet healthcare market boasts high profit margins, driving the establishment of numerous community-based veterinary clinics. Due to geographical constraints, local brands are more likely to gain a competitive edge. Currently, chain veterinary hospitals account for less than 10% of the market share in China, representing a significant gap compared to the 25% penetration rate seen in the United States.

   
   

2. Lax industry regulation leads to uneven quality in veterinary medical services.The rapid growth in pet ownership and rising demand for veterinary care have driven industry expansion, while profit motives have spurred the swift establishment of numerous small clinics. However, given the high technical barriers in veterinary medicine, the sector cannot mature rapidly in the short term, thereby increasing the risk of safety incidents.

   
   

3. There is a shortage of licensed veterinarians.Pet veterinarians are required to hold professional practice qualifications. However, China faces a relative shortage of veterinary professionals, with an even more acute scarcity of talent specializing in small animal veterinary care. For pet hospitals, attracting and retaining veterinary talent has become a significant challenge on their path to development.

   
   

■ Drivers of Future Growth in the Pet Healthcare Industry

From a policy perspective: Industry regulation is becoming increasingly standardized, and talent development is on the right track. The establishment requirements for pet hospitals in China are stringent. According to the Animal Epidemic Prevention Law of the People's Republic of China, pet hospitals must obtain an Animal Diagnosis and Treatment License and an Animal Epidemic Prevention Compliance Certificate from the animal epidemic prevention supervision agency in their respective district or county. They must employ at least three licensed practicing veterinarians and three registered veterinary assistants, with an indoor usable area of no less than 120 square meters. The processing time for qualified applications, from acceptance to final review results, takes approximately 20 days. Correspondingly, there is ongoing standardization of veterinary practice qualifications and significant national efforts to strengthen the veterinary workforce.

However, in contrast to the rapid development of veterinary care for pets, the industry still faces partial regulatory gaps. The proliferation of small pet clinics has led to frequent issues such as opaque pricing and non-standardized services, which are prone to triggering civil disputes. There is an urgent need to establish detailed legal and regulatory frameworks governing clinical practice standards and service pricing in pet hospitals.

In 2016, China released the "Draft for Comments on the National Veterinary Health Development Plan (2016-2020)," proposing to strengthen the development of veterinary talent. Meanwhile, in terms of training pet veterinarians, chain pet hospitals such as Ruipai Pet Hospital and Ruipeng Pet Medical Group have established partnerships with relevant colleges and universities, incorporating small animal clinical practice as a core curriculum component to lay a solid foundation for students pursuing careers as licensed pet veterinarians.

From the demand side of the industry: The rapid growth in the number of pets in China, coupled with the trend toward younger pet owners, is creating consumption opportunities. Furthermore, pet owners' emotional attachment to their animals has led to an increased willingness to pay.The United States has a pet population of 400 million and a total human population of approximately 300 million, resulting in a pet-to-human ratio of about 1.3:1. In China, the broad-defined pet population is approximately 150 million, with only 10.4 million registered pets, yielding a broad-defined pet-to-human ratio of about 0.1:1. Although China’s per capita GDP is only one-seventh that of the United States, the disparity in the pet-to-human ratio exceeds tenfold.There is still significant room for growth in the pet population.。

In 2015, China's per capita GDP was RMB 52,000, approximately USD 8,016. The pet industry has developed rapidly in first-tier cities, while second- and third-tier cities still hold substantial untapped potential.Pet ownership is trending younger, with the post-80s and post-90s generations becoming the primary pet owners. Meanwhile, population aging has led to changes in lifestyles and family structures, shifting pet ownership from mere entertainment to fulfilling emotional needs, thereby increasing consumers’ willingness to pay.

