Industry upgradation driven by cutting-edge technology has become a fixed reality worldwide.
The transformation of industries through upgrades has become an undeniable trend at both the national policy and market selection levels. Within this trajectory, a cohort of forward-thinking enterprises has risen to prominence. In the expansive market, one finds not only headline-grabbing corporate giants but also numerous tech-innovative startups with a global vision.
The EqualOcean interview series focuses on startups that exhibit technological and product innovation, global competitiveness, and a worldwide presence in advanced manufacturing, new energy, consumer technology, and digital sectors. Through close observation of their technological product development processes and the global perspectives and visions of their core management, the series showcases the new appearance and opportunities of China's sci-tech entrepreneurship. This time, EqualOcean engages in a dialogue with Shelley, the head of international business at PETKIT, a pet product brand.
EqualOcean: First, please introduce PETKIT to us.
PETKIT Shelley: Our team was founded in 2013, and this year marks our 10th anniversary. We started in the industry with a focus on smart hardware, and over the past decade, we have become the top player in the smart pet product industry in China.
PETKIT has introduced new types of products and design concepts to the industry, which have also performed well in developed countries. From our early customers to our own cross-border e-commerce, the market share of PETKIT's smart fully automatic cat litter box in North America is second only to Litter Robot.
EqualOcean: What is the basic profile of the founding team of PETKIT?
PETKIT Shelley: PETKIT has two CEOs named Guo, as you can find online, they are twin brothers. Little Guo (Guo Weixue), the younger of the twins, is our CEO. Weixue previously worked at MTK and Spreadtrum and was an early employee of MTK in mainland China. The other Guo, Weike, was involved in the smartphone business at a company from Taiwan, and they play upstream and downstream roles. Before starting PETKIT, the background of our entire team was in smartphones, chips, and similar technical backgrounds, including myself, who comes from a software background.
EqualOcean: There is quite a leap from consumer electronics to the pet industry. How did you decide in this direction?
PETKIT Shelley: This story is a bit lengthy. In the earlier part of the careers of the two Guo CEOs, they experienced the development of the Chinese smartphone industry. Around 2011-12, we noticed that as the whole machine business of smartphones in China was consolidating towards brands, we realized one thing - Chinese smartphones had become the number one globally. In other words, the shipping capacity and overall supply chain capability of Chinese smartphones were already leading globally.
In 2013, there was a significant background. That year, due to the release of Google Glass, there was a strong wave of IoT and smart wearable devices. Shenzhen had a large number of chip and solution providers using MTK's solutions to create different scenario-based devices. In such an opportunity, we realized that apart from smartphones, other industries in China were relatively weak. Comparing the smartphone industry to the early 21st century computers, we anticipated rapid development and the formation of a strong supply chain and peripheral driving capabilities.
We started thinking about what different things we could do. Weike had pets in his early years, and Weixue also loved animals. When we were sitting together discussing, we thought that there were many opportunities in various tracks, and we should choose something we liked. In the end, we chose the pet track. After choosing the pet track, we have been happy to work on it for these years because we still love interacting with pets. So, we have been able to maintain our enthusiasm over the years.
EqualOcean: Smart hardware is quite important for refining the product itself. When developing smart pet products at PETKIT, what aspects of improvement and innovation do you focus on?
PETKIT Shelley: Firstly, we believe that the most important thing is to consider the end-users. In our case, as we create devices for household pets, there are two main user groups: the pets themselves, who are the direct users, and the humans who also play a role in the interaction. So, when conducting research, we need to take into account the needs of both sides.
Over the years, we've focused on two aspects when it comes to improvement and exploring growth paths: stability and usability. These two aspects have been a long-term focus for our backend development. While front-end functionality addresses user issues, it's crucial to first understand those needs and problems. In terms of China's manufacturing capabilities, we believe that creating functionalities isn't particularly challenging as long as you have the insight. However, after implementing numerous features, we've found that what truly tests a team is stability and usability.
Let me provide an example. A pet water dispenser may seem like a very simple product, which is why many people from various industries enter the pet water dispenser market, only to disappear later on. Over the past three years, we have been reflecting on this and found that one of the reasons we faced many challenges with water dispensers is that the testing environment developers believed to be rigorous often differs from real-world scenarios. Before a product is launched, in addition to rigorous testing by our team, our colleagues who own pets in the office also try it out. We go through many rounds of testing and only push the product to market when we are confident there are no issues. However, once the product is on the market, we discover that different users have different usage scenarios at home. The pet water dispenser is an electric device with a cord. Our office colleagues did not encounter cases of pets chewing on the cord, but after the product was launched, we found that some users' pets did chew on the cord. So, we later introduced a wireless pet water dispenser. The water dispenser involves both water and electricity and sometimes, we might not dry it completely while handling things in the office. However, in real-world usage scenarios, we found that some users may not maintain it properly or pay attention to it. Some pets may drink water vigorously and cause splashing. So, the actual situations in usage scenarios, as opposed to laboratory environments, which are what we can foresee in the short to medium term, can be quite different.
On the other hand, when we initially entered the industry, we had the idea of utilizing sensors, IoT, and big data capabilities to help pet owners address some issues and enhance product usability. For instance, being able to detect anomalies or understand changes in pets.
Display bar of PETKIT's products
EqualOcean: PETKIT started exploring overseas markets from 2017. Have there been any changes in the way you've expanded globally during this process?
