Chinese businesses hope for baby boom in consumption after child policy relaxed

World Today

China announced last week it would abandon its decades-long one-child policy, allowing all couples to have two children, with the aim of growing the economy and better support the aging population.

The Chinese Academy of Social Sciences estimates that the new policy means at least 2 million newborns are expected each year. It may also mean more business opportunities for markets catering to children.

Lucy Wang, a sales person from Mothercare in Shanghai, said that after Shanghai relaxed birth controls last year, they’ve sold 40 percent more children’s clothing in the past few months compared to the previous year.

“After the new policy, many moms began considering having a second child in the future. So longer wearing products like toys and clothing, which can be passed down from an older sibling to a younger one are now more popular. We see an increasing demand for those,” said Wang.


(Photo by CFP)

Eva Na, vice president of consulting firm Nielsen also sees bright prospects for rising business opportunities in all categories related to childbearing, especially due to the large number of working mothers in China. She predicted that education-related products, baby formula, diapers, clothes, and toys would be key areas for rapid development.

“Nowadays, a lot of parents, particularly more mothers are working. Infant formula, as well as baby food, provides convenience for working moms to feed the baby. And also because it is their second child, there might be an increasing need for baby-related service like early child care, education, or any such service, that helps them to raise their child better, in pursuit of the quality or high standard for the babies,” Na said.

Is China going to embrace baby boom business? Photo by  Li Jiangsong, CFP

(Photo by Li Jiangsong, CFP)

In the past few years, the childcare industry has seen a double-digit growth. Last year, the baby products market hit a value of over 100 billion yuan ($15.7 billion), up 17 percent compared to the previous year and much higher than the average growth in the fast moving consumer goods market.

While baby-related businesses might be looking forward to increased profits, some disagree that there will be a big baby boom. Many couples in big cities have mixed feelings towards the new policy, as the cost for raising a second child could be a huge burden.

“Raising a child costs a lot, at least 20,000 yuan ($3141) to 30,000 yuan ($4712) a year before kindergarten. And then it will cost more for education,” said Lyu Guizhu, a grandmother and resident in Shanghai.

The Chinese Academy of Social Sciences said that the average annual cost of raising a child in China can reach 16,000 yuan ($2,516). Analysts also estimated that only 10 percent of parents affected by the new second-child policy intend to take advantage of it.