business plan for Zhengzhou Bokang Pet Medical Company

AUTHOR OF THE MASTER’S THESIS:

Fengbin Liu

SUPERVISED BY:
ani.hayrapetyan@autonoma.cat

SUPERVISOR’S SIGNATURE
__________________

DATE OF UPLOADING TO VIRTUAL CAMPUS

6/14/2023

CONFIDENTIAL
Controlled Copy. Reproduction and dissemination outside the scope of the
academic evaluation are prohibited.
*Acknowledgements
Contents

1. Business Idea..................................................................................................1

1.1. Introduction of the Company.....................................................................1

1.2. Business Motivation..................................................................................2

2. Field Analysis.................................................................................................. 4

2.1. Economic Analysis....................................................................................4

2.2. Legal Analysis...........................................................................................4

2.3. Sociocultural Analysis...............................................................................5

2.4. Technological Analysis.............................................................................6

2.5. Overall Market Analysis............................................................................7

2.5.1. Characteristics of Pet Medical Industry..............................................7

2.5.2. Classification of Pet Medical Practices...............................................8

2.5.3. Visions for the Development of Pet Medical Market...........................9

2.5.4. Analysis of the Market of Interest.....................................................10

2.6. Competitive Element Analysis................................................................12

3. Legal Framework...........................................................................................14

4. Marketing Plan.............................................................................................. 16

4.1. Description of Service.............................................................................16

4.2. Pricing Strategy...................................................................................... 18

4.3. Distribution Strategy...............................................................................19

4.4. Communication and Promotion Strategy................................................19

4.4.1. Market Segmentation.......................................................................20

4.4.2. Target Market...................................................................................20

4.4.3. Market Positioning............................................................................21

4.5. Promotion Strategy.................................................................................21

 4.6. Communication Scheme.........................................................................22

5. Operation Plan.............................................................................................. 25

5.1. Operation Model.....................................................................................25

5.2. Hierarchical Layout.................................................................................25

5.3. Layout of the Facility...............................................................................26

5.3.1. Site Selection...................................................................................26

5.3.2. Layout Design and Interior Equipment.............................................27

5.3.3. Management of Materials.................................................................28

5.4. Quality Politics........................................................................................29

6. Human Resource.......................................................................................... 30

6.1. Organization of Bokang Pet Medical.......................................................30

6.2. Quantity and Qualification of Employees................................................30

6.3. Human Resource Policy.........................................................................32

6.3.1. Employee Training...........................................................................32

6.3.2. Remuneration System......................................................................33

7. Economic and Financial Plan........................................................................35

7.1. Initial Investment.....................................................................................35

7.1.2. Operation Budget of Company.........................................................35

7.1.3. Estimation of Total Initial Investment................................................36

7.2. Financing Plan........................................................................................36

7.3. Projected Cash Flows.............................................................................37

7.4. Estimated Annual Transaction................................................................38

7.5. Investment Analysis................................................................................38

7.6. Income Statement...................................................................................39

8. Conclusion.....................................................................................................40

Bibliography.......................................................................................................41
1. Business Idea

1.1. Introduction of the Company

Bokang Pet Medical Company is currently in the preparation stage, mainly

focusing on cats and dogs as the main service targets, with pet medical
services as the core business, through the "medical" as the entry point, to drive
the development of "food", "housing" and other multi-layer business. The
company's core business is pet medical services, with "medical" as the starting
point, leading to the development of "food", "housing" and "type" businesses.
The company is operated by a unified pet hospital community chain business
model, with a few specialist hospitals and a central hospital, creating a multi-
level service to meet the diversified needs of customers. The pet hospital is run
as a neighborhood chain, combining a range of services such pet medical
attention, food supply, boarding, and grooming to provide a one-stop solution to
suit the all-encompassing demands of clients. The unified business model's
standardized management may successfully raise the overall management
standard, increase the enterprise's competitiveness, and deliver high-quality
services, increasing its appeal to users and customers. After many years of
operation, Bokang Pet Medical aspires to become a market leader in the pet
medical sector by combining resources to provide consumers more expert
services and a better overall experience. The specifics of the proposal will be
outlined in this thesis in the form of a business plan.

Bokang Pet Medical's business philosophy is to provide a professional service

for pets and a quality experience for pet owners. The company's philosophy
reflects its core service to pets and pet owners. By "providing professional
services for pets", we put pets first and let its clients feel the responsibility and
professionalism of its company. We respect the needs of its clients.

The corporate mission of Bokang Pet Medical is to improve the quality of life for
animals and to lead the pet health sector. Most pet health care providers focus
more on the owner's experience and less on the pet's experience. Nowadays,
as the role of pets in the family changes, more pets are given the role of "family
members". It is the company's vision and responsibility to be a leader in the

1
industry and to provide a better life for more pets.

The company's market scope sets Zhengzhou in China as the core area, and
through operational development, the marketing scope will gradually expand to
the surrounding provinces and major cities.

1.2. Business Motivation

People in China are spending more money on pets as their per capita income
rises due to consumer upgrading and the country's expanding economy. The
market size of the pet economy exceeded 170 billion yuan (Hou et al., 2018),
more than two times the size of the pet market in 2013, and along with China's
rapid economic development, the potential of pet consumption has been fully
unleashed. In 2018, the per capita GDP of China reached US $9,780 and the
number of pet owners in urban areas nationwide reached 73.55 million. China's
pet economy grew steadily from 2012 to 2017, with an average annual growth
rate of 34.6%. (Liu et al., 2017). The scale of the pet sector in China will keep
growing as pet ownership increasingly becomes a way of life and people's
desire for pet service content rises. By 2023, it's anticipated that pet ownership
will become more and more common, with a 19% pet ownership rate in urban
households. By 2024, it is anticipated that the pet industry would reach $250
billion. In comparison with the US, the proportion of pets kept in US households
is over 60%, while in China it is only 17% (Hall et al., 2016).

This comparison shows that there is still plenty of room for growth in China's pet
market, and the pet economy will certainly receive more attention in the future
as social and economic development continues. Among the segments of the pet
economy, pet healthcare is an important part of the pet industry. The majority of
pet medical facilities in China are tiny shops and smaller neighborhood stores
rather than massive chain organizations. However, with the cooperation
between High Tide Capital and Ripon Group, the establishment of a chain
medical group, also indicates that the pet medical industry is beginning to
receive the attention of the capital market, the future development of China's

2
pet medical direction is from a single, community-based to chain operations,
and gradually form a professional and standardized large pet It is against this
backdrop that Bokang Pet Medical has chosen pet medical care as its main
business segment through its analysis of the pet industry, with the aim of
creating a large chain pet medical group to provide professional services to its
customers. Bokang Pet Medical is currently in the preparatory stage and the
design of the project will be presented in the form of a business plan.

3
2. Field Analysis

2.1. Economic Analysis

The increase in per capita income has enhanced pet consumption willingness,
but the pet raising rate is relatively low compared with that in the United States
and Japan. In 2018, the per capita GDP has reached US $9780 (Hou et al.,
2018), the market size of China's pet sector has reached 170.8 billion yuan, and
there are now 73.55 million urban pet owners (Geng & Lin, 2021). Pet owners'
willingness to spend on their animals has greatly grown along with the constant
rise in per capita disposable income, and they are also less price sensitive
when it comes to pet supplies. The chain of the domestic pet sector is
progressively getting better as a result. The market size of each industrial
segment varies greatly because various items or services are required in
different ways. Pet food and pet medical care made up the highest percentage,
34.8% and 23.0%, respectively, in terms of industrial structure (Shen et al.,
2022).

According to the 2018 China Pet Industry White Paper, China's pet economy
market size has exceeded 170 billion yuan, an increase of about 27.5% year-
on-year, of which the market size of pet dogs is about RMB 105.6 billion, and
the pet cat market is RMB 65.2 billion (Gao & Yang, 2022). The number of pets
in China reached 168 million, and there is still room to increase the proportion of
pet ownership. In 2017, the pet ownership rate in US households was 68%, with
an average household pet count of 1.46 (Howell & Bennett, 2017); in Japan, the
household pet ownership rate was 37%, with an average household pet count
of 0.35 (Brown & Jensen, 2020), and in the UK, the counterpart was 45%
(Westgarth et al., 2019), all much higher than in China. The urban population is
the main group of pet owners in China, with the proportion of urban pet owners
rising from 10% to 17% in the last three years (Tan et al., 2021), but it is still
very low compared to countries with a mature pet industry such as the US and
Japan.

2.2. Legal Analysis

4
Government organizations, particularly the Ministry of Agriculture, have given
the standardization of the pet industry's operations a great deal of importance in
light of the rapidly growing pet industry in China. As a result, they have
introduced a number of policies to enhance the governance of veterinary
medicine and medical centers, legislate animal treatment practices, guarantee
public health and safety, and enhance the healthy and stable growth of the pet
industry (Chen & Liu, 2017).

The State Ministry of Agriculture issued the "Highlights of Veterinary Work in

2018" in order to improve the practice management and admission of licensed
veterinarians in rural areas (Hu et al., 2018); plan the organization of the
development of national and industry standards for animal slaughter and
processing, hygiene, veterinary drugs, and veterinary drug residues; strengthen
the development of veterinary laboratory systems; and encourage the creation
of code specifications.

A number of specific policy measures have been implemented by the State

Council, the Ministry of Agriculture, and other pertinent authorities to continually
control the pet medical business (Tang et al., 2021). A favorable legislative
environment has been created for the pet industry's healthy development as a
result of the ongoing control of industry growth.

