Core Summary
The pet economy is one of the few consumer sectors still experiencing growth, with a market size of 312.6 billion yuan in 2025 expected to reach 400 billion yuan by 2028. However, Fubei Pet, which focuses on pet food, is facing difficulties: its revenue has stagnated over the past three years (from 1.046 billion yuan to 1.021 billion yuan), and its profits have plummeted by 40% (from 164 million yuan to 98.23 million yuan). The reason lies in its strategic indecision—Fubei aims to both engage in contract manufacturing (ODM) and develop its own brand (OBM), but it has failed to excel in either area. Its ODM business has grown slowly, and its own brands have not made a significant impact in the market. Additionally, Fubei’s journey to the stock market has been fraught with challenges, including a failed attempt on the A-share market and a subsequent switch to the Hong Kong stock market. Furthermore, the company’s decision to distribute a substantial dividend before its IPO has raised doubts about its financial health.
Detailed Analysis
#### 1. Why is Fubei losing money despite the growing pet industry?
The pet economy is a booming sector: there are 126 million dogs and cats in urban areas as of 2025, contributing to a market size of 312.6 billion yuan, a year-on-year increase of 4.1%. Competitors like Guibaio Pet (owned by麦富迪) and Tianyuan Pet are seeing both revenue and profit growth, while new brands are gaining momentum through e-commerce. Fubei, on the other hand, is going against the trend, with virtually no increase in revenue over the past three years and a 40% drop in profits last year. The issue isn’t with the industry itself but with Fubei’s failure to align its strategies properly. While others are focusing on building local brands and leveraging e-commerce, Fubei has been hesitant between ODM and branded products, missing out on opportunities.
#### 2. Struggling to balance ODM and branding
Fubei operates in two main areas: ODM and OBM:
- ODM: Fubei produces products for other companies under their brands. It has a strong R&D and manufacturing capability (the largest R&D base in Asia and the only company with an experimental animal license), but its ODM revenue has only increased slightly from 613 million yuan to 630 million yuan over three years, indicating a lack of larger client orders or stable pricing.
- OBM: Fubei has launched brands like Bile and Aibei, but they have not been successful. For example, its largest brand, Bile, ranked only tenth among local pet food brands in 2025 and is far from being a leader. Brand revenue has also decreased from 432 million yuan to 350 million yuan.
This strategic inconsistency has led to poor performance in both areas, resulting in stagnant growth.
#### 3. Strong capabilities but limited success
Fubei possesses significant strengths, such as 132 patents and leadership in 12 industry standards, along with automated manufacturing facilities. However, these advantages have not translated into business growth:
- In ODM, although it is the second-largest player (with a 5.3% market share), it has not been able to expand its client base or increase prices.
- In branding, despite having advanced technology, Fubei has failed to create hit products and effectively manage e-commerce and marketing efforts. Without a clear market strategy, even strong technical capabilities are ineffective.
#### 4. A rough path to the stock market and the significance of the dividend distribution
Fubei’s attempts to go public have been unsuccessful:
- It nearly was acquired by Zhongchong Shares in 2019 but did not proceed.
- In 2021, it tried to list on the A-share market alongside competitors like Guibaio, but only they succeeded.
- Now it has switched to the Hong Kong stock market, where industry giants hold a significant advantage. Fubei ranks among over 400 companies waiting for approval, lacking a clear competitive edge.
The company’s decision to distribute a large dividend before its IPO is concerning: it may indicate uncertainty about the listing process or a lack of confidence in future growth, suggesting that management believes shareholders might benefit from the cash now rather than waiting for stock market returns.
#### 5. The lesson for Fubei: Focus on a clear direction
The current trends in the pet industry are branding, localization, and e-commerce, which have helped companies like Guibaio thrive. Fubei could either specialize in ODM (becoming the “ODM king” of the pet food sector) or commit fully to building its own brand. By failing to make a clear choice and wavering between these strategies, it has fallen behind its competitors. In a rapidly growing industry, a focused strategy is essential; even the strongest capabilities are useless without a clear direction.
Conclusion
Fubei’s struggles stem from a lack of strategic focus, leading to the misallocation of resources. While the pet economy is promising, not all companies can benefit from it. Fubei needs to decide on a core focus—either excel in ODM or build a strong brand—and stick to it. The sudden dividend distribution before its IPO further raises doubts about its future prospects. To turn things around, Fubei must first determine its true goals and commit to them wholeheartedly.