December 04, 2020

Consumption of mother and child products in China

Consumption of mother and child products in China

China’s maternal and child products market has been growing rapidly since 2010, with the market size growing from 1 trillion yuan (1 RMB is approximately 0.96 DKK) in 2010 to 3.6 trillion yuan in 2019, at an annual growth rate of 15.27%. Although the market growth rate is evident, quite some new characteristics have emerged in recent years.

1. Status of China’s mother and baby industry

China fully implemented its two-child birth policy in 2016 (China had been implementing the one child policy before 2016, which meant that a couple only allowed to have one child), the number of births rose to 17.86 million that year, but then in 2017 the births began a rapid downward trajectory. By 2019 the number of births had fallen to 14.65 million, the birth rate also fell to 10.48 percent, it’s the lowest since the founding of the new China. At present, the “two-child” policies have failed to reverse China’s sluggish fertility trend. In terms of fertility structure, the one-child total fertility rate has continued to decline significantly, while the release of the two-child policy has only slowed the decline in the birth rate, the birth rate in China is expected to decline significantly.

In the context of the overall decline in fertility, there are still some new features to note. Affected by many factors such as work-life pressure and education costs, mothers in big cities are significantly less willing to give birth than those in small cities. In terms of data, the birth rate in big cities such as Beijing, Shanghai and Tianjin have remained within 10‰ all year round, lower than the national average. It is reported that 80% of the newborn population in 2016-2019 is located in small cities, as people who live in smaller cities are more willing to have more children because of lower costs of raising and housing. 

2. Trends in the consumption of mother and child products

2.1 High-end well-known brands are popular

Food (formula and supplemental food), diapers, clothing, and toys are the main products of the mother-child industry. More than half of Chinese parents focus their childcare expenditures on milk powder, diapers and children’s clothing. With the people born in the 90s becoming the main fertility force, they are willing to invest more energy and financial resources in the next generation due to their increased consumption ability and willingness. At the same time, these parents pay more attention to the personalized needs, their consumption of maternal and infant products has a clear trend of upgrading, showing an overall trend of high-end and differentiation. According to the survey, Chinese consumers have a strong preference for well-known brands. A high demand for safety and quality in baby products, prompting them to choose international brands with products and brand endorsements.

2.2 Online growth rate slows, offline mother and baby chain stores usher in growth

The growth rate of online channels slowed down, and the sales ratio tended to stabilize. Thanks to the continuous high new-born population in 2010-2016, the rapid development of mobile Internet and the liberalization of cross-border e-commerce and other policies, online maternal and infant sales have ushered in explosive growth. However, due to the declining birth rate in recent years, maternal and infant products have slowed down. In 2018 China’s maternal and infant e-commerce market growth rate has been lower than the overall growth rate of the industry, the overall growth rate of is expected to be 13.9% in 2020, while the growth rate of the online market is only 7.5%. The online market share will be expected drop to 20.45%. Therefore, we believe that the offline physical stores are still the main sales channel for the current and future maternal and infant market.

The market size of mother and baby chain stores began to increase, and products + services became a new trend. As a professional place for selling maternal and infant products, mother and baby chain stores provide quality products and at the same time, possess service advantages. Many mother and baby stores have developed various service projects, such as baby swimming/bathing, baby massage, baby haircut, early education and other projects. These projects not only bring new profit growth point, but also can greatly enhance the frequency of customer consumption and stay time in the store, improve customer stickiness and increase sales of related products.

3. Trends in consumer products for mothers and children

3.1 China’s mother and baby clothing consumption in general shows a trend of consumption upgrading and increasing brand penetration. On the price distribution, the price range of 0-100 yuan is in the absolute advantage, with sales accounting for 85.65%, of which sales of goods in the 25-50-yuan range account for more than 40%. In the area of high-priced children’s clothing, consumption tends to be branded, and consumers are willing to pay a premium for brands with good quality and safety.

3.2 China is a very competitive society, so Chinese parents place great importance on their children’s education, and many of them begin the development of their children’s IQ and EQ in their infancy. The consumption of educational toys has increased significantly in recent years. According to the survey, building blocks and educational toys are ranked first and third respectively in the overall toy category sales in JD and sales are growing year by year.

Danish companies need to think carefully about their strategies if they want to gain a share of the Chinese market for mother and baby products. First of all, brand awareness is very important for high-priced products. Although consumption of high-priced maternal and child products is growing, it is crucial for Danish products to expand their brand awareness and at the same time highlight their advantages against well-known brands in other countries. Secondly, there is huge potential for maternal and child consumption in small cities in China, but these consumers are relatively price-sensitive, and pricing strategies for Danish products need to be adjusted to win over this significantly larger group of customers. Finally, Danish products still have a strong reputation for safety among Chinese consumers, and to take advantage of the rapid growth of educational children’s products, many children’s toys can add or emphasize educational learning features to meet the needs of Chinese consumers and stimulate sales.