In the current era, a growing number of people are pursuing consumption that brings personal joy and fulfillment, with pet ownership being a prime example. Particularly driven by the 'singles economy' and 'silver-haired economy,' China has become one of the world's fastest-growing pet markets, ushering in a boom period for the pet economy.
A recent industry white paper highlights that the urban pet consumption market in China reached 312.6 billion yuan in 2025, marking a 4.1% increase from 2024. Within this, the dog-related market was valued at 192.3 billion yuan, while the cat-related market stood at 218.4 billion yuan.
On this high-growth track, pet food, as the most frequent and essential segment, has naturally become a focal point for capital. Recently, Shanghai Fubei Pet Products Co., Ltd. (hereinafter referred to as Fubei Pet) submitted a listing application to the Hong Kong Stock Exchange, aiming for a main board listing.
Founded in 2005 and focused on pet staple food, this company is the second-largest player in China's pet food third-party manufacturing industry. It also owns proprietary brands such as "Bile."
However, a review of the extensive prospectus reveals a contradictory picture: the company's ODM business shows steady growth and a solid market position, while its proprietary brand business has experienced a significant decline, leading to a near-halving of overall net profit in 2025.
Against the backdrop of the ongoing 'joyful consumption' dividend, why has Fubei Pet failed to fully capitalize on this growth wave?
ODM Advances Steadily, OBM Faces Headwinds
The core business model of Fubei Pet is a dual-drive strategy of "ODM + OBM." ODM involves providing one-stop customization services, from formula design to production and delivery, for other pet food brands. OBM refers to selling directly to end consumers under its own brands.
In theory, this model creates a virtuous cycle where "scale manufacturing feeds back into brand quality, and market insights guide R&D." However, financial data indicates that the two wheels are spinning at noticeably different speeds.
The company's ODM business performance has been stable. From 2023 to 2025, revenue from the ODM model was 613 million yuan, 624 million yuan, and 630 million yuan, respectively. Its proportion of total revenue increased yearly from 58.6% to 61.7%.
These figures show that even in 2025, when overall revenue slightly declined, the ODM segment still achieved positive growth, indicating the company's deepening reliance on this business.
According to a Frost & Sullivan report, based on 2025 revenue, Fubei ranks second in China's pet food third-party manufacturing industry with a 5.3% market share. It also holds second place in the pet staple food third-party manufacturing segment with an 8.5% share.
In contrast, the performance of the proprietary brand business is concerning. From 2023 to 2025, revenue from the OBM model declined from 432 million yuan to 350 million yuan, with its share of total revenue shrinking from 41.3% to 34.3%.
Revenue from the core brand "Bile" dropped from 409 million yuan to 333 million yuan, a contraction of nearly 20% over three years. The company attributed this to "adjusting the product portfolio, phasing out legacy products and launching new series, leading to a transitional period for new customer development and market penetration."
While this explanation has merit—launching premium product lines like the "Staged Nutrition Series" and "Oriental Nutrition Series" requires market cultivation time—it also exposes structural challenges in Fubei Pet's brand building.
As a company that started with ODM, its brand recognition in consumers' minds still lags behind that of pure consumer goods companies. Based on 2025 retail sales, Bile is only the tenth-largest local pet food brand in China, with a market share of less than 1%.
In a highly fragmented and fiercely competitive market, transforming from a "behind-the-scenes manufacturer" to a "name remembered by consumers" requires sustained and substantial marketing investment.
Changes in distribution channels are also noteworthy. Within the OBM business, revenue generated through distributors plummeted from 254 million yuan in 2023 to 166 million yuan in 2025, while direct sales revenue increased slightly from 152 million yuan to 157 million yuan. The number of distributors decreased from 324 to 223.
The company stated this was due to "actively optimizing the distributor structure and focusing on high-quality distributors." However, this contraction also reflects the pressure on the channel side amid intensifying market competition.
Underlying Causes of Performance Volatility
It is also notable that against the backdrop of overall growth in the pet consumption market, Fubei Pet's performance trajectory has been significantly weaker than the industry average.