PETKIT Shelley: To be precise, we started exploring overseas markets in 2017, but for some time, I wouldn't call it "large scale". Starting in 2017, we had independent overseas customers, and we sold products overseas through bulk trade. In 2019 and 2020, our cross-border e-commerce had significant performance, partly due to the circumstances at that time. If we talk about changes, in the earlier years, we were primarily involved in bulk trade, but in recent years, we've been focusing more on cross-border e-commerce.
EqualOcean: What are the main countries and regions you are currently targeting for international expansion?
PETKIT Shelley: Our cross-border DTC (Direct-to-Consumer) presence is quite strong in developed countries, such as the European and American markets. In contrast, bulk trade is more significant in scattered markets, which are relatively closer to us. First and foremost, within these nearby markets, the Chinese operators have strong capabilities and can make a relatively easier entry. The dynamics of nearby markets are heavily influenced by the Chinese market and are somewhat similar to the Chinese market. Some of our good long-term partners are present in these nearby markets, including Thailand, Singapore, and others.
Official website of PETKIT
EqualOcean: Are there any differences within the pet product markets in developed European and American countries?
PETKIT Shelley: Although Amazon has unified all European regions, making shipping relatively simple, Europe is still a relatively fragmented market. There are multiple internal regions and languages in Europe, making it more diverse. In contrast, the United States is relatively simpler and more consistent. We've observed that from 2019 to 2021, the United States market was strong, but since last year, the growth in Europe has been rapid. Some official data indicates that the main differences lie in the types of pets, with slight variations. In the U.S. market, dogs dominate, but in Europe, the proportion of cat owners is significantly higher than in the U.S.
EqualOcean: In 2017, PETKIT began exploring international markets. How did you quickly grow into a leading brand within a few years? In the highly competitive European and American markets, what advantages does PETKIT have?
PETKIT Shelley: The European and American markets have left a lot of room for companies with innovative products. Not only PETKIT but also in recent years, several Chinese cross-border companies have excelled in various tracks, such as mobile power. The market economy in Europe and the United States is good, but in terms of concentrated innovation capability and desire, it is not as strong as rapidly developing countries like ours. This holds true for any track in the European and American markets. In these markets, there are many stable old products that do not undergo product iteration or updates even when there are issues, leaving ample space for companies with innovative capabilities. Additionally, with the support of Amazon in recent years and the improvement of China's cross-border capabilities, many Chinese cross-border companies have benefited from this trend. So, it's about whether a company can provide users with better products and a better user experience than others. If it can, the opportunity is right in front of them. It's just a matter of who can take that step faster or do a better job of understanding user needs.
EqualOcean: Does the European and American markets show preferences for pet product brands from specific countries?
PETKIT Shelley: Yes, there are preferences. In recent years, due to some external factors, some customers have chosen non-Chinese brands. However, we still firmly believe that as long as we continue to produce more and better products, Chinese brands will also become the first choice worldwide.
We have always had a great role model in DJI, and we hope to become a Chinese company that is respected worldwide, just like DJI.
EqualOcean: You mentioned DJI, a company with the highest global market share in the drone industry. Its market dominance is so high that it has few competitors. In contrast, the pet industry has many brands and fierce competition. What do you think PETKIT can learn from DJI?
PETKIT Shelley: What DJI has achieved in recent years, being irreplaceable, essentially comes down to having excellent products and high technological barriers. This is something we've been pursuing all along. Can we make the best-performing product in the entire market? I believe we've achieved at least half of that, and we're on our way to creating products with the highest competitive barriers in the market. There's no room for hesitation in making great products; only excellent products can secure a brand's space in the market.
EqualOcean: Speaking of the process of "making great products," internally at DJI, there are very detailed services from research and development, product design, production, and sales, all the way to after-sales support. What is PETKIT's strategy in this aspect?
PETKIT Shelley: We are working on all aspects of the supply chain from start to finish. Our goal for this year is to establish an after-sales support team in the United States to cover a broader user base. Previously, all our after-sales teams were in China, which had its limitations, such as the ability to inspect and communicate promptly. In China, we've had some strange issues that we could resolve by visiting the users, but we can't just fly to the United States to do the same. In international markets, we will gradually improve the entire user service, but this is not something that can be achieved in a day. The prerequisite is having a competitive product that opens up the market, and only then can you continue. Otherwise, a large-scale investment cannot lead to long-term success.
EqualOcean: In your observations, are there any recent trends in the pet industry's international market? You mentioned Southeast Asia has some markets; do these markets differ in terms of demand from Europe and the United States? Are there any emerging markets?
PETKIT Shelley: The European and American markets are relatively stable, with consistent usage scenarios and consumer demands over the years. There still aren't enough products that can meet all the scenarios in these markets. For example, in the United States, many pets are kept in gardens, and products for this scenario are different from those for indoor pets. We have found that there are very few brands specializing in optimizing products for these specific scenarios. It's not easy to capture user insights and trace user paths in environments that you are not a part of. Still, it presents a significant opportunity.
From what I have observed in recent years, the market tends to converge. There are basically two categories: one is characterized by vast areas and sparser populations, like the United States, and the other is characterized by high urbanization density, such as China, East Asia, and Southeast Asia. As urbanization density increases in these regions, the pet-raising environment differs from regions with vast areas and sparse populations. We've found that the market is shifting towards these two ends.