2.3. Sociocultural Analysis

The changing demographics, accelerating ageing and changing lifestyles of

young people are contributing to the continuous upgrading of pet consumption.
China's population is ageing at an accelerated rate, with the ageing rate
expected to reach 17% by 2020 (Fang et al., 2020). Additionally, the function of
pets in people's lives has evolved from that of conventional caregiver to that of
family member as a result of the rise in the number of only children and
changes in family arrangements such dinky families and empty nest families.
Pet ownership is on the rise, which can be attributed to the growing desire for
companion animals. The pet economy has grown to be a significant economic
phenomena, particularly in industrialized nations like the US and Europe where
it contributes significantly to the overall economy (Ostapenko, 2019).

5
Young individuals under the age of 35 dominate the expanding pet services
industry, and young people are more open to innovative pet ownership
concepts. As a result, the predicted growth in income of young pet owners will
assist to boost expenditure per pet. With urbanization, demographics are
changing dramatically and the number of people marrying later and having
children later is increasing every year, hence the emotional demand for pet
ownership is also increasing (Knight & Edwards, 2008). According to the US
Bureau of Labor Statistics, per capita pet consumption increases with age until
the age of 65 and does not decline significantly until retirement (Wang, 2017).
Currently, 96.90% of pet owners in China only spend about RMB 600 per
month, a significant decrease from affluent nations like the US and Japan (Liu
et al., 2020). However, there is a general upward tendency in these people's
professional growth given that the mass of pet owners in China are below the
age of 40. The amount of money pet owners are eager to spend on their
animals will considerably increase as their salaries rise, thus fueling the growth
of the pet industry.

2.4. Technological Analysis

The pet medical sector in China will experience a period of significant growth
from 2010 to 2020, with the continual updating of medical technology, increased
domestic and international trade, and quickening technical advancements.
Large chain medical institutions have the advantage of standardized
management, high veterinary expertise and advanced equipment, and can
share resources in technology, equipment and talent to establish an effective
medical network system, effectively addressing the pain points of pet owners
and improving customer stickiness (Zhong et al., 2016).

Pet medical technology barriers are high, with the extension of the upstream
and downstream of the industry chain, more likely to become the future of the
pet industry integrator (Stull et al., 2018). Pet medical care has high
requirements for medical technology, hardware facilities and human resources.
Complete hardware facilities are the basis for providing pet medical services,
and a professional medical team is necessary to provide services.

6
Pet online social media platforms and self-publishing will become the new
marketing tools. Research shows that over 70% of pet owners in China are
under 35 years old (Tan et al., 2021). In the face of such a large young
consumer base, online social media platforms for pets will become a new tool to
make money. For example, pet owners can consult online doctors about their
pets' illnesses, sell their pets and food online, and book medical and grooming
services online. The development of technology has also allowed for new pet
apps to be developed, not only to better serve existing customers, but also to
popularize general knowledge of pet ownership for newcomers who intend to
keep pets, and to increase the number of new users, increasing customer
stickiness and a good interactive experience (Zhou et al., 2022). However, the
internet is only a tool for the pet industry and companies should not over-
emphasize the internet and ignore the essence of offline pet medical services.
Only on the basis of good products and quality service can the internet be used
to bring good experience and value to customers.

2.5. Overall Market Analysis

2.5.1. Characteristics of Pet Medical Industry

The research and technological services industry's veterinary services sector

includes the pet medical services business, which is a significant link in the
chain of industries that make up the pet economy. The second largest pet
industry after pet food is pet medical services, which includes the diagnosis and
treatment of illnesses as well as routine health care for animals. Pet medical
services may be broken down into categories such as surgical diseases, skin
disorders, treatment for infectious diseases, and pet health care (Lefebvre et al.,
2008). The service provided by the companies in the pet medical industry
includes the diagnosis of disease and daily care. Disease therapy and diagnosis
includes actions such as symptomatic treatment, supportive therapy, and the
removal of causes in order to diagnose and cure pet illnesses. The term "daily
health care" refers to a range of activities that are done on a regular basis to
maintain and enhance the health of pets, enhance their quality of life, lengthen
their lifespans, and prevent diseases in them. These activities include health

7
care administration, sanitization, behavior modification, insect control, and
preventive medicine (Constable et al., 2016).

The pet medical industry involves medical institutions, manufacturers of drugs and
vaccines, veterinarians, pet owners and other participants, with pet medical
institutions being the core of the pet medical industry. The domestic pet
healthcare industry is currently in a rapid development phase, with four
characteristics including low market penetration, low market concentration, poor
staff mobility and low industry standardisation.

2.5.2. Classification of Pet Medical Practices

- Pet Medical Services

With better gross margins than sales of pet food and supplies, pet medical
services serve as the primary business of a pet hospital and are the primary
source of income. Due to the prolonged course of treatment for general internal
disorders, revenue from pet medical services accounts for a bigger percentage
of total revenue (LaVallee et al., 2017). However, for some specialist hospitals
with a strong surgical focus, surgical revenue accounts for a larger proportion of
revenue due to the higher unit cost of surgery.

- Pet Grooming Service

Compared to pet medical services, pet grooming services have a lower

technical threshold and average unit cost. Pet grooming services are mostly
used by veterinary clinics to draw customers and keep them coming back.

- Sales of Food and Supply for Pets

The selling of pet food and supplies complements the primary business of a pet
hospital and improves the customer experience, much like the grooming
services do. Pet hospitals, however, no longer have a clear advantage in the
sale of pet food and supplies and are up against fierce competition from both
online and offline pet stores as a result of the rising popularity of online
shopping (Brockman et al., 2008).

- Pet Boarding Service

8
Among the four main categories of pet hospital business, pet boarding services
have the highest level of gross margins, with the hospital simply providing
sufficient space and daily care for the pets. However, there are technical risks
associated with this type of service, as failure to adequately isolate healthy pets
from sick pets can increase the likelihood of disease transmission (Romero et
al., 2015). In addition, compared to human dental and ophthalmology care, the
pet medical industry has a relatively low level of education and a low level of
maturity, and its overall human performance and average employee salary
levels are relatively low.

2.5.3. Visions for the Development of Pet Medical Market

The operation in chain is the primary industrial development trend. Pet hospitals may
effectively develop a branding effect and pool resources in terms of technology,
equipment, and personnel to construct an efficient medical network system through
an uniform logo and standardised chain management. A pet medical firm might grab
the market opportunity and quickly increase its market share by attempting to join the
chain. The main focus of the pet hospital chain is medical care, which is
complemented by the sale of pet products and services to broaden the hospital's
range of services and draw in more clients.

Branding and customer cohesion are the core competencies of future veterinary
hospitals. In the brand building process, the training of veterinary personnel and
the building of customer trust in veterinarians play a major role, and once such
trust is established, customers will gradually form a dependency on the same
doctor and hospital, thus forming an effective customer stickiness that can be
transferred to other industrial chains such as retailing of pet products and
broadening the profitability of the company.

The growth of the whole industrial chain is driven by medical services, which
form its foundation. In order to achieve scale effects, professional pet clinics will
progressively build the entire industrial chain of pet illness prevention and
treatment, pet health care, pet grooming, and other companies. They will also
bundle the sales of pet food and pet health care items (Romero et al., 2015). It
is challenging to cultivate customer stickiness in upstream and downstream

9
sub-sectors like retail pet products and pet grooming because they are
characterized by small business scope, low entry barriers, low technical
requirements, fierce industry competition, and weak recurring consumption.
However, the emergence of related sub-sectors within pet hospitals can make
up for such shortcomings. Companies will be able to maximize economic
advantages with the least amount of capital input if a complete industrial chain
is established; at the same time, customers will benefit from the convenience
and timeliness of the integration, further increasing pet owners' willingness to
spend repeatedly and frequently.

The International Animal Health Alliance estimates that the entire share of the
pet medical business production value has reached 38% in the more developed
pet sector in the United States, whereas it was only approximately 20% in China
(Feiyang, 2020). The consumption level of China's pet market exceeded RMB
170 billion in 2018, according to the 2018 China Pet Industry White Paper,
which translates into a 20% share of China's pet medical services (Zhang,
2018). The market for pet hospitals in China is estimated to be worth 20.2 billion
yuan in 2019, and it is anticipated to expand to 29.9 billion yuan in 2023, with a
compound annual growth rate of around 13.9% over the following three years.

2.5.4. Analysis of the Market of Interest

-Low percentage of Pet Hospital Chain

Chain veterinary clinics only account for less than 15% of the market. The
industry is very fragmented, with the number of large-scale chain hospitals
accounting for fewer than 15% of China's 10,000–15,000 pet hospitals. 80%–
90% of these hospitals are small-scale single-store operations or chains of less
than ten (Tao, 2021). 80%–90% of pet hospitals, depending on turnover and
premises area, have an annual turnover of less than RMB 3 million and a
monthly operating revenue of less than RMB 3 million, according to information
from the 2019 China Pet Hospital Development Report (Chen et al., 2021). In
terms of investment size, 43.8% of pet hospitals invested less than RMB 1
million.

10
Competitive advantages of pet hospital chains: In the competitive pet medical
market, large-scale pet hospital chains have bargaining advantages in the
centralized procurement of drugs and consumables, which can reduce
procurement costs and thus provide more space for price adjustments. On the
other hand, large scale pet hospital chains can easily form a brand effect, which
can attract consumers by establishing a professional and trustworthy brand
image.