From 2023 to 2025, the company's total revenue was 1.046 billion yuan, 1.033 billion yuan, and 1.021 billion yuan, remaining relatively flat. However, the profit side experienced severe volatility.
Gross profit rose from 374 million yuan to 392 million yuan before falling back to 323 million yuan. The gross profit margin increased initially and then declined, recorded at 35.7%, 37.9%, and 31.6%, respectively. Net profit plummeted from 164 million yuan to 98 million yuan, nearly halving.
The improvement in gross margin in 2024 was primarily due to a decrease in raw material costs. The cost of raw materials and consumables used that year dropped from 586 million yuan to 535 million yuan, a decrease of approximately 8.7%. Meanwhile, revenue only declined by 1.2%, directly driving the margin improvement.
However, in 2025, raw material costs rebounded to 556 million yuan. Simultaneously, depreciation and amortization expenses surged from 27.3 million yuan to 37.46 million yuan, and employee benefit expenses increased from 26.05 million yuan to 41.32 million yuan.
The sharp rise in depreciation and labor costs is directly linked to the commissioning of new production capacity. In 2024, Fubei had three new production bases commence operations, but the utilization rates of this new capacity were significantly low in the initial stages.
Taking the Fuxin base as an example, its utilization rate was only 7.2% in 2024, improving to 20.1% in 2025 but still far below mature production lines. This mismatch of "capacity preceding orders" is the most direct reason for the sharp profit decline in 2025.
The expense side also warrants scrutiny. Sales and marketing expenses increased from 106 million yuan to 133 million yuan over the three years, with their proportion of revenue rising from 10.1% to 13.0%, aligning with the company's strategy of increasing brand promotion and online traffic investment.
However, against the backdrop of declining OBM revenue, marketing efficiency raises concerns. Increased spending has not translated into higher sales for proprietary brands, suggesting the current brand strategy may need recalibration.
Research and development expenses were continuously compressed from 24.06 million yuan to 11.51 million yuan. Although the company explained this as "optimizing R&D management integration," the fact that R&D investment decreased while the company consistently emphasizes being "R&D-driven" inevitably raises questions about the substance of this core selling point.
Industry Landscape and Competitive Position
From an industry perspective, China's pet food market is still in a growth phase. The overall consumption market size of 312.6 billion yuan and an annual growth rate of 4.1% indicate that this sector still has ample room for expansion.
More noteworthy are the structural changes: the growth rate of local brands is significantly faster than that of international brands. From 2020 to 2025, the compound annual growth rate for local brands was 11.0%, compared to only 4.9% for international brands. This provides a structural opportunity for local enterprises like Fubei Pet.
However, the fragmented market structure also means competition is exceptionally intense. Based on 2025 retail sales, the combined market share of the top ten pet staple food brands was only 22.1%, with no single company holding a dominant position.
In the third-party manufacturing segment, the combined market share of the top five companies is 30.4%. Fubei Pet ranks second with a 5.3% share, showing a clear gap from the industry leader's 14.3% share.
This "one strong, many weak" landscape means that while Fubei is a frontrunner in ODM business, it still faces competitive pressure from the top player. In other words, Fubei is the "runner-up" rather than the "champion" in third-party manufacturing and is merely a "gatekeeper" in the top ten for its proprietary brands. Its market position under this dual pressure is not as solid as it might appear.
In summary, Fubei Pet is a company with solid fundamentals but is currently in a period of structural adjustment. Its manufacturing capabilities and customer base in the ODM field provide a stable foundation. However, the growth trajectory for its proprietary brands has not yet entered an upward phase.
Amid the ongoing industry tailwind of 'joyful consumption,' Fubei's failure to fully harness this growth dividend stems from its proprietary brand development lagging behind market changes and an over-reliance on the ODM model, which limits its brand premium capability.
Looking ahead, whether Fubei Pet can genuinely achieve the leap from a "manufacturing powerhouse" to a "strong brand enterprise" through this Hong Kong listing depends not only on recognition from the capital markets but, more crucially, on its ability to rediscover a steady growth rhythm in the face of fierce market competition.
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