Core Viewpoint - The pet industry participants are seeking broader resource support to cope with competition, as evidenced by the recent announcement from Tianjin Yiyi Hygiene Co., Ltd. regarding its plan to acquire Hangzhou Gaoye Family Pet Food Co., Ltd. [1] Company Overview - Tianjin Yiyi Hygiene Co., Ltd. is planning to issue shares and pay cash to acquire assets, specifically targeting Hangzhou Gaoye Family Pet Food Co., Ltd. [1] - Gaoye Family was established in 2018 and focuses on pet food, with its "Xu Cuihua" brand specializing in cat litter [1][3]. Market Performance - Xu Cuihua is a leading brand in the cat litter sector, achieving sales of over 75 million yuan in 2023 and projected to exceed 260 million yuan in 2024, representing a 247% year-on-year growth [3]. - During the "618" e-commerce promotion, Xu Cuihua ranked first in both the Tmall brand and store rankings for cat/dog products, with a 400% increase compared to the previous year [3]. Competitive Landscape - The pet product market is characterized by high product replicability and low manufacturing barriers, leading to significant product homogeneity [5]. - The competition is increasingly focused on effective content marketing and sales channel strategies rather than product differentiation [5][9]. Product Analysis - Gaoye Family's main products include cat food and cat litter, with the former facing challenges in differentiation due to the low barriers to entry in the cat food market [6]. - The market has seen a rapid increase in participants, with many brands offering similar products, making it difficult for Gaoye Family to stand out [6][7]. Financial Considerations - Gaoye Family's cat food has profit potential but lacks scale, while its cat litter has scale but low profitability, placing the company in a challenging position [9]. - The company is investing in a new factory to increase cat litter production capacity, aiming for a production value of 1 billion yuan to reduce marginal costs [7]. Strategic Needs - To enhance profitability, Gaoye Family needs to identify breakthrough opportunities, and the acquisition by Yiyi could provide necessary financial support and facilitate channel expansion [11]. - Yiyi's recent financial performance shows a revenue of 888 million yuan in the first half of 2025, a 9.34% increase year-on-year, indicating its potential to support Gaoye Family [11]. Market Positioning - Despite the potential benefits of the acquisition, the future performance of Gaoye Family remains uncertain, particularly regarding Yiyi's ability to assist in expanding its presence in the Chinese market [12]. - Gaoye Family and Xu Cuihua have higher brand recognition than Yiyi, which may limit the exposure gained from the acquisition [12].