The competitive advantage of a single or small-scale chain pet hospital: The

competitive advantage of a single or small-scale chain pet hospital is that it is
more flexible in its operation and management and can quickly make
adjustments according to market demand. Compared to large chain pet
hospitals, which often have a system of visiting specialists, single or small-scale
chain pet hospitals can concentrate their expert power on one or two shops,
which helps to improve their medical standards and reputation among
consumers.

-Intense Competition in Urban Regions

Tier 1 cities face intense competition, and the market has changed. The
majority of veterinary clinics—nearly 80%—are located in first- and second-tier
cities, where the rivalry is extremely strong (Wang, 2017). In addition to Beijing,
Shanghai, Guangzhou, and Shenzhen, emerging Tier 1 cities like Tianjin,
Hangzhou, and Suzhou also have a significant number of animal hospitals, with
Chongqing and Chengdu having even more than 800 (Liang et al., 2014). The
number of pet owners in these cities is high, the level of economic development
is high, and pet owners are more aware of medical consumption, making them
the preferred areas for large-scale chain pet hospital shop expansion. Pet
hospital rivalry has reached a condition of fierce competition in first-tier cities
like Beijing and Shanghai, ushering in a time of market reshuffling. Take
Chaoyang District of Beijing as an example. There are 33 pet hospitals within 3
kilometers around Sanyuanqiao Subway Station. This means that there is one
hospital per square kilometer on average, and the market supply is extremely
saturated. Accordingly, the revenue pressure of pet hospitals also increases.

11
Large-scale chain hospitals with hundreds of stores may also reduce the size of
stores or slow down the pace of expansion due to the income of new stores not
meeting expectations.

The geographical distribution of pet owners has, however, showed a declining

tendency, with cities below the third tier having a share of pet owners that is
nearing 40%, according to the 2019 China Pet Industry White Book (Lockwood
et al., 2019). However, given that the rate of economic growth and the number
of pets will not significantly increase in the coming years, the first and second
tier cities will continue to serve as the primary arenas of competition for pet
hospital chains, and their market penetration rates have the potential to rise.
After the rapid expansion of pet hospital chains in 2015-2017, it is expected that
the market competition among pet hospital chains will continue in the short term,
but with the arrival of the market reshuffle, the future competition pattern will
become clearer.

2.6. Competitive Element Analysis

Given the lack of qualified medical professionals (62% of practitioners have a

degree or less), skill is the key to competing in veterinary facilities. Pet medical
services are, on the one hand, extremely professional and have a high bar,
which lays significant expectations on the expertise of practitioners. The caliber
of medical services is closely related to the level of medical expertise of
veterinarians, and competent veterinary staff may easily build customer loyalty
and acquire the trust of clients. On the other side, there aren't enough domestic
pet medical specialists. More than half (52.9%) of the current pet hospital
personnel have worked for less than five years, while fewer than 40% (38.4%)
have a bachelor's degree or higher (Hwang et al., 2021); the workforce is
mainly young (Hwang et al., 2021). As a result, there is a lot of personnel
turnover in the sector and pet hospitals frequently slit one other's throats. To
guarantee that new stores have enough talent reserves to support their launch,
hospital chains will build a thorough talent reserve system and training system
for future expansion.

In addition to the skill pool, managerial and branding aspects are crucial for the

12
larger-scale growth of pet clinics. Pet hospital managers are mostly highly
skilled doctors who can attract and retain clients with their expertise when
running a small-scale hospital, but as the hospital grows in size, the
management issues it faces become more complex, posing a challenge to the
manager's management skills. Particularly, when a pet hospital enters the
expansion phase, it should concentrate on creating a standardized
management solution, including staff salary planning, financial planning, and
other elements, to enhance the management level of the shop director and
ensure the cleanliness of the shop's services. If a chain company does not
concentrate on management, it may face the possibility of a break in the capital
chain and a deterioration in service quality, which will further harm the hospital's
reputation. The scale of a pet hospital chain may develop from dozens to
hundreds of hospitals in just a few years. (Sousa et al., 2022).

For animal hospitals, the brand image is a thorough reflection of the facility's
technical proficiency, degree of customer service, atmosphere for patient care,
and many other competitive considerations. When there aren't enough
resources to hire qualified doctors, a pet hospital's brand image may help it
become more visible to potential clients, draw them in, and recruit outstanding
staff members. However, if the brand's reputation suffers, customers' levels of
trust in it will drop dramatically, which will have an impact on hospital traffic.
Therefore, the main method of operation for a chain of pet clinics being
developed is direct operation in order to preserve the brand's reputation, as
opposed to joining, which requires more investment but is more practical for
unified administration and risk management.

13
3. Legal Framework

The project aims to build a community pet medical institution with a specific
brand effect in the Zhengzhou region by establishing a stable pet medical
community chain over the course of 8 years of operation, with a stable customer
base and team, a mature medical service system, and a mature operation of
self-media marketing. It is estimated that there will be more than 30 chain stores
in 2026, the number of stable customers will reach 20000 families, the number
of service customers will exceed 60000, and the annual turnover will reach
more than 60 million. After six years of operation, the firm expects to enter its
mature phase with an annual growth rate of more than 20% of its revenue and
become a dominant brand in Zhengzhou's pet medical market.

The company's initial three-year strategy covers the years 2022 to 2024. The
key goals of the company's strategic planning at this time will be market
expansion, team building, and establishing the upstream and downstream
distribution networks. Finding strategic partners, introducing partners and a
skilled management team as well as excellent healthcare talents, building a
professional team, and cultivating a backbone for the company's later
development are all steps that we will take to thoroughly research the market,
develop the market through different advertising processes and healthcare,
select suitable regions as a pilot, set up a standardized pet community hospital,
and gain a good reputation; the active integration of upstream and downstream
resources, and opening up of the medical supply chain. Additionally, Bokang
Pet Medical will aggressively open the upstream and downstream of the
medical supply chain, integrate the upstream and downstream resources,
establish strategic collaboration, and lower the cost of procurement.

The years 2025 to 2029 will see the firm experience fast expansion, and as a
result, the company's strategic planning will be focused on achieving its main
goals of growing the brand's impact and securing strategic funding from the
capital market. The business will continue to grow its customer base, boost its
market share, attract new clients by satisfying those it already has, broaden its
brand influence, and enhance consumer perceptions of it. At this stage, Bokang

14
Pet Medical will continue to increase the number of pet medical chain shops
and improve the quality of service, achieve a reduction in operating costs
through the scale effect, improve investment returns and prepare the ground for
the introduction of new venture capital. The business will work with the capital
market to achieve rapid development via the adoption of venture funding and
strategic investment, utilizing the strength of the capital market to help the
business expand quickly.

After 2030, the firm is anticipated to progressively expand, stabilize, and mature
in terms of operations and development, during which time its strategic planning
will have a primary emphasis on enhancing brand value. The corporation will
boost corporate revenue, acquire negotiating leverage over upstream suppliers,
and lower procurement costs thanks to the scale effect. The business will
simultaneously address the unique and varied demands of downstream
consumers while offering expert services. Based on pet medical care, the
business will leverage its brand to include industry chain resources and grow
into a full-service provider of pet products and services. Future resource
integration will occur after the company's brand value reaches a particular
threshold of impact and it becomes public.

15
4. Marketing Plan

4.1. Description of Service

There are primarily four categories of services provided by Zhengzhou Bokang

Pet Medical Company, which are pet medical service, sales of food and supply
specially for pets, pet boarding service and pet grooming service.

Pet medical services, which make up the majority of pet hospitals' revenue and
have greater gross margins than sales of pet food and supplies, are their main
source of income. Due to the lengthier course of treatment and greater per-unit
cost of surgery, general internal disorders make for a bigger share of income
from pet medical services. By offering skilled medical and surgical services,
Bokang Pet Medical expands consumer channels and treats medical services
as the foundation of its company. The business can satisfy the demands of the
majority of dogs for both medical and surgical treatments thanks to the
employment of high-end medical equipment that has been acquired from
overseas. Additionally, we offer medical services including immunizations, pet
health care, and training for rehabilitation.

Sales of pet food and supplies complement pet clinics' core businesses by
giving clients access to high-quality pet consumer goods that can enhance user
experience and satisfy a variety of demands. Pet hospitals do not, however,
have a significant edge in the selling of pet food and supplies because of the
rising popularity of internet shopping. In order to support the full health
management requirements of pet medical care, Bokang Pet Medical's food and
supplies are positioned primarily as health food and pet rehabilitation and
training supplies.

The pet hospital provides a separate space for pets and daily care services, but the
number of clients served is limited due to space constraints in the shop and is
only used as a means of developing business. While the pets are boarded,
several basic health care food packages may be customized for them, and the
pet medical store will take care of their regular checkups and other medical
needs at that time.

16
Pet grooming services have a lower technical threshold and a lower average
unit cost than pet medical services. Pet grooming services are mostly used by
veterinary clinics to draw customers and keep them coming back. Pet stores
can provide photographic services for animals as well as expert groomers to
clean, treat, and style dogs.

Bokang Pet Medical provides a diverse range of services to customers, allowing

them to meet all their needs in the pet medical shop, making it a one-stop
experience. By investigating the business income of pet hospitals in the
Zhengzhou region on site, the four statistical segments of business income are
structured as follows.