From the supply side, the upgrade of medical services in chain pet hospitals has led to an increase in average revenue per customer.Traditional small-scale pet clinics are equipped with basic facilities, operate in an assembly-line manner, and lack a high degree of specialization. They offer simple grooming and healthcare services, resulting in relatively low average transaction values per customer. In the future, chain pet hospitals can enhance their bargaining power through standardized services and specialized division of labor. More transparent pricing standards, coupled with service quality that matches the price, are more likely to be accepted by consumers.

■ Profit Model and Single-Store Input-Output Analysis

The primary revenue source for veterinary hospitals is fees from diagnostic and treatment services.Taking Ruipeng Pet Healthcare Group as an example, the company handled over 250,000 pet consultations in 2015. Common healthcare services included general management and surgical procedures for surgical conditions, diagnosis and treatment of internal medicine disorders, prevention and control of dermatological diseases, prevention and control of infectious diseases, as well as pet vaccination and deworming. In 2015, revenue from pet medical and healthcare services amounted to RMB 88.66 million, accounting for 62.41% of total operating revenue, while pet grooming and sales of pet food and supplies contributed 18.74% and 18.85%, respectively.

Mature pet retail chains have a net profit margin of approximately 25%, with costs primarily stemming from labor, rent, equipment depreciation, and income tax.Taking the Wuxi Chongning Road branch of Ruipai Pet Chain as an example, its annual revenue is RMB 8 million, with labor costs accounting for 25-30%, rent for 10%, and equipment depreciation, taxes, and other costs for 35%, resulting in a net profit margin of approximately 25%. In contrast, the overall net profit margin for pet hospital chains such as Ruipai Pet and Ruipeng Group stands at only 15%, primarily due to investments in chain expansion and the fact that some newly opened stores have not yet reached mature operational status.

According to Ruipeng Shares’ three-year business expansion plan, the company intends to open 31, 60, and 85 new stores in 2016, 2017, and 2018, respectively, through acquisitions or self-built outlets. The projected investments are RMB 46.5 million, RMB 90 million, and RMB 127.5 million, respectively, with an average investment of RMB 1.5 million per store. Based on a 25% net profit margin for mature stores, Ruipeng Shares currently generates an average annual revenue of RMB 2 million per store, yielding an annual net profit of approximately RMB 500,000, which implies a payback period of three years. However, considering the time required for stores to reach maturity, the estimated average payback period per store is 3–5 years.

The U.S. pet healthcare market is mature, and compared with China’s pet industry, it exhibits two distinct characteristics:

1. Chain stores are large in scale and have a high chain rate. In the United States, chain-affiliated pet hospitals account for over 20% of the market, whereas in China, the chain affiliation rate of pet hospitals is less than 10%.

   
   

2. Synergies are emerging across the pet hospital industry chain. Banfield, the second-largest veterinary hospital chain in the United States, currently partners with PetSmart, the world’s largest pet retail chain, by operating within PetSmart’s retail stores to provide comprehensive wellness and emergency care services. Meanwhile, VCA is the largest provider of veterinary medical services in the U.S., with more than 680 locations.
   

■ VCA—The largest provider of pet healthcare services in the United States

VCA Antech was founded in 1986 and listed on the NASDAQ in 2001. Headquartered in Los Angeles, USA, the company provides professional veterinary diagnostic and treatment services, with particular expertise in internal medicine, oncology, ophthalmology, dermatology, and cardiology for pets. In addition, the company markets pet-specific imaging diagnostic equipment, in vitro diagnostic devices, and other related products to its target markets. Beyond operating veterinary hospitals, it maintains a network of animal clinical laboratories across the United States, offering specialized therapeutic solutions for pets.

The Company’s number of chain stores and veterinarians exceeds the combined total of China’s top-tier pet care chains. Currently, the Company operates more than 680 veterinary hospitals, primarily distributed across 41 states in the United States and three provinces in Canada. The Company employs over 3,000 veterinarians, including more than 400 board-certified specialists in the pet care industry. It has established the world’s largest graduate training program in small animal clinical practice, along with 28 internship programs, laying a solid foundation for its talent pipeline. The Company enjoys strong brand recognition in the pet healthcare sector. In 2015, its total operating revenue reached USD 2.134 billion, of which USD 1.698 billion was generated from its animal hospital operations.

