How did the virus outbreak impact Wanpy’s business forecast?

The Interview of Mr. Hao Zhongli

How did the virus outbreak impact your business since January?​

With the sudden outbreak of the virus, the impact on all industries is not a “point” problem, but a “surface” problem. It affects not only the industry, but also an enterprise. As a leading enterprise in China’s pet industry, exports business and domestic market business of China Pet Foods Co., Ltd.(“Wanpy”) have also been affected to varying degrees. The main reason is that the company has successfully resumed work on February 10, but a large number of non-local front-line production workers have been affected by the virus outbreak and cannot return to work in time, which has restricted the company’s production capacity.

The current business structure of Wanpy can be summarized as “four-wheel drive”, they are export business, domestic market business, overseas factory business and agent business of overseas brands in the Chinese market. 

Facing the virus outbreak, the business impact analysis for four sectors of Wanpy as follow:

  • Export market business: the virus outbreak mainly affected the company’s export business. The constraint factor was that the non-local production workers could not return to their operating posts after returning to work, which restricted the company’s production capacity and affected the delivery date of orders.
  • Domestic market business: the virus outbreak has little impact on the company’s domestic market business. Some offline pet stores were unable to operate during the outbreak, which caused a certain impact on offline pet retail in China, but pet food is a rigid demand for families with pets, and the total demand will not be affected by the closure of the stores. Therefore, during the outbreak period, the domestic online business grew rapidly and the volume continued to increase, making up for some of the sales in the offline retail market.
  • Overseas factory business: Wanpy has established production factory in the United States, Canada, New Zealand, and Cambodia, and has made strategic layout of globalization in advance. The outbreak has no impact on Wanpy’s overseas factories. Even the restricted capacities of domestic pet food companies have reduced the number of pet industry exports in a short period of time. On the contrary, Wanpy’s overseas factories will see a more than expected increase in orders. 
  • Agent business of overseas brands in the Chinese market: This part of business is barely affected.

How does your company manage to keep the business going? 

Due to the outbreak, the Spring Festival holiday was extended and the date of resumption of work was delayed about 10 days. During the delay of resumption of work, the company opened the online office platform to encourage employees to work from home and deal with the important business work timely.

Since February 10th, the company has been actively responding to the government’s call, and under the premise of doing a good job in various virus outbreak prevention and safety measures, the company began to resume work. 

Due to the shortage of workers caused by some non-local front-line employees who are not able to return back to office, the company has issued initiatives timely to encourage the office and logistics staff to support production. The local government has also helped the enterprise to find ways to bring back more qualified production workers to the company safely.

The sales work of each sectors of the company went on smoothly, the business orders of export market were running good, and the production and delivery of orders were actively promoted. Production and sales of overseas factories were not affected. Domestic market sales work has completed the comprehensive strategy, adopts the online and offline linkage policy, enables the online channels to stimulate the offline retail channels, the rapid increase in online sales drove made up for the vacancy of the offline retail market.

During this period, how do you help your customers and the pet industry in general?

In terms of foreign customer service, the company tries its best to speed up production, and improve the duty rate of front-line production employees, recover production capacity rapidly, and complete the order delivery as soon as possible. At the same time, in the terms of logistics and customs declaration had also made comprehensive preparations in advance, to ensure the delivery of goods timely.

In terms of domestic customer service, the company’s online sales have been in a normal state and not closed during the Spring Festival. During the outbreak, the company’s logistics and transportation of online channel actively cooperated with all the logistics companies regardless of the cost to ensure the continuous food for pets! At the same time, we immediately launched online and offline linkage policies to push accurate offline store information to online consumers. Wanpy joint hands with delivery platforms, such as Eleme and Meituan to launched a new O2O retail layout, helping offline stores expand the scope of localized services, and ensuring contactless delivery during the outbreak safely.

The company also actively organized online training during the outbreak to strengthen professional knowledge, and conducted professional business training on marketing business, dealer business, store display, store operation, pet nutrition behavior and other aspects. 

As the chairman of Asia Pet Alliance, the company’s chairman worked together with the association to do a lot of work for the domestic pet industry during the outbreak and issued a positive initiative to strengthen the positive publicity for the industry and the society, and organized industry colleagues helping each other, shared the management mode of our company’s resumption of production during the outbreak to the industry and the society, and contributed a force to the industry.

How do you see the Chinese pet industry 6 months from now?

The government took appropriate measures and the whole people paid attention to deal with the sudden outbreak. We have great confidence in control of the outbreak. As things stand, the outbreak will end in the foreseeable future.

The pet industry in China is a sunrise industry in a fast rising period. The number of pets, the concept of keeping pets and the proportion of eating professional food are rising rapidly. Although the outbreak has affected the performance of offline stores to some extent, the government has also given policy support to the affected industries, and online sales have also grown rapidly. Overall, the impact of the outbreak on Chinese pet industry is limited. With the past of the outbreak, the market will definitely rebound and there will be new growth.