Income of Different Pet Services in Zhengzhou

1%

7%
Pet Medical Service
12%
Pet Grooming
Pet Food and Supply
Pet Boarding

80%

Figure 1, Income of Four Categories of Service in Pet Medical Industry

The core business of Bokang Pet Medical is medical services, and the business
model adopted is community chain shop operation. The core business of pet
medical services is chosen because it has high technical barriers and links
upstream and downstream of the industry chain, with the potential to open up
the industry chain, and is likely to become the future consolidator of the pet
industry. Community medical services are characterized by relatively small
investments, stable customer sources and easy to develop customer stickiness.
In the pet healthcare industry chain, the pet hospital is the core of the pet
healthcare industry chain as the main place where pet healthcare services take
place. On the one hand, pet hospitals purchase drugs, equipment and

17
consumables from upstream suppliers and provide treatment services to pets
on this basis; on the other hand, with pet medical care as the core, the
development of additional businesses such as pet food supplies, pet boarding
and pet grooming can be driven, which can increase revenue sources.

Medical services include disease treatment, vaccination and daily health care
for pets. The medical service includes diagnosis and treatment of diseases,
including trauma treatment, intravenous injections, surgery and neutering;
vaccination, including vaccination against microcephaly, rabies and infectious
hepatitis; and daily health care, including food physiotherapy, preventive care
and special care for young and elderly pets.

The business also collaborates with independent testing facilities. By acquiring

or creating medical tools and diagnostic reagents, we may provide small pet
clinics with auxiliary diagnostic bases with the aid of independent testing
facilities. The business increases the relationship between pet hospitals or
veterinarians, animals, and pet owners while expanding the chain of pet hospital
services and drawing customers to pet hospitals through collaboration with
online consultation, doctor visits, and other internet platforms. The pet
insurance, which has a very tiny customer base, can also be employed as a
paying party and a distraction.

4.2. Pricing Strategy

Bokang Pet Medical Company has a clear commitment to the wellbeing of our
clients' pets and we strive to provide them with a comprehensive range of
services. Our offerings span from pet grooming and the sales of pet food and
supplies to top-line healthcare for pets; effectively catering to different needs of
our customers. The continued patronage and loyalty of our customers affirmed
our acute customer-centric focus, which fuels our continued success in this
industry. The company's pricing strategy is multi-faceted and is largely
determined by a blend of the factors: the complexity of the services offered, the
associated costs of necessary equipment and consumables, the current state of
local market economy, growth trends in the pet market, degree of competition,
and other operational expenses.

18
With services ranging from simple grooming sessions that require fewer
resources, to more comprehensive medical check-ups and treatments that
necessitate specialized equipment and trained staff, the associated costs vary
significantly. Due to the diversity and complexity of our services, our pricing
model is especially designed to accommodate this variability, ensuring that
customers are charged reasonably and transparently. Further, we recognize
that the cost of requisite equipment and consumables continue to elevate. A
notable chunk of our budget allocation goes towards the procurement of
medical equipment, grooming tools and supplies. These costs, at times, trickle
down to the consumer, potentially impacting the pricing.

Simultaneously, we take into account the prevailing economic trends and

conditions within our operating environment as we set our prices. For instance,
during an economic downturn, consumers typically tighten their spending and
the potential for discretionary services such as pet grooming may decrease.
Conversely, as the pet market grows, the demand for our services may
increase, coupled with the ability of customers to pay more due to economic
prosperity. We constantly assess the competitive landscape as well. Our prices
are set to remain compatible and compelling within the market, while still
ensuring financial viability for our company. We closely watch trends,
understand competitor strategies and adjust our pricing dynamically to remain
competitive, and to always offer great value for our services.

Concurrently, our operational costs, comprising rents, salaries, utilities,

marketing and miscellany are considered. As a service-based brand, the brunt
of our costs rests on operational expenses. As these costs rise, we need to
increase our prices to maintain our profitability, while also exploring measures
to control or decrease our costs.

At Bokang Pet Medical Company, we have adopted a three-point strategy to

boost profitability. Firstly, we strive to control service costs. We achieve this by
carefully controlling inventory and managing supplier relationships to mitigate
price fluctuations. By forecasting demand, ensuring optimum stock levels to
prevent oversells or excess, and by negotiating contracts with suppliers, we

19
seek to control costs. Secondly, we work on introducing new services that
match customer expectations and demands. We constantly survey the market
for evolving pet care trends and devise unique service offerings. These not only
distinguish us from our competitors, but also present an opportunity to add
higher-margin services.

Lastly, we aim to increase the rate of customer visits. For this, we work towards
creating an engaging, stress-free environment for the customers and their pets
and provide unsurpassable care and service quality. One of our other strategies
to reduce costs is through the centralized procurement process. Instead of
individual pet hospital chains scrambling to meet procurement needs, orders
are issued directly to our trading company, which serves as our main external
procurement platform. Except for items that the head office approves for
independent purchase, this centralized method streamlines procuring tasks,
increases our bargaining power over upstream suppliers and minimizes
procurement costs company-wide. Therefore, this system of collective
procurement garners cost-effectiveness, which allows us to maintain
competitive pricing, despite the elevated costs.

4.3. Distribution Strategy

Bokang Pet Medical achieves its sales revenue mainly through the provision of
pet medical and healthcare, pet food and supplies, pet boarding and pet
grooming services to end consumers through directly operated or partnered pet
hospital chains. The Company's retail and service-oriented sales model,
customer density and customer stickiness around the chain shops are key
factors in revenue realization. The company has adopted a hierarchical layout,
such as one central hospital, a few regional hospitals and several community
chain shops, to provide more efficient and professional services to customers,
enhance customer experience and ensure a stable customer base, while
ensuring that its own costs are optimised.

The company's chain shops are both directly operated and in partnership. The
shops set up under the partnership system are community chains jointly set up
by the company and the partners according to a certain percentage of capital

20
contribution. The company is responsible for providing support in terms of
training, procurement, technology and management experience, and the
partners participate in the management of the shops, which not only allows the
company to effectively leverage capital for rapid expansion, but also reduces
capital costs by working with the partners. In the future, the company will buy
back the partnership's chain shops, and the partners can choose to exit for
cash, continue to enjoy dividends or continue to invest in new partnership shops
according to the agreement. At the same time, this model can effectively attract
investors or entrepreneurs, and is a win-win model for entrepreneurs who lack
capital.

4.4. Communication and Promotion Strategy

The STP theory is a modern method of marketing strategy analysis proposed by

American marketing scientist Philip Kotler. The theory analyses the three aspects
of market segmentation, target market selection and market positioning to
clarify its target market. By analysing these three aspects, the company
provides direction for the choice of marketing strategy and marketing plan.

4.4.1. Market Segmentation

The demand for various products and services varies significantly amongst the
various sub-markets. The foundation for choosing a target market is market
segmentation. In order to suit the wants and preferences of customers within
the segment, a company's marketing efforts involve segmenting a market,
making it its target market, and devising the ideal "mix" of products, services,
pricing, promotions, and distribution networks. The clientele may be broken
down into cat owners, dog owners, and other pet owners depending on the type
of pet kept. Owners of cats and dogs are the major demographic that Bokang
Pet Medical's animal hospital caters to among them. The client base can be
separated into younger and older consumers depending on the owner's age.
Since post-1980s and post-1990s consumers make up 80% of the pet market,
younger customers make up the bulk of the market.

According to their ability to spend, the consumer base may be split into high
income, medium income, and low-income categories. The firm is positioned to
21
serve middle- and high-income consumers since its sites are primarily in
affluent and affluent regions, and the medical equipment it uses is primarily
imported high-end equipment.

Owners of Pets:
68 Million

Owners of Pet Dogs and Cats:

63 Million

Owners of Pet Cats and Dogs

with medium or higher level of
salary:
55 Million

Figure 2, TAM, SAM, SOM of the Company

As the picture above shows, the total available market (TAM) of this company is
owners of all types of pets. The serviceable addressable market (SAM) is the
owners of pet dogs and cats. The serviceable obtainable market (SOM) is the
owners of pet dogs and cats whose salary is beyond medium level. The data in
Figure 2 is from China Statistical Yearbook 2021. In China, the salary of
medium level is around 5000 RMB per month.

4.4.2. Target Market

For community hospitals, shops are generally located in communities and

shopping areas with a high number of pet owners or a high flow of customers. If
there were not enough competition for community-based pet hospitals, the
majority of central hospitals that like to treat difficult diseases would not be able
to attract enough patients. These locations are where the potential of the pet
medical industry has been unlocked. In order to serve the demands of a large
population of people who own pets and have high levels of consumer
expenditure, community hospitals are situated in densely populated locations

22
with easy access to transportation. Community-based services will
progressively spread to other places, with the residential neighborhoods in
Zhengzhou's eastern region serving as the core area. Young people who own
cats and dogs and reside in affluent neighborhoods make up the target market
for Bokang Pet Medical since they tend to have more disposable income and
spend more money on their pets, both of which are necessary for the firm to be
profitable.

4.4.3. Market Positioning

Using cutting-edge technology and imported medicines as the foundation of its

investment in equipment and medication, the community-based chain of pet
medical stores known as Bokang Pet Medical offers imported food, pet care,
grooming, and other comprehensive services to high-income pet owners in
affluent neighborhoods. Pet medical store of Bokang Pet Medical is not only
chasing the number of customers but is also raising the net value per unit of
consumers on the basis of fulfilling a particular customer flow in order to give a
competent service and excellent experience to customers.

