Cities strive to make home-buying among bigger families more affordable, spurring growth of maternal-child goods
With some cities easing homebuying policies for families with two or more children, the market for products and services catering to such consumers is expanding.
In May, the Hangzhou government in Zhejiang province issued a guideline promoting the healthy and stable development of the city's property sector to satisfy the needs of multi-child families.
According to the guideline, eligible three-child households are allowed to purchase additional housing units beyond the city's purchase quota. When eligible three-child families sign up for public lottery sales of newly built commercial housing, they can enjoy the same advantages as families that rent rather than own homes.
Other cities have also eased housing policies for families with more than one child.
On May 14, the government of Dongguan, Guangdong province, published a notice allowing two-kid and three-child families to buy additional housing. A day earlier, the Nanjing government issued a similar policy with related policies carried out by the governments of Yangzhou, Wuxi and Suzhou in Jiangsu province, Ningbo in Zhejiang province as well as Mianyang and Zigong in Sichuan province.
The policy easing helps Chinese residents with reduced financial capacity due to additional family members to purchase residential property. This has spurred a willingness to have more children, thus promoting the market for goods and services catering to young mothers and their children, industry experts said.
In 2015, China launched a comprehensive second-child policy. At the beginning of the launch of the policy, the number of newborns in 2016 totaled 17.86 million, an increase of 1.31 million compared with that of 2015, and China's birth rate reached 12.95 percent, 0.88 percentage point higher than the previous year, said the National Bureau of Statistics.
With the gradually declining influence of the second-child policy and the newborn population dividend, the number of births in China in 2020 was only 12 million.
By the end of last year, the nation's population totaled 1.413 billion. The number of newborns was 10.62 million, and the birth rate was 7.52 percent. The latter two both marked lows unseen since 2000.
On May 31, 2021, the third-child policy was officially announced. "Giving birth or not" once again became a hot topic, and various memes about the third-child policy appeared on the internet.
On video sharing portal Douyin, there were over 400,000 videos related to "three children", and the cumulative number of views hit nearly 6 billion.
It is expected that although there will not be a new baby boom within the next few years, there will still be a certain degree of recovery in the growth of the newborn-related sector, said market insiders.
According to a report from market consultancy iResearch, China's maternal and child-infant market totaled 3.46 trillion yuan ($515.5 billion) in 2021. The market is expected to maintain stable growth and reach 4.68 trillion yuan by 2025.
"China's population base is large. Although experiencing relatively slow growth, there were more than 10 million newborn babies in the country last year. The market contains great potential," said Chen Qiang, president of Burdock Biotechnology Co Ltd, a domestic company specializing in mother and infant products.
Thanks to the second and third-child policies, the market for goods and services catering to young mothers and their children has been steadily growing in recent years. According to a survey from United States-based data, information and marketing group Nielsen, between May 2019 and April 2021, sales of infant-related fast-moving consumer goods in China, including pacifiers, bottles, diapers, breast pumps, baby food and baby formula, grew at a compound annual growth rate of 5.6 percent.
Between May 2020 and April 2021, the sales volume of the country's overall maternal and infant market totaled 15.6 billion yuan, up 5.4 percent on a year-on-year basis, said Nielsen's survey.
Chen, who has been a market insider for over a decade, said: "With household per capita disposable incomes rising, parents are more and more willing to spend money on their babies. From a long-term perspective, the future growth and sustainability of China's mother and infant market are decent, and there are vast business opportunities ahead."
Parental demand for high-quality maternal and infant products has been rising. A more specialized, higher-end market will usher in opportunities for continuous growth, industry experts said.
According to the 2021 Maternal and Infant Industry White Paper issued by Beijing-based marketing service platform Ocean Engine, since the COVID-19 broke out, parents have been more willing to buy high-priced products for their children. Consumers in the new era, represented by the post-1990s generation, have gradually become the mainstream of the parental group, and their parenting concepts, related consumer behaviors and attitudes have all undergone changes.
"When it comes to maternal and infant products, consumers value the quality and appearance of goods, and are more willing to spend money. Such consumption concepts have driven the consumption upgrade of the maternal and infant market," said the report.
Chen agreed, saying: "With consumption upgrades, baby-related products have also been upgraded. Nowadays, babies have exclusive personal care products catering to them, including face washes, face creams, body washes, shampoos and haircare products. Also, for children in different age groups, there are differentiated products. For example, personal care products for newborns, preschoolers and older children vary. Some skincare companies are considering developing products for children in junior high school and for their mothers, so that they can share skincare products."
Kids prefer various fragrances for their products, which gives us the motivation to develop better-quality, natural, additive-free products, Chen added.
Shenzhen Securities Times said currently, there are more than 100 listed companies in the A-share market with businesses related to the maternal and infant sector, covering skin care, dairy products, children's medicines, toys, retail and clothing.
More than five institutions forecast that in the next three years, a total of 24 companies are expected to have an over 10 percent year-on-year increase in net profit. Among them, Anhui Anke Biotechnology (Group) Co Ltd is expected to grow at a compound annual growth rate of 94.6 percent.
Also, among the 24 companies, Yunnan province-based biopharmaceutical company Botanee Group Co Ltd, which created a sub-brand "Winona Baby" for toddler skincare, received a northbound investment of 649 million yuan in April.
Wei Zhe, co-founder and chairman of Vision Knight Capital, said, "The shifting of the consumption group and their consumption concepts offers new brands in the sector more business opportunities."
Regarding consumer brand choices, Chen from Burdock Biotechnology said that for most high-end consumers, their first choice will be famous brands, especially international brands. However, he also noted that with the rise of the guochao trend or the Chinese cultural tide, newly emerging domestic brands also have chances to present their maternal and infant products to consumers.
"High-quality domestic brands are entering a rapidly growing phase. In the past, the knowledge of raising a child was passed on from experience. Now, even in fourth and fifth-tier cities, parents can easily access scientific parenting knowledge through various channels. With the help of social networking, e-commerce platforms, celebrity endorsements, key opinion leaders and consumers, homegrown brands are able to get connected with consumers and gain trust among the latter," Chen said.
"KOLs and KOCs have an influence on consumers, who tend to acquire brand recognition and then purchase products," he added.
As promising as China's mother and infant market is, experts said industry players should carefully work out business strategies.
Chen Xianglin, chairman of children's brand Igrowkids, said that as household income levels continue to increase, people's sensitivity to prices is also decreasing, and it is difficult to impress consumers simply by relying on low prices.
Consumers' consumption thinking has gradually matured, and decision-making will become more complex and diverse, he said.
Shi Qiong, chairman and president of Shanghai-based mother and infant brand Babemax, said, "Under the consumption upgrade background, when facing consumers, especially young consumers, maternal and infant industry brands need to understand their mentality and ways of thinking, and work out diversified, customized business strategies."