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Navigating changing demographics: the future of China’s child care market in the face of declining birth rates

From its early stages to its current mature transformation, China’s maternal and child market has undergone significant development. In the 1990s, the market was characterized by limited channels, scarce product offerings, and low consumer demand. However, today, it has evolved into a dynamic landscape with both online and offline operations, offering a wide range of product categories. What’s more, the market now boasts high-quality and well-designed products to cater to the needs and preferences of consumers.

High expectations were held that China’s child care market will experience even higher growth due to the government’s promotion of the three-child-policy and its housing subsidies for families. However, the industry shows slowing growth: in 2023, it is estimated to grow 7.9% year-on-year compared to 12.5% in 2019. Although growth is slowing down, the market is still projected to expand: in 2022, it amounted to 4.6 trillion RMB and is expected to reach 5.4 trillion in 2024. The competition in the industry is strong, and it pushes further development of the products offered. 

In 2022, the most purchased categories of childcare products were diapers, infant nutrition, baby personal care items, milk powder, food supplements, and baby wipes. Within the maternal and child care market, the largest shares are those of clothing (26%), milk powder (22.7%), followed by diapers (12.1%), and food supplements (9.3%).

Source: MamyPoko, Baby diaper advertisement, 2023

China’s declining birth rate

Despite efforts to encourage higher birth rates in China, there is a declining willingness among families to have children. China’s births have been declining in the past decades, seeing a sharp drop of 2% in 2019-2020, followed by similar decreases in the following years. As a result, from 2020, only around 1,000 babies were born each year per 10,000 people, and this is predicted to decrease even further in the long term.

Number of child birth in China
Source: iResearch, designed by Daxue Consulting, Children born in China 2016-2024E

This trend can be explained by several factors. First, the growing cost of living and raising children is turning families away from giving birth to multiple children, if any at all. The second is the growth of single households, both male and female, that prefer investing into pets or luxury items instead of family. Although the one-child policy officially ended in 2016, roughly a half of newborns each year are first children. This trend was further reinforced by the high cost of university fees, prompting parents to focus on providing the best education and opportunities for their single child rather than expanding their family. As a result, the potential impact of the recently introduced third-child policy is expected to be limited.

Health and safety matter

Chinese parents are showing a strong concern with the safety and quality of baby products. This partially comes as a result of the one-child-policy, which forced parents to focus on giving the best to their only child, creating a tradition of excessive care for children. As well as this, past food safety issues made parents more alert with protecting their family. One example was the 2008 melamine scandal, when contaminated milk was sold and led to fatalities among infants.

Covid-19 has spurred these concerns too, with people paying much more attention to the safety and quality of bought products. In 2021, health and family safety became the top concerns for half of Chinese consumers. Furthermore, this trend was further encouraged by the government, which has been introducing stricter regulations. The latest update to the regulations was made in 2023, making them “the world’s toughest”. It revised nutrition rules and aimed to protect children from any danger or malnutrition.

Parents are interested in premium products

Premium-category products are seeing a rise too, with parents being ready to spend larger sums on premium items. The growing middle class is seeing an increasing purchasing power with disposable income expected to grow from 35 thousand RMB in 2021 to 47 thousand in 2025. The post-90s generation accounts for 60.6% of today’s parents, and millennials are much more willing to buy fewer, but higher quality products. For example, Balabala, a brand known for its extensive selection of children’s clothing, places a strong emphasis on research and development while actively fostering partnerships with renowned designers to promote its products.

Parents are embracing a new approach towards raising children, with more attention being paid to kids’ holistic wellbeing. They are much more willing to pay attention to their children’s needs and emotions, listen to their kids, and focus on communication.

Moreover, modern Chinese mothers pay much more attention to their own well-being than previous generations. Within the maternity and childcare market, the leading category purchased by Chinese consumers were maternal personal care items, with 66% of buyers acquiring the products. Along with this, the third place was taken by maternal clothing, with 50% of consumers buying it.

The higher spending capability encourages luxury brands to seek opportunities in the childcare market, producing more clothes for children. Brands like Bonpoint and Brave Kid are enjoying popularity, and childrenswear lines of Thom Browne, Burberry, and Ralph Lauren are cited as favorites by some parents.

Source: Bonpoint, Baby collection, 2023

Domestic brands are gaining more strength

Guochao has perpetrated China’s child care market too. Interviews conducted by China Daily show a shifting tendency among buyers’ preferences. Older generations naturally have more trust towards foreign brands, because they first encountered baby care products when imported products entered the Chinese market. Unlike them, younger people becoming parents today tend to have higher trust towards domestic companies.  

The government’s efforts in improving health regulations and promoting local producers are paying off. Domestic brands accounted for 18% of the maternal and childcare market in 2016, and increased to 20% in 2020, while the market share of European and American brands dropped from 17% to 12% in the same years.

However, with the decline in birthrates, companies in the baby product industry are now exploring alternative avenues for growth. One such approach involves diversifying their product offerings. For instance, firms are expanding their range to cater to different age categories. Some companies have ventured into producing beverages targeting young women, with a focus on vitamin-rich supplements. Others, like Yashili, start producing milk powder for adults and the elderly.

Main trends in China’s child care market

  • Despite the launch of the three-child policy, birth rates in China continue to decline.
  • Safety and prioritizing children’s health have become significant concerns for both the Chinese government and consumers.
  • With the growing purchasing power of the Chinese middle class, more parents are willing to buy premium and luxury products for their children.
  • Although previous generations trusted foreign brands more, millennials are willing to support Chinese producers in the child care market too.

Author: Sofia Tishchenko

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