4.5. Promotion Strategy

Online, offline, and media collaboration are just a few of the methods used to
promote brands. The promotion strategies used by Bokang Pet Medical are
diversifying, and now include offline TV commercials, building walls, car bodies,
print advertisements in magazines and newspapers, as well as online channels
like WeChat, Weibo, and other self-media platforms, which can be used to
regularly promote different knowledge about pet breeding, strengthen
communication with existing and potential customers, and disseminate the
company's service information. By using a "fan economy" to increase its brand
influence, Bokang Pet Medical is able to increase brand recognition and
consumer acceptability. This multi-channel strategy has given the business
access to a large variety of consumer resources, giving it a significant
competitive edge.

The issue of building a brand presence is one that Bokang Pet Medical must
overcome in addition to having quality products and distribution channels. The

23
majority of pet owners like socializing, especially now that the internet has made
it simpler for them to communicate with one another. Around 40% of pet owners
participate in QQ or WeChat pet groups as well as professional pet
communities, according to the 2016 China Pet Industry White Paper (Wang,
2019). Additionally, pet owners are typically open to sharing their experiences,
and some veterans who have had dogs for a long time can even serve as
opinion leaders. Pet owners are seen to be a particularly close-knit group of
individuals, according to Bokang Pet Medical. When a product is endorsed by
one of these thought leaders, it is more likely to appeal to other pet owners,
resulting in a sharp rise in product sales. Among order to accomplish precise
marketing, Bokang Pet Medical should concentrate on advertising their goods in
professional pet forums.

The company philosophy of professional service and quality experience is the

core of Bokang Pet Medical’s marketing strategy to meet diversified service
needs. With the help of the company's four business divisions—pet boarding,
pet grooming, pet food and supplies, and pet medication and healthcare—
Bokang Pet Medical's young service team is continually enhancing the caliber
of the company's services while implementing multi-business synergy. The
company's primary line of business, pet health care, is crucial to strengthening
the company's reputation and elevating client happiness. Bokang Pet Medical
can build its brand by providing "one-stop" services that clients need.

4.6. Communication Scheme

Customers of Bokang Pet Medical tend to be young people with a certain level
of income. In a time when Internet+ and self-media are developing quickly,
Bokang Pet Medical's marketing strategies should also take into account the
ideas and practices of young consumers, improve consumer interaction and
communication, integrate online and offline promotional channels, and make full
use of marketing tools. Consumer awareness and brand loyalty are raised by
this marketing strategy. These are the four primary formats for the marketing
program.

Social medias such as Tiktok, WeChat public account and Weibo friend circles

24
are low cost, easy to operate, have a large audience base, spread quickly and
have a wide reach. Through the establishment of pet communication groups,
communication communities, etc. to maintain communication with customers,
and regular promotion of pet health and other knowledge. The primary entry
point is to spread knowledge about pet health using self-media projects like
Shakeology, through a dedicated operator. Regular knowledge points and pet
shows are released to draw in animal-loving groups, transforming the online
group into offline costumers for marketing purposes. Along with changing the
conventional strategy of emphasizing its own products, it is necessary to
increase the company's promotion of its service philosophy and
professionalism, using the perspective of the customer experience as the
starting point for propaganda. This can effectively increase customer
acceptance while forming a positive relationship with clients and creating the
brand's reputation.

Due to property cooperation, the establishment of publicity signs in the

community, the installation of lift billboards, etc., the company's service
business is conducted directly to consumers. The surrounding community is the
main source of customers as well as the main body and core of the pet medical
shop services. Customers can be drawn in by offering free community lectures
on pet grooming and wellness topics on a regular basis. To achieve customer
happiness and encourage them to recommend us to others and bring in new
clients, we must also enhance the quality of our services and add interactive
projects with consumers. Bokang Pet Medical must also be receptive to
consumer complaints, summarize the comments, and implement changes as
soon as possible.

It is intended for Bokang Medical Care to use a membership system. Customers

can sign up for membership for free, and the business will offer frequent
promotional services to members in order to generate revenues for clients and
build a loyal clientele. Point offers are one of the crucial ways to acquire
consumer resources in the meanwhile. After making purchases, customers may
convert their purchases into points, which they can then use to redeem
discounts or take money off future purchases. This can widen the gap between
25
customers and businesses. Points can be used for both in-store and online
purchases.. In addition, customers can enjoy additional points for each other
customer they introduce. After exceeding a certain amount of points, the excess
part can be converted into cash, to mobilize the enthusiasm of customers to
introduce Bokang Pet Medical to their friends or families.

Finally, Bokang Pet Medical can organize educational campaigns about pet
health each year, participate in charitable endeavors, and secure local media
coverage, all of which help to increase the company's influence and brand
recognition among local customers. These efforts also give Bokang Pet Medical
better access to the assistance of the necessary local agencies, which in turn
boosts sales and influence. The active cooperation with various group-buying
websites is beneficial in terms of expanding sales and enhancing the
advertising effect. At the same time, when cooperating with group-buying
websites, you should focus on the relevant background of the websites to avoid
the potential risks of these companies and choose the group-buying websites
with good reputation and strength in the industry as far as possible.

26
5. Operation Plan

The core of the Bokang Pet Medical's business model is to operate as a group,
adopt a multi-layered layout of one central hospital plus a few regional specialist
hospitals plus several community chains and achieve multi-business synergy
with medical services as the core business.

5.1. Operation Model

The company operates as a group, with a hierarchical chain management

structure of "company - management department - chain shops". The head
office is responsible for the unified management and operation of the company,
formulating the company's development strategy and business plan, and
centralising the management of the company's procurement, finance and
marketing. The management department is directly managed by the company
and undertakes the company's development strategies and operational plans
and provides effective management and service support for the chain shops,
which is a strong back-office support for the chain shops. The chain shop is the
core of the company's customer service and is also the actual business entity.
Pet chains generally focus on medical treatment, supplemented by pet
grooming and pet merchandising to expand the hospital's range of services and
attract customers. The chain can take advantage of the support and resources
provided by the company to be able to provide better service to customers.

By unifying the development of a unified logo and standardised chain

management for pet hospitals, the company can effectively create a brand
effect, realise the sharing of technology, equipment and talent resources, and
establish an effective medical network system. This will promote the continuous
improvement of corporate services and help to form a unified management and
standardised management model. Ultimately, the benefits of standardised
management and branding will be gained, enhancing the market
competitiveness and influence of the enterprise.

5.2. Hierarchical Layout

The company has adopted the "1+P+C" model, which is one large central pet

27
hospital, a few regional pet hospitals and several community chain shops. The
rational layout of the hospital ensures that the company's cost control and
resource allocation are optimised in the process of shop expansion. The
company's direct chain management model ensures the standardisation and
standardisation of its services, safeguards its service quality, effectively
enhances customer experience and brand loyalty, and has the feasibility of
expanding to other regions.

Second Phase Third Phase

First Phase
When a certain Community Central and
market size is hospitals, which specialist hospitals
reached, regional mainly cover have higher
specialist hospitals common pet requirements for
will be set up diseases, are testing equipment to
gradually to meet generally equipped deal with more
the demand for with basic testing complex diseases,
specialist disease equipment, such as with some hospitals
treatment, and a X-ray machines, B- being equipped with
central hospital will ultrasound and CT and MRI.
be set up in blood cell analysers.
Zhengzhou at a later
stage

Figure 3, Development Phase

In each operating region, the directly operated chain of pet hospitals in large,
concentrated communities is positioned as a community hospital to meet the
demand for general cases within a 3km radius, using the community pet hospital as a
starting point to expand the chain through operations. Along with the increase in the
number of community hospitals, a pet specialist hospital will be opened in the central
area of the community hospital in a location with convenient transportation to absorb
niche market cases and provide more specialised needs. In the future, 1 or 2
specialist hospitals will be established in each region of Zhengzhou. A central hospital
will be selected for key cultivation as a regional referral centre to provide more
advanced equipment to meet the needs of large-scale surgery and testing and labs
etc.

28
5.3. Layout of the Facility

5.3.1. Site Selection

The single shop design is based on the single shop design of a community
chain. Firstly, to choose the target area, it is required to be a community
frontage with convenient transportation, which is convenient for pets to seek
medical treatment and can attract good traffic; to be able to radiate several
large medium and high-end communities, preferably with a park or green area
near the shop, as customers like to take their pets for a walk in their leisure
time; to choose an area where there are fewer pet medical shops around and
there is a gap in the market. Secondly, the eligible address is selected to
measure the market size and market saturation in its vicinity. Taking Zhengzhou
South Huanghe Road Metro Station as an example, the market size is
measured as follows.

A survey was conducted on the residential areas within three kilometers around
the Huanghe South Road subway station. The residential areas around the
station were relatively concentrated. From the Baidu map, taking the Huanghe
South Road subway station as the center, a total of 70 records were selected
from the residential areas within three kilometers around the station. After
searching the number of households in each residential area and removing the
duplicates, the total number of permanent residents in the residential area was
about 60000. The calculation model is established: the number of residents is
converted by 3 people per household, and the number of residents is 180000,
and the total number of cats and dogs is 20200. The medical cost of a single
pet is about 1100 yuan per year, and the overall scale of the pet medical market
in the area three kilometers away from the Huanghe South Road subway
station is 22.66 million yuan. According to the site survey, the income of the
single store in the surrounding area is about 1.6 million yuan, of which the
medical income accounts for 80%. The pet medical income of the single store is
1.28 million yuan, and the total size is 22.66 million yuan divided by 1.68 million
yuan. The ideal number of pet hospitals in the Huanghe South Road subway
station area is 17. At present, the actual number of pet hospitals within this

29
district is 11, with a gap of 6. Therefore, the market in this area is not saturated,
which meets the requirements for establishing a facility of Bokang Pet Medical.