■ Banfield—the second-largest chain of veterinary hospitals in the United States

Banfield was founded in 1955. In 1994, PetSmart, the largest pet supplies retailer in the United States, invested in Banfield and acquired a 21% equity stake. Through a strategic partnership agreement, Banfield, a chain of veterinary clinics, collaborated with PetSmart to establish an integrated pet care service model. Currently, Banfield operates over 800 animal hospitals within PetSmart stores, providing comprehensive veterinary diagnostic and treatment services.

Headquartered in Arizona, USA, PetSmart is an integrated service company that combines online sales of pet food and supplies with offline pet-related services. The company adopts a “e-commerce + chain stores” business model, operating five e-commerce platforms online, such as PetSmart.com, and maintaining a nationwide chain of 1,477 physical pet stores. In 2014, PetSmart’s service revenue amounted to $808 million, accounting for 11.36% of its total operating revenue, primarily driven by revenue contributions from Banfield veterinary services.

Banfield creates industrial synergies by partnering with pet supply retailers. This strategy enhances its bargaining power and achieves greater economies of scale upstream in the supply chain. Downstream, it offers consumers a diverse range of products through channel integration, while the brand advantage derived from its integrated, end-to-end services makes it more attractive to customers.

■ Chain Operation of Veterinary Hospitals

Chain pet hospitals benefit from economies of scale, granting them greater bargaining power in the procurement of veterinary pharmaceuticals, vaccines, and medical equipment. As demand and facility requirements vary across regions, chain hospitals can implement unified management while tailoring infrastructure to local conditions, thereby preventing inventory overstock or shortages. The core resource driving customer loyalty is veterinarians; by enhancing clinical proficiency through specialized training and management, chain hospital platforms are better positioned to attract and retain veterinary talent.

Customers develop reliance on chain pet hospital brands, thereby becoming a stable source of customer traffic for these facilities. In China, the pet healthcare sector has long lacked unified pricing standards. Chain pet hospitals, with their standardized services and more rigorous training and management of veterinarians, are better positioned to establish brand advantages and increase average revenue per user (ARPU). Pet hospitals can also differentiate their pricing by offering diverse services, such as comprehensive examinations and treatments through one-on-one VIP consultations, along with pet boarding and care services. High-quality service levels can enhance both ARPU and profitability.

■ The Rise of the “Community + E-commerce + O2O” Integrated Service Model: Building a Fully Integrated Industry Chain

The introduction of “Internet+” has driven a rapid surge in the dissemination of veterinary medical information. Early online veterinary communities provided platforms for user interaction and knowledge sharing, but their service models were limited in scope, characterized by low average transaction values and constrained profitability. The emergence of pet e-commerce significantly disrupted the sales landscape for pet products, leading to increasingly active transactions in categories such as pet food, healthcare supplies, and grooming services. However, these specialized pet e-commerce platforms face intense competition from comprehensive e-commerce giants, resulting in low profitability. As an indispensable segment of the pet industry, veterinary medicine positions animal hospitals with the capacity to integrate the broader pet industry chain, while also enabling new collaborative models through partnerships with sectors such as the internet and real estate.

For pet owners, there is strong demand for comprehensive services such as veterinary care, food, training, and grooming. Platform-based integrated services are more effective at attracting consumers. Under the “Community + E-commerce + O2O” integrated service model, the community provides a communication platform for pet owners and drives customer traffic to e-commerce and O2O channels; O2O encourages users to experience offline medical services, while simultaneously boosting community engagement and e-commerce sales. E-commerce and O2O have become the primary monetization channels for the community, with content complementing each other. However, this model entails high investment costs and a long lead time for building out product lines.

