Zheshang: Xiaohongshu to embrace overseas traffic, pet brands may have the opportunity to tap into overseas business opportunities.

Zheshang has issued a research report stating that the current surge in emotional value consumption will become a driving force for pet owners to foot the bill for pet brands. Recently, Xiaohongshu welcomed a large number of overseas netizens to join, with the "Cat Tax" topic becoming a hot topic, and domestic pet brands actively promoting marketing and publicity. With the advantage of Xiaohongshu's natural "grass planting gene", the pet industry is expected to seize opportunities in the new trend. Key points from Zheshang: Xiaohongshu welcomes a large number of overseas netizens, with the "Cat Tax" topic becoming a hot topic On January 13th, Xiaohongshu topped the list of free app downloads in the US App Store, with more than 700,000 new users joining Xiaohongshu in just two days. On January 14th, Xiaohongshu also topped the list of free app downloads in countries and regions such as Australia, the UK, and the Netherlands. "Showing off cats" is one of the most posted content, with many American netizens posting pictures of their pet cats when introducing themselves, a way of saying hello jokingly referred to as paying "Cat Tax". Pets can be the best interpretation of a friendly attitude even when language is not understood, so CatTax has become one of the most discussed topics in this wave of migration. As of January 18th, the topic #cattax has exceeded 46,000 notes and has been viewed over 76 million times. Domestic pet brands capture industry trends and actively promote marketing and publicity In this hot topic, some brand merchants have also timely realized the market changes and began to use the CatTax topic to build a bridge of communication with overseas users. For example, brands such as Naughty and Leading under Yantai China Pet Foods, high-end cat food brand Fulejiate under Gambol Pet Group, and its OEM Shengsheng Buxi, Jueyan and Haoshi Jia under Petpal Pet Nutrition Technology, and internationally renowned brand Royal Pet Food. These brands' Xiaohongshu official accounts have posted bilingual content under the CatTax topic to showcase the features, advantages, and brand culture of their products to overseas users. Additionally, some small brands such as Gewuan and GIMMO are actively marketing through this hot topic to increase brand awareness. Xiaohongshu's natural "grass planting gene" provides the pet industry with opportunities to capture the new trend In the process of moving towards a new stage of high-quality development, the pet industry's consumer decision-making process is shifting online, with platforms like Xiaohongshu becoming important places for pet product awareness, "grass planting", purchasing, and sharing. According to the "Xiaohongshu 2024 Pet Industry Insight Report", pet owners are mostly young people living in top-tier cities, with a large proportion being women. These pet owners obtain pet care information on platforms like Xiaohongshu, forming their own consumption decisions. In the pet section of Xiaohongshu, "cute pet hoarder" and "scientific pet raiser" account for the highest proportion, with 30 million and 24 million people respectively. They have a strong tendency to high consumption, and their consumption decisions are greatly influenced by promotional activities and social media. Xiaohongshu's natural advantage lies in the continuous reinforcement of the community's "grass planting gene", with users' demands for Xiaohongshu being very clear, which is to find professional content that allows them to make purchases after reading reviews. Based on the wave of recent years of the pet industry going global, many pet brand merchants are still struggling with how to establish a base in overseas markets. The influx of a large number of "TikTok refugees" this time has brought new opportunities for pet brands: 1) Communicating and cooperating with overseas internet celebrities can not only expand the brand's influence in overseas markets but also significantly enhance diversified marketing capabilities, further improving the planning and layout of overseas market channel construction; 2) Pet brand merchants can also open official flagship stores on Xiaohongshu's overseas version, guiding overseas users through high-quality content displays to establish deeper connections with overseas users; 3) Pet brand merchants may also be able to expand and connect with new customers in the domestic market through this event. Investment recommendations: In the pet medical field, we recommend Tianjin Ringpu Bio-Technology (300119.SZ) that has a strong advantage in integrating the pet medical industry chain and is expected to take the lead in the blue ocean market of pet medical care in the future; In the pet food sector, it is advisable to pay attention to Gambol Pet Group(301498.SZ), Yantai China Pet Foods(002891.SZ), Petpal Pet Nutrition Technology(300673.SZ), and other domestic brands leading in channel construction and actively expanding overseas business. Risk warning: changes in industry policies, increased competitive pressure, fluctuation in cost prices.