Despite rapid growth in China’s pet economy, a growing number of pet shops are shutting down or struggling to stay afloat. This wave of closures reflects underlying structural challenges in the industry, as investors and operators grapple with shifting market dynamics and financial pressures.
China’s pet market has expanded swiftly in recent years. According to the 2025 China Pet Industry White Paper, the urban pet (dogs and cats) consumption market grew 7.5% in 2024, surpassing 300 billion yuan ($43 billion). The cat segment alone reached 144.5 billion yuan, marking a 10.7% increase. Millennials born in the 1990s account for 41.2% of pet owners, while those born after 2000 make up 25.6%—a demographic steadily on the rise.
The robust market attracted an influx of capital and a proliferation of pet service providers, including high-end pet hotels and budget grooming shops. However, this rapid expansion has brought growing pains. Multiple well-known pet stores have abruptly closed in recent months, leaving consumers unable to redeem prepaid memberships or services.
In Chengdu, for example, several stores under the “LOOK STAR” brand declared bankruptcy earlier this year, with owners vanishing and customers scrambling for refunds. The “Haha Husky” pet café chain also reportedly collapsed, with contact lines disconnected. Similar closures have made headlines across major cities: a popular pet lifestyle boutique run by an influential pet blogger shut down in early 2024; over ten outlets of a Wuhan chain called “X Pet Power Station” shuttered in one week; and Asia’s largest pet store group “Extreme Pet” suspended its last remaining locations by October.
Industry insiders attribute these failures largely to a business model imbalance. Many pet chains aggressively expanded through heavy financing, often engaging in price wars that undermined profitability. Rising rental costs further squeezed operators, especially those offering low-price services with little margin to absorb overhead increases.
Moreover, many operators rely heavily on prepaid membership cards for cash flow. While these advance payments provide upfront capital, inadequate service frequency and low customer retention have led to cash flow strains and, in some cases, default. The high fixed costs associated with upscale pet hotels—spanning rent, staffing, and facilities—have proven unsustainable in the absence of steady repeat business.
The pet services sector also faces a shortage of qualified professionals. Groomers, trainers, and other specialists require lengthy training and are often highly mobile, creating operational vulnerabilities. When key employees leave, stores risk losing service quality and customer trust. Weak supply chains and limited investment in technology and marketing further erode margins.
Experts note that unlike many consumer sectors, pet services are less driven by online traffic and digital marketing. Instead, offline experience, staff expertise, and reputation remain paramount. Heavy spending on promotions and social media presence cannot substitute for consistent, high-quality service delivery.
For consumers, the closures highlight significant risks tied to prepaid service models. Under China’s Consumer Rights Protection Law, operators must provide advance notice and refunds when closing, and failure to do so may constitute consumer fraud. However, many affected pet owners face obstacles in recovering funds due to inadequate regulatory enforcement and the complexity of pursuing legal remedies.
Observers suggest stronger oversight of prepaid funds is urgently needed. Currently, some local regulations require businesses to place a portion of prepaid money in escrow accounts, releasing funds only as services are rendered. Yet, enforcement is uneven. Many operators divert prepaid cash to cover rents, renovations, or personal expenses, leaving customers vulnerable when businesses fail.
The recent spate of closures reflects a broader market correction after years of unregulated growth. The pet economy in China appears to be shifting from a phase of rapid expansion to one of consolidation and maturation. Operators and investors alike face the challenge of establishing sustainable business models that balance customer expectations, cost structures, and long-term viability.
As the industry evolves, consumer vigilance and regulatory intervention will play crucial roles in shaping the future of China’s pet services market.