5.3.2. Layout Design and Interior Equipment

The image design of the shop should highlight the company's business
philosophy of "professional service and quality experience", with simplicity and
warmth as the overall VI design principles. It is also easy for customers to recognise that
the main focus of the shop is pet care. The design of brochures, business cards and other
paper promotional materials should be brand specific, aesthetically pleasing to the
customer and have a distinctive flair and differentiation. The overall image design
should also consider the principle of cost and be workable.

The interior design scheme takes into account functionality, aesthetics and cost.
The interior should be divided into customer reception areas, treatment rooms,
operating theatres, pharmacies, laboratories, animal housing areas, etc. to
facilitate the work of the staff. The "light eco-friendly green" style is an important
part of the shop's identity. "The green colour gives the shop a bright, fresh,
relaxed and unhurried feel. At the same time, the decoration style should be
relatively simple and cost effective.

The air purification system is used in all pet services to avoid unpleasant smells,
which can often give customers a bad experience. Therefore, the shop is
equipped with an air purification system to keep the air flowing and eliminate
odors at all times. The customer waiting area is equipped with an LED screen,
which plays the company's promotional film to promote the company's
philosophy and brand image, as well as general knowledge of pet ownership, so
that customers can have a good experience during their waiting time.

5.3.3. Management of Materials

As a pet health care community chain, single shop site operations should be
unified and standardised to give customers a professional experience. Pet
health care requires a high level of hygiene, and only standardised
management can provide a good service and hygiene environment. This is why
the company has introduced the new concept of 5s standard management, which

30
aims to create a clean and hygienic working environment by strictly regulating the site
and existing objects, and to cultivate good working habits among all staff, so that we can
provide professional services and a quality experience to our customers.

Figure 4, Common Practice of 5S Management

Distinguishing between wanted and unwanted items, keeping only essential

items on site and nothing that is not used. Sorting the various items that are
realistically placed on the service site, distinguishing between what is needed
and what is not, and which pets should be present on the operation site and
which should be in the boarding area or inpatient unit and not be allowed to
wander around.

All necessary items are arranged and configured in accordance with the
relevant regulations by means of positioning and quantification, in an orderly
manner and clearly numbered and labelled. All items that need to be left at the service
site will be reasonably designed and arranged so that all operations can be
completed efficiently and accurately. More importantly, for animal emergency
treatment, especially for some pet emergency medical supplies, clear
classification and orderly placement according to the frequency of animal use,
not only can we effectively save a lot of treatment time in times of emergency,
but also greatly reduce the use of improper emergency drugs may cause
various medical health accidents.

31
5.4. Quality Politics

The cleaning team is responsible for the removal of dirt, household waste,
animal hair and excrement from the service area and for the timely cleaning of
the shop. This ensures a clean environment, reduces odours and removes
microbial hair from the air, and the daily cleaning of equipment and household
items ensures the safety and longevity of the equipment in the shop. All staffs in
the facilities of Bokang Pet Medical are required to maintain the results of work
site cleaning, keep the entire site environment optimally clean, eliminate
contamination from dirty indoor air, suspended hair, noise and waste
excrement. In this way, all employees, customers, and their pets can move
freely in a clean, safe and environmentally friendly space. Meanwhile, it is not
only the cleanliness of the indoor environment that is important, but also the
cleanliness of the mental and professional spirit of each employee, the sincerity
and courtesy of each customer, and the respect for the different values of each
user.

Finally, every staff in the facility is required to operate in accordance with the
rules and regulations and to develop a good habit. The “5S” management
concept is deeply rooted in people's hearts, so that employees can develop a good
working habit, improve the awareness of self-management responsibility of all
employees, and enhance professionalism.

32
6. Human Resource

6.1. Organization of Bokang Pet Medical

Three partners co-founded Bokang Pet Medical; one is a veteran of the pet
sector and oversees general business operations; the other two serve as
consultants to the firm and provide financial and strategic guidance for its
growth. The business of the corporation is under the general manager's control.
In order to fulfill the company's daily operating demands, there are now just four
departments under the General Manager: the Purchasing Department, the
Management Department, the Finance Department, and the General
Department. Several regional hospitals, a central hospital, and a number of
neighborhood chain stores are all part of the management department.

General Manager
x1

Procurement Management
Finance Department General Department
Department /2 Department /2
/2 Staffs /2 Staffs
Staffs Staffs

Central Clinic /6
Staffs

Regional Clinics /4
Staffs

Chain Store /4
Staffs

Figure 5, Organizational Chart

6.2. Quantity and Qualification of Employees

The general manager is in charge of the majority of the company's affairs and is
fully accountable for its overall management. He is in charge of managing the
day-to-day operations of the firm, reviewing contracts, developing business
strategies, managing and training the staff, and creating the company's
business, strategic, and marketing plans, among others. The general partner

33
(GP) of the partnership is in charge of running the particular business
operations of the company.

The department in charge of marketing and purchasing is in charge of buying

the company's supplies for pet food, medical equipment for animals, and other
items. Maintain connections with upstream vendors and create channels for
purchasing; create procurement plans, inventory plans, logistics plans, etc. to
guarantee the delivery of the company's consumables and goods; bargain
prices with suppliers to reduce costs. There is one individual assigned to this
role who has access to sourcing and understanding of the pet medical
industry's supply chain.

The company's chain of pet hospital stores are managed and run by the market
management department. Bokang Pet Medical will develop shop opening plans
and select suitable areas for shop opening through market research; develop
standardized operating plans for chain shops and standards for staff recruitment
and management; be responsible for managing the daily chain shop operations
and maintenance and providing support and guidance for chain shop
operations. Two members of the team are knowledgeable in the pet market and
have experience managing chains of stores.

The finance department is in charge of the company's daily financial

accounting, reasonable fund deployment in accordance with capital operations,
and ensuring the smooth functioning of the company's money. Responsible for
the preparation of the company's financial statements, according to the financial
situation of the company's operation to give guidance suggestions; the
company's taxation co-ordination work; the development of the company's cost
analysis and budget plan; expense reimbursement and personnel salary
accounting; the company audit-related affairs. Two persons, one with an
intermediate accounting title and more than 5 years of experience in
accounting, are responsible for the overall financial management of the
company; the other person has basic accounting knowledge and is responsible
for the daily financial affairs of the company.

The general department is responsible for the administrative work and

34
personnel management of the company. It is responsible for organising the
company's meetings, receptions, office supplies procurement and other service
work; ensuring the normal internal operation of the company, coordinating the
work of various departments and providing good background support for the
development of the company; responsible for other things assigned by the
leadership. There are two employees: one is the integrated department head,
who oversees the department's activities; the other is the integrated department
commissioner, who works with the head to carry out the tasks given to him by
the business.

Doctors hired in Bokang Pet Medical are required to be certified veterinarian

with extensive experience in veterinary practice. Able to provide a professional
consultation service according to the client's needs and skilled in operating
medical equipment for testing and surgery. A thorough knowledge of the
general health of pets and the ability to achieve good treatment results. Medical
Assistants are required to be certified veterinarians who assist the doctor in the
treatment of pets and can address basic pet treatment needs. Also responsible
for client reception, and consultation. Groomers mainly provides grooming
services for pets, including bathing, coat care, worming and photography
services. They are required to love pets, have professional knowledge about pet
beauty and have a good sense of service.

6.3. Human Resource Policy

6.3.1. Employee Training

The training system is a core part of the company's personnel management,

training qualified staff and developing standardised operational guidelines for
the company's pet community chain shops. The company's training is organised
by the company, with instructors consisting of external experts and senior shop
managers to provide training to staff in a variety of areas, including professional
and technical knowledge, shop management, standardised operations, and
customer service, using the business situation of quality shops as a case study.
The aim is to be able to train excellent talents for the chain shops, establish
uniform management and service standards, and enhance the service quality of

35
the chain shops and the company's brand influence. To achieve the training
effect, the company has developed a training system that includes the
establishment of a curriculum system, instructor management and training
effect evaluation in three segments.

The company's course system focuses on three areas: professional knowledge,

sales skills and customer service, and has developed courses such as the Pet
Medical Handbook, Pet Shop Sales Guide and Service Guidelines for Pet
Owners. For managers, we will develop courses such as Efficient Management and
Efficient Communication and other related courses. A combination of online and
offline training is used to deliver the courses. Online courses are delivered through
fun videos and online quizzes using the APP, while offline courses are delivered through
regular themed professional seminars. In addition, the company will develop relevant
course learning manuals and guides to provide employees with a variety of
learning tools.

Lecturers are mainly external professionals and excellent physicians in the shop
to establish a team of medical expert lecturers who are responsible for the
training of professional medical care knowledge. The company will select
excellent shop managers or staff to form a team of service expert lecturers,
responsible for explaining sales techniques, customer service and other
knowledge to staff. The company will give class fees and honour incentives to
those who become lecturers to motivate the team to learn and create a team of
excellent lecturers.

