In the first quarter of 2018 China’s GDP growth continued to bubble away at 6.8%, largely driven by consumption which accounted for 77.8% of the growth. Powering this critical economic driver is the ever-evolving millennial; higher-earning, freer-spending, and in many cases with child in tow or one not far away.
17.2 million babies were born in China last year – the population of the Netherlands – expanding the already-significant demand for child and family related products and services. A child born in China today will have parents earning 130% more than those born a decade ago. Their parents will be four and a half times more likely to have travelled beyond Greater China. The millions of new parents are more educated, open minded and worldly than any generation before them, and as a result are more inclined to Western products and lifestyles.
The shifting profile of Chinese parents has also changed the way they research and shop and the products they are seeking. Although parenthood remains steeped in culture and tradition and is heavily influenced by family structure, mothers are the least-trusting consumer group in China and among the most digital. They are large contributors to the rise of China’s ecommerce which grew three-and-a-half times faster than traditional retail last year. One of the fastest growing categories online is FMCG, where 43% of the value of products sold are bought by families with children aged below 14. Similarly, two-thirds of cross border shoppers have children, a result of easier access to trusted, safer products from abroad.
Yet family-relevant products aren’t exclusively focused around health and safety. Brands have found success catering to families’ busy lifestyles with products that are also attractive to kids. An example is animal-shaped dumplings that are easy to prepare within a few minutes. Products that understand and minimise those pain-points of hectic family life or contribute to the happiness of families are well placed to appeal to the lucrative segment.
China’s young families are an incredibly important demographic for relevant and well-marketed products. Yet for a larger share of Chinese at child-rearing age, parenting WeChat groups, imported infant formula and panda-shaped dumplings are not relevant. Despite initial enthusiasm from the loosening of the One Child Policy and youths having sexual intercourse earlier, Chinese millennials are becoming more indifferent about sex and less likely to be parents.
China’s fertility rate of 1.24% is even lower than Japan’s 1.46%. Slowing birth rates mean there remains plenty of opportunities in products and services unrelated to families such as health, travel, entertainment and fashion which can seize a share of spending that may have otherwise been used on childcare. Go to Page 2 to see this week’s China news and highlights.