China's Kids are Treasures for Everyone
China can be a tough place to be a youngster. As the only child in most cases, they are the single hope for their parents and two sets of grand parents, to be successful, marry well, and make their fortune to provide for their elders in their latter years. Every minute, some 31 babies are born in the Mainland, or around 16-18 million new bouncing babies a year. Many of those millions will be competing for the extremely limited spots in the good schools, best universities, and eventually, for the top jobs.
That type of competition means it's not surprising that Moms can have a touch of Tiger, and parents can take on the characteristics of a helicopter. With just one chance in such a competitive environment, most Chinese parents place unrelenting emphasis on their child's education and wellbeing. It's not unusual for Chinese to spend more than 30% of their household income on education, with Chinese parents saying education would be their number one priority if they were given a 25% increase in discretionary spending. Right from early childhood, many parents pay a premium for safe baby formula, then food, to ensure their little treasure has the best chance possible at becoming the next Xi Jinping, Jack Ma, Zhang Xin or Yao Ming.
With such emphasis on the next generation, organisations who capture the attention of parents and kids, and appeal to their needs, are in for a boon. The recent loosening of the one-child policy, allowing parents to have a second child if one of the parents was an only child, is likely to make those opportunities even bigger. Be it education providers, to educational toys such as Lego, to online apps and services, to healthy food and activities; positioned and marketed well, there is no other place on the planet that comes close for potential.
Fortunately, the boon won't just be for businesses targeting kids and parents; those kids will grow up, earningmore than previous generations, and spending more on everything from entertainment, to cars, to holidays. As always, we hope you find some news and views below to help you tap into that. Enjoy!
See below highlights of the news this week:
Little Emperors
The Year of the Lego: Why the Company Thrives in China: Chinese parents are buying more and more educational toys, which has seen Lego grow 70% in the first half of 2013, in what has become the world's second largest toy market. Lego still costs a lot more in China than other markets. Chinese parents want things that encourage independence and creativity, that may not be currently offered by the local education system. Sales in education toys have more than doubled in the last five years in China, versus a 38% drop in the USA.
China’s Consumer Babies: Interesting analysis into the expected decreased saving rates and increased spending from the loosening of China's one-child policy. Forecasts are anywhere from 1 million to 5 million extra kids a year. Rudimentary calculations estimate that could add almost a trillion dollars in extra spending to the economy, touching everything from food, to tourism, to education - every segment of the economy. Interestingly though, 5,000 respondents a Sina Weibo survey found 52% of respondents said the "economic pressure" of a second child would be too much.
To Save or Not to Save: Why Are Chinese Holding on to Hard-earned Cash?: China's aggregate savings grew from ¥10 trillion ($1.64 trillion) in 2003 to ¥43 trillion ($7 trillion), an average of ¥31,700 ($5,180) per person. Here's an infograph illustrating motivations for saving, with a baby and education being two of the main reasons.
China's Fathers Say Driving Children Is Their Most Important Job as a Parent: A survey of Chinese fathers found they believe their most important parenting role is driving their child to extracurricular activities and to school . Handling visits to the doctor, disciplining children and helping with homework came in next. Less than 20% believed changing diapers or making lunch were tasks that they were primarily responsible for. By comparison, 80% of American dads thought discipline was their top role.
Chinese Consumers
5 Lessons From Chinese Innovators: How some progressive businesses are tapping into China's massive opportunities: 1) Leave your comfort zone - a number of local Chinese businesses have be successful by starting in lower-tier cities and moving up; 2) Change the way you innovate; 3) Connect the dots; 4) Consumers are your company; and 5) Shift consumer perceptions.
Hong Huang: Chinese Consumers Have ‘Great Eagerness’ To Rediscover Culture: “I think for most Chinese, there is a great eagerness to rediscover Chinese culture in many ways: in food, in fashion, in lifestyle, because they have experienced all the wonders that Europeans and Americans have imported into China and this actually prompted them to be more curious about themselves,” says iLook editor Hong Huang.