The company's general department will evaluate the effectiveness of training,

with staff and organisers scoring the lectures and establishing a scoring system.
It also tracks the personnel after the training, pays attention to the changes in
their performance, retention and other indicators, conducts regular tests and
develops solutions. The effectiveness of the evaluation is analysed, and the
next training plan will be developed based on the analysis results.

6.3.2. Remuneration System

Today, a company's ability to compete in the market is largely determined by its

talent. A company's development depends on reasonable compensation, which

36
can help it recruit more people. In order to ensure the employees' motivation
and competitiveness, a fair and suitable compensation structure must be
created.

The compensation package for the corporation comprises of a base salary,

incentive pay, benefits, and allowances. Three criteria are used to categorize
and assess them: the degree of the employee's position, the nature of the task,
and professional aptitude. The performance compensation is based on the
accomplishment of the tasks and goals specified by the employee, whereas the
basic salary is determined in relation to the salary level of the industry.

The company adopts performance appraisals to motivate its employees. In

order to achieve the same company goals, managers and employees
participate in the development of the company's performance appraisal
program. By setting reasonable performance targets, the company's overall
target plan is subdivided into the work plans of each department and employee.
Through the results of the performance appraisal, company managers can
make timely improvements to problems in their work and to the working
methods and attitudes of their employees. For the excellent performance of the
department and staff can also be given timely rewards, to achieve performance-
driven staff enthusiasm, to achieve the effect of the winners and losers, to
ensure that the company's performance objectives are achieved. The
company's performance appraisal follows the principle of fairness, justice, and
openness, with two mid-term and annual appraisal incentives.

37
7. Economic and Financial Plan

For Bokang Pet Medical, which consists of the company and its subsidiary
chains, the initial investment budget is divided in the current period into an initial
investment budget for the company's operations and an investment budget for
individual shops, which are combined as the total initial investment budget.

7.1. Initial Investment

7.1.1. Operation Budget of Company

The company's first investment budget is based on the idea of cost savings,
and it is hoped that additional money will be spent in the chain stores. Bokang
Pet Medical is largely in charge of the company's operations and offers
technical service support to the chain.

Office supplies

Computers, tables, office chairs, couches, and projectors are among the
multimedia and office equipment that cost a total of RMB 60,000.

Rent

In the interest of cost saving, we have chosen a more cost effective business
park for the duration of the business. The area is approximately 150 sq ft at
RMB 70,000/year.

Personnel salaries

The company's annual salary is calculated at $624,000 based on a full

complement of seven company employees and one general manager at starting
5 years.

Publicity costs

The budget is close to $40,000 and includes expenses for both online and
offline advertising, planning speeches, printing brochures, etc.

Other costs

Various charges like getting company licenses and paying for energy and water
came to about $0.08 million.

38
Therefore, the initial investment for the company is around 802000 RMB.

Investment Budget for Single Facility

The following table shows the list of initial investments for a single medical
facility of Bokang Pet Medical.

Category Description Fees (RMB)

Equipment and Medical office equipment,

660,000
consumables consumables

Choose a mid to upscale

Room rent 300,000
neighborhoods

Shop Fitting Furnished to standard storefront 200,000

2 doctors, 1 medical assistant and

Personnel salaries 360,000
beautician

Other costs Utilities, opening costs, etc. 30,000

Single shop initial investment

Total 1,550,000
measurement

7.1.2. Estimation of Total Initial Investment

To sum up, the investment budget for the company's operation is 802000 yuan.
Four chain stores are planned to be opened in the first phase. A single shop
would require an initial investment of 1.55 million yuan, or 6.2 million yuan. A
cash balance of 300000 yuan is also necessary in order to cover any additional
capital requirements that could arise inside the business. As a result, the
founding capital's overall investment budget is 7.32 million yuan.

7.2. Financing Plan

At the first two years, the primary source of funding for the business at the
startup phase is the money of the partners. The company must seek start-up
capital as a result of the significant capital expenditures required for business
operations, equipment purchases, market expansion, and other relevant start-

39
up-period activities. The three partners will be responsible for marketing,
operating the company and providing professional medical support.

During the next three years, finding new investors or venture capital firms to
make many rounds of risky investments is the primary form of funding
throughout the midterm period in order to give the company with enough
monetary support for its growth. A new investment fund is being introduced at
this stage of the company's development as the number of chain stores keeps
growing, operations are progressing as planned, and preliminary results are
evident. This also requires a detailed plan for the use of capital and the future
development of the company, which can be used to bring in new venture capital
investors. The introduction of venture capital funding not only raises significant
working capital, but also reduces the risk of the company by transferring the
operational risk to the venture capitalist. In addition, the resources of the investment
institution can be used to provide professional guidance and support for the
management and development of the company, helping the company to grow
rapidly.

After 5 years, the business has grown reasonably maturely, is capable of

making consistent earnings, and the capital chain is comparatively stable at this
level of financing. In order to simplify the firm's financing and listing at this time,
the company will alter its ownership structure in order to pursue future market
expansion and satisfy its financial requirements. The chosen financing strategy
include locating low-cost capital, mostly through bank corporate loans, bond
issuance, company listing, and other forms of capital. The company will use the
financing method of combining equity and creditor's rights to reduce the
financing cost and maximize the interests of shareholders.

7.3. Projected Cash Flows

The following table is the estimated monthly cash flows for years from 2022 to
2026.

Cost Item 2022 2023 2024 2025 2026

Overhead 40000 40500 42000 43000 45000

40
 Marketing Cost 2000 2200 2400 2500 2500

Tax 500 520 550 600 800

Depreciation of 5000 5200 5600 5600 6000

Decoration and
Equipment

Monthly Net Profit 40000 44000 48000 50000 52000

7.4. Estimated Annual Transaction

The following table shows the annual cost in operation for years from 2022 to
2026:

Cost 2023 2024 2025 2026

Category Note (RMB) in
2022

Equipment 10 Years of
45000 45000 45000 45000 45000
Depreciation Depreciation

200-meter
Annual Rent 300000 300000 350000 350000 350000
square space

5-year
Decoration 40000 40000 40000 40000 40000
Amortization

Payment for
Personal Salary 360000 380000 400000 410000 420000
the Employees

Piles, Food
Consumables and Medical 200000 200000 200000 200000 200000
Supplies

Papers,
Office Supplies 10000 10000 10000 10000 10000
Computers

Expense for
Other Cost Water and 30000 30000 32000 32000 32000
Electricity

All Types of 107700

Total Cost 985000 1005000 1087000 1097000
Annual Costs 0

41
7.5. Investment Analysis

The Chinese pet medical market has enormous growth potential, but at the
moment, it is still in its early stages of development and is not yet standardized.
There are also still a lot of unknowns. The majority of veterinary clinics
investigate and analyse local market data before choosing a location for their
business. They will also carry out a preliminary analysis of pet hospitals' typical
profit levels, although they will still be at danger from peer rivalry. Particularly at
the moment, the pet business is expanding, and more and more renowned pet
clinics are also using national designs. They will face intense competition from
the industry if they don't reinvent their business strategy. Future pet hospitals
will also expand in a chain-like fashion, acquiring more and more market share.
The rivalry and merger concerns in the pet medical sector have also been
worsened by the entry of the capital market and the continued integration of
resources.

The best strategy for Bokang Pet Medical Company to compete against rivals is
to increase customer satisfaction via better service awareness and professional
technical proficiency. Secondly, Bokang Pet Medical adheres to the chain
operation mode, establishes brand effect and expands market share through
standardized operation and rapid replication. Finally, Bokang Pet Medical needs
to cooperate with the capital market and integrate its competitors with the power
of capital.

7.6. Income Statement

According to the rules of the pet industry, the opening of new stores requires a
climbing period of at least half a year, so the performance is not normal. The
following data is the monthly amount after the average data.

Table 1, Income Statement

Service Category Operation Profit (RMB) Net Profit (RMB)

Pet Medical 70000 35000

42
 Pet Food and Supply 20000 7000

Pet Grooming 30000 29000

Pet Boarding 17500 16600

Total 132000 87600

The following table is the balance sheet.

Table 2, Balance Sheet (104 RMB)

Item 2022 2023 2024 2025 2026

Current Asset

Total Current Asset 355 576 954 1431 1969

Non-Current Asset

Original Value 30 30 30 30 30

- Accumulated Depreciation 5.7 11.4 17.1 22.8 28.5

Book Value of Fixed Asset 24 19 13 7 1.5

Intangible Asset 21 21 21 21 21

- Accumulated Amortization 4.2 8.4 12.6 16.8 21

Long-term Deferred Expense 20 20 20 20 20

- Accumulated Amortization 4 8 12 16 20

Total Non-Current Asset 57 43 29 15 2

Total Asset 412 620 983 1447 1970

Total Liability 0 0 0 0 0

Owner’s Equity

Paid-in Capital 400 400 400 400 400

Capital Reserve 0 0 0 0 0

Undistributed Profit 12 220 583 1047 1570

43
 Total Owner’s Equity 412 620 983 1447 1970

Total of Liability and Equity 412 620 983 1447 1970

The key to financial forecasting is to first predict sales. This article predicts the
financial situation of the project over the next five years based on sales
percentage and assumes a sales growth rate of 20% in the second and third
years, and a sales growth rate of 15% in the fourth and fifth years. Assuming
that there is a stable proportional relationship between assets, liabilities, and
sales revenue, it is reasonable to use sales percentage prediction.

