Creating baby-friendly urban markets

Cities offer affordable homes for bigger families, boost growth of maternal, childcare products businesses

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, Nanjing authorities issued a similar policy, with related moves also made by the governments of Yangzhou, Wuxi and Suzhou in Jiangsu province, Ningbo in Zhejiang province, and 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 last two figures 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 country's maternal and infant products market recorded total sales of 15.6 billion yuan, up 5.4 percent on a year-on-year basis, according to the Nielsen 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.