How Should We View Pet Supply Companies That Rely on OEM Exports for 95% of Their Revenue?

 This question highlights four important aspects of the pet industry:

1. Labor Cost Advantages

Labor costs are significantly higher in many foreign countries, making it difficult for overseas companies to maintain competitive manufacturing. Chinese companies, by offering OEM (original equipment manufacturing) services, can effectively tap into these international markets.

The global pet industry continues to show strong growth potential, offering Chinese manufacturers a great opportunity to scale quickly.

As one of the world’s leading manufacturing hubs, China still faces challenges in building strong, independent brands—such as limited brand recognition or management capabilities. OEM exports allow Chinese companies to maximize their strength in manufacturing without needing to overcome those brand-building hurdles.

2. Uncertainty in Consumer Markets

The pet product industry is highly competitive and sensitive to various external factors such as economic shifts and changing consumer preferences.

By focusing on OEM exports, companies can reduce exposure to domestic market fluctuations and mitigate risks tied to unpredictable demand.

3. Easier Access to Foreign Markets

Compared to the increasingly saturated and hyper-competitive domestic market, overseas markets often offer better pricing strategies and more room for product innovation.

Foreign customers also tend to be more brand-loyal and offer higher profit margins, making international OEM partnerships more attractive to Chinese companies than fighting for market share at home.

4. Challenges in Building International Brands

OEM suppliers often operate at the bottom of the value chain, making it difficult to evolve into globally competitive brands.

Building an international brand requires extensive control over the entire value chain—including production, marketing, sales, and distribution. By contrast, OEM business models are relatively straightforward and allow companies to focus solely on manufacturing efficiency.

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