Table 3, Estimated Profit and Loss in Future 5 Years (RMB)

2026
Item 2022 2023 (-5%) 2024 (0 %) 2025 (+5%)
(+10%)

Operation Income 132000 125400 121638 128936 141830

Operation Cost 7000 6650 6451 6838 7521

Overhead 3500 3325 3225 3419 3761

Financing Cost 1500 1425 1382 1465 1612

Marketing Cost 2000 1900 1843 1954 2149

Deprecation of Fixed
1200 1140 1106 1172 1289
Asset

Estimated Profit 116800 110960 107631 114089 125498

Minus Tax (25%) 29200 27740 26908 28522 31374

Estimated Net Profit 87600 83220 80723 85567 94123

44
8. Conclusion

In this paper, the business strategy of Bokang Pet Medical was examined, with
the study's chosen topic being pet healthcare. It gives a thorough overview of
the project, assesses its viability in light of the industry and economic climate,
and then concentrates on the business model and marketing approach of the
company. The company's capital demands are anticipated, the risks associated
are examined, and preventative measures are developed via the use of
financial statement analysis and the creation of a single shop model to evaluate
costs and inputs. The objective is to develop a group-managed business model
that includes a hierarchy of central hospitals, specialty hospitals, and
community chains, and through standardized replication, to establish
Zhengzhou as a nationally renowned pet medical company while realizing the
aspirations of entrepreneurship and innovation. The project is determined to
have certain practical importance and investment worth through examination.

The expansion of the global economy has been significantly impacted by the
abrupt appearance of the new coronavirus in 2020, and the working
environment is growing more hostile. The government fosters individual
entrepreneurship and corporate innovation. In light of this, the dissertation
serves as the last evaluation and practical test of postgraduate study since it
offers a thorough analysis and review of an entrepreneurial initiative while
making full use of the information acquired and fusing it with practice to make a
daring effort.

45
Bibliography

Brown, B. B., & Jensen, W. A. (2020). Dog ownership and walking: Perceived
and audited walkability and activity correlates. International journal of
environmental research and public health, 17(4), 1385.

Brockman, B. K., Taylor, V. A., & Brockman, C. M. (2008). The price of

unconditional love: Consumer decision making for high-dollar veterinary
care. Journal of Business Research, 61(5), 397-405.

Chen, Q., & Liu, T. (2017). Biogas system in rural China: upgrading from
decentralized to centralized?. Renewable and Sustainable Energy
Reviews, 78, 933-944.

Chen, Q., Ma, X., Rainey, J. J., Li, Y., Mu, D., Tao, X., ... & Petersen, B. (2021).
Findings from the initial stepwise approach to rabies elimination (SARE)
assessment in China, 2019. PLoS Neglected Tropical Diseases, 15(3),
e0009274.

Constable, P. D., Hinchcliff, K. W., Done, S. H., & Grünberg, W.

(2016). Veterinary medicine: a textbook of the diseases of cattle, horses,
sheep, pigs and goats. Elsevier Health Sciences.

Fang, E. F., Xie, C., Schenkel, J. A., Wu, C., Long, Q., Cui, H., ... & Woo, J.
(2020). A research agenda for ageing in China in the 21st century:
Focusing on basic and translational research, long-term care, policy and
social networks. Ageing research reviews, 64, 101174.

Feiyang, L. (2020). Multi-Source Review on Domestic Stray-Animal Problems.

In Proceeding of 2020 2nd Scientific Workshop on Advanced in Social
Sciences, Arts & Humanities, ASSAH (pp. 352-361).

Gao, Y., & Yang, J. (2022, March). Challenge and Opportunity for Development
of Start-up in Pet Economy Through E-commerce Channel. In 2022 7th
International Conference on Financial Innovation and Economic
Development (ICFIED 2022) (pp. 93-98). Atlantis Press.

Geng, X., & Lin, Q. (2021, January). Discussion on the Aesthetic Function

46
 Design of Pet Staple Food Packaging. In The 6th International Conference
on Arts, Design and Contemporary Education (ICADCE 2020) (pp. 679-
682). Atlantis Press.

Hall, C. M., Adams, N. A., Bradley, J. S., Bryant, K. A., Davis, A. A., Dickman,
C. R., ... & Calver, M. C. (2016). Community attitudes and practices of
urban residents regarding predation by pet cats on wildlife: an international
comparison. PloS one, 11(4), e0151962.

Howell, T. J., & Bennett, P. C. (2017). Despite their best efforts, pet lizard
owners in Victoria, Australia, are not fully compliant with lizard care
guidelines and may not meet all lizard welfare needs. Journal of
Veterinary Behavior, 21, 26-37.

Hou, B., Liao, H., & Huang, J. (2018). Household cooking fuel choice and
economic poverty: evidence from a nationwide survey in China. Energy
and Buildings, 166, 319-329.

Hu, Y., Sun, J., Zhang, Q., & Han, Y. (2018). Current status and future
development proposal for Chinese agricultural product quality and safety
traceability. Strategic Study of Chinese Academy of Engineering, 20(2),
57-62.

Hwang, S., Song, Y., & Kim, J. (2021). Evaluation of ai-assisted telemedicine
service using a mobile pet application. Applied Sciences, 11(6), 2707.

Knight, S., & Edwards, V. (2008). In the company of wolves: the physical,
social, and psychological benefits of dog ownership. Journal of aging and
health, 20(4), 437-455.

LaVallee, E., Mueller, M. K., & McCobb, E. (2017). A systematic review of the
literature addressing veterinary care for underserved communities. Journal
of applied animal welfare science, 20(4), 381-394.

Lefebvre, S. L., Golab, G. C., Castrodale, L., Aureden, K., Bialachowski, A.,
Gumley, N., ... & Writing Panel of the Working Group. (2008). Guidelines
for animal-assisted interventions in health care facilities. American journal

47
 of infection control, 36(2), 78-85.

Liang, H., Chen, J., Xie, J., Sun, L., Ji, F., He, S., ... & Li, S. (2014). Hepatitis E
virus serosurvey among pet dogs and cats in several developed cities in
China. PLoS One, 9(6), e98068.

Liu, L., Liang, Y., Song, Q., & Li, J. (2017). A review of waste prevention
through 3R under the concept of circular economy in China. Journal of
Material Cycles and Waste Management, 19, 1314-1323.

Liu, X., Liu, Y., & Yan, Y. (2020). China macroeconomic report 2020: China’s
macroeconomy is on the rebound under the impact of COVID-
19. Economic and Political Studies, 8(4), 395-435.

Lockwood, J. L., Welbourne, D. J., Romagosa, C. M., Cassey, P., Mandrak, N.

E., Strecker, A., ... & Keller, R. (2019). When pets become pests: the role
of the exotic pet trade in producing invasive vertebrate animals. Frontiers
in Ecology and the Environment, 17(6), 323-330.

Ostapenko, T. (2019). NANOECONOMY IN UKRAINE AS FACTOR OF

SUSTAINABLE DEVELOPMENT. Sustainable development under the
conditions of European integration. Part II, 209.

Romero, L. M., Platts, S. H., Schoech, S. J., Wada, H., Crespi, E., Martin, L. B.,
& Buck, C. L. (2015). Understanding stress in the healthy animal–potential
paths for progress. Stress, 18(5), 491-497.

Shen, Y., Hu, F., Wang, Y., Yin, D., Yang, L., Chen, Y., ... & Wang, Y. (2022).
Transmission of carbapenem resistance between human and animal
NDM-positive Escherichia coli strains. Engineering, 15, 24-33.

Tan, J. S. Q., Fung, W., Tan, B. S. W., Low, J. Y., Syn, N. L., Goh, Y. X., &
Pang, J. (2021). Association between pet ownership and physical activity
and mental health during the COVID-19 “circuit breaker” in
Singapore. One Health, 13, 100343.

Tang, H., Shen, C., Zou, L., Cai, C., Edwards, J., Bruce, M., ... & Huang, B.
(2021). Value chain analysis of yellow broiler industry in Guangxi, China to

48
 inform H7N9 influenza control strategies. Preventive Veterinary
Medicine, 190, 105328.

Tao, Y. (2021, June). The Commercial Feasibility Analysis on Pet Online

Diagnosis and Treatment Platform. In Proceedings of the 2021 2nd
International Conference on Internet and E-Business (pp. 63-67).

WANG, Y. (2017). TMALL BUSINESS NETWORK MARKETING STRATEGY

RESEARCH---PET BABY LIVING ROOM FOR CASE (Doctoral
dissertation, SIAM UNIVERSITY).

Wang, J. (2019). The other digital China: Nonconfrontational activism on the

social web. Harvard University Press.

Westgarth, C., Christley, R. M., Jewell, C., German, A. J., Boddy, L. M., &
Christian, H. E. (2019). Dog owners are more likely to meet physical
activity guidelines than people without a dog: An investigation of the
association between dog ownership and physical activity levels in a UK
community. Scientific reports, 9(1), 1-10.

Zhang, H. (2018). Securing the ‘Rice Bowl’: China and Global Food Security.
Springer.

Zhong, R. Y., Newman, S. T., Huang, G. Q., & Lan, S. (2016). Big Data for
supply chain management in the service and manufacturing sectors:
Challenges, opportunities, and future perspectives. Computers & Industrial
Engineering, 101, 572-591.

Zhou, Q., Allen, B. J., Gretz, R. T., & Houston, M. B. (2022). Platform
exploitation: When service agents defect with customers from online
service platforms. Journal of Marketing, 86(2), 105-125.

49