■ Gradual Increase in Industry Concentration

The involvement of industrial capital will accelerate industry consolidation, with leading chain institutions gradually expanding their market share by leveraging standardized and professional platforms. Small clinics, characterized by limited coverage, weak profitability, and low replicability, are likely to be acquired and integrated or gradually exit the market in the future.

■ Ringpu Biology

The company is primarily engaged in the research and development of veterinary biological products and veterinary formulations. Its core products include poultry vaccines, livestock vaccines, and veterinary active pharmaceutical ingredients (APIs) and formulations. Currently, the company holds a 13.04% equity stake in Ruipai Pet Hospital Group, leveraging its industrial and capital platform advantages to continuously drive Ruipai’s industry consolidation, mergers and acquisitions, and systematic development.

Ruipai Pet was established in 2012, specializing in the chain operation and management of pet hospitals, with its headquarters located in Tianjin. It currently has management companies in East China, Beijing, Northeast China, Southeast China, and Tianjin Wuda. Ruipai Pet manages 83 pet hospital stores, with an annual operating revenue exceeding RMB 180 million. The company employs approximately 1,000 staff members, including nearly 300 licensed veterinarians. It handles an annual caseload of 700,000 visits and features 25 specialized disciplines in veterinary medicine.

The main store of Ruipai Tianjin covers an area of 300 m².², with annual revenue exceeding RMB 8 million. After deducting rent, labor costs, and administrative expenses, the net profit margin stands at 22–25%. Since 2013, Ruipai has been establishing branch stores. Taking “Wo Chong Wo Ai,” a brand under Ruipai, as an example, a single store generates annual revenue of RMB 2 million, achieving an annual revenue of RMB 20,000 per square meter. Classified by construction area, community stores cover 50–100 m².², specialty and comprehensive stores are 200–300 m², large referral hospitals are 400 m²The above.

Leveraging the platform resources of Ringpu Biology, the target for Ringpai Pet’s chain stores was 100–120 locations in 2016. The number of stores reached 200 in 2017 and 500 in 2018. Based on 200 chain stores in 2017, with an average annual revenue of RMB 3 million per store, Ringpai Pet’s total revenue amounted to RMB 600 million. Assuming a net profit margin of 20%, the net profit reached RMB 120 million. Currently, Ringpu Biology holds a 13.04% equity stake in Ringpai Pet, and there is market expectation that Ringpai Pet will be fully injected into Ringpu Biology. In 2015, Ringpu Biology reported revenue of RMB 793 million and net profit of RMB 122 million. A consolidation would significantly enhance the company’s valuation and profitability.

■ Ruipeng Shares

Ruipeng Pet Hospital was established in 1998, primarily offering consumers three core services: pet healthcare, pet grooming, and the sale of pet food and supplies. As of August 2016, the company comprised nine subsidiary pet hospitals with their 61 branch clinics, two trading subsidiaries, and one clinical veterinary training subsidiary, mainly located in Shanghai, Guangzhou, Shenzhen, and Changsha.

The Company adopts a unique “1+P+C” scientific layout model, comprising “Central Hospitals + Specialty Hospitals + Community Hospitals,” to optimize resource allocation and comprehensively meet the diverse needs of customers. In 2014, 2015, and the first half of 2016, the Company generated operating revenues of RMB 95.29 million, RMB 142.06 million, and RMB 83.90 million, respectively, with net profits of RMB 6.23 million, RMB 20.28 million, and RMB 10.22 million, respectively. The Company’s primary revenue source is pet medical care and health services, which contributed RMB 88.66 million in operating revenue in 2015, accounting for over 60% of the total.

Over the next three years, the company will implement its strategic plan of “establishing a foothold in first-tier cities and expanding into second-tier cities,” adding 31, 60, and 85 new stores in 2016, 2017, and 2018, respectively, through self-built or acquired outlets. Currently, the company’s 61 pet hospitals are primarily located in Shenzhen, Guangzhou, Shanghai, and Changsha.