Chinese Consumers, Globalization and Innovation: In 2000, nearly 50% of spending by Chinese middle class was on basic foodstuffs. Now they're spending less than 30%, with a lot more discretionary income to spend on other consumer goods and services.
What Makes Chinese (Shanghainese) Consumers Tick?: “The most important drivers for purchasing decisions were being seen to be successful by the possessions you had and acquiring possessions as a central goal for life, while acquiring possessions for happiness was not as important,” Professor D’ Alessandro, CSU following research into Shanghainese consumers.
Environment
Chinese Consumers Care About Brands’ Environmental Efforts: 52% of Chinese consumers care what efforts brands are making to help the environment, and 58% would pay more for it.
Internet, eCommerce, Mobile & Social Media
Chinese Government is “Winning” Internet Ideology Battle: Two months after legislation was launched threatening jail for spreading 'rumours' online in China, a sample of the number of posts by key opinion leaders dropped by 10.4%, including 24.9% in the 2nd month. Tianya, a popular online forum has seen post numbers drop by 60%, with posts related to individual rights and corruption dropping by 70% - that can't be helping the Government's drive to stamp out corruption.
Apple Still Making it Hard to Think Differently: Apple is working hard to keep the Chinese Government onside, in the hope of reversing its declining fortunes in the Mainland. But will these measures potentially alienate Apple fans elsewhere who love the company for its free-thinking, independent ways? It's a difficult balancing act.
Who Rules the Virtual World? WeChat Does: Since allowing WeChat enterprise accounts in August 2012, two million accounts have been created. 20K other smartphone apps have a link to WeChat.
Still Room for Messaging App Latecomers? : Still some work to do to compete with WeChat, but Alibaba's head-on competitor Laiwang clocks up 10m registered users in a month. Not a bad start.
Sport
Building Sportswear Brands in China: 25 min video about building sportswear brands in China. Many youth see sports as an outlet, to let loose after so much study. Sports are assisting young Chinese in their pursuit of identity and grassroot sports are providing inspiring role models for Chinese youth. Even the global super stars need to balance performance with connecting to the locals, and put in the leg work, as Chinese can see through the token facades.
Why Athletic Brands Are Turning To Retail Theatre In Emerging Markets: Where retail is going in China - Great photos and video from Under Armour's new 'store' in Shanghai, building an "immersive experience into the retail context". Consumers take a ten metre tunnel altering the retina in prep for the experience room, where the fun really begins...
Health and Beauty
China Starts to Turn to Drugs as Awareness of Depression Spreads: Although China does not publicise official statistics on mental health, the number of depression-related websites are proliferating, and spending on anti-depression medication grew 22.6% in 2012 to $528 million.
Chinese Tourism
Why China’s Globetrotters Will Outspend All Luxury Shoppers Combined By 2015: Chinese became the world's biggest tourism spenders in 2012, spending $102 billion while abroad. By 2015, they're forecast to spend $194 billion, more than they will spend on luxury goods.
Auto
New Luxury-Car Rivals Aim to Break Germany's Hold on China Market: Germany's Audi, BMW and Mercedes Benz account for more than 70% of China's annual $40 billion, 1.4 million high-end vehicles market, and other countries' automakers want a bigger share. 3 million high end vehicles are expected to sell annually by 2020.
Daimler's Chinese Investment: 'A Step in the Right Direction' : Helping the German camp, Daimler has just received approval to purchase 12% of Chinese partner BAIC to become the first foreign car manufacturer to purchase a stake in a state-owned Chinese auto maker.
Hyundai Puts Chinese Consumers First with Mistra Sedan: Hyundai moves from modifying existing models for China, to designing models from the ground up for the market. The Mistra Sedan is the first such model, with more space inside and a premium look outside to appeal to Mainlanders.
That's The Skinny for the week! China Skinny would love to discuss how we could help with your marketing, online initiatives or research to take advantage of China's opportunities. Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.
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