Second-child market

Coming of age

China’s second-child policy and e-commerce boom are revitalizing the mother-infant industry as brands shift focus to quality


February 5-11, 2018
in Hong Kong

The second-child market has become the new battlefield for companies in the mother-infant industry, especially when young Chinese parents are willing to provide their babies with the best, regardless of price.

“Brand is the first priority for Chinese consumers when buying mother-infant products,” said Vishal Bali, managing director of market research firm Nielsen China. He cited infant milk as an example. According to Nielsen’s research, around 55 percent of consumers will first look for the brand name before further researching the suitable ages, ingredients and functions of the product.

“Only 9 percent of consumers will check the price after deciding which brand to go for,” he said, adding that over the past five years, consumers have been paying more attention to the health and safety of products, especially related to infant products.

Under the potential demographic dividend brought by China’s second-child policy, this ongoing consumption shift is encouraging companies to compete for a better brand image and bigger market share.

A storefront of Annil, a children’s wear company based in the southern city of Shenzhen. Even though the brand ranks second in China’s children’s wear market, it accounts for only about 1 percent market share, reflecting the sector’s intense competition. (Provided to China Daily Asia Weekly)

In January 2016, more than three decades after implementing the single-child policy to rein in the growth of the country’s population, China introduced the universal second-child policy.

The total number of births at hospitals in China was around 18.5 million in 2016, the highest level since 2000, according to the National Health and Family Planning Commission. Though the number dropped to 17.58 million last year, Xinhua reported that over half of the newborns were second children, a 5 percent rise from 2016.

The sales value of infant products in China reached 123.2 billion yuan ($19.2 billion) from September 2016 to August 2017, an increase of 11 percent, according to Nielsen’s data. The sales value of key infant fast-moving consumer goods like infant food supplement, diapers and infant formula milk, all have recorded double-digit growth.

In another report, released jointly by China e-commerce giant and a research institute under the 21st Century Business Herald in January, nearly 80 percent of people surveyed are willing to have a second child as long as they can afford to have one. Driven by the rising population and consumption upgrade, the report said China’s mother-infant market will continue to grow, exceeding 4 trillion yuan by 2020.

Foreign brands remain major players in the market, said Bali from Nielsen China. In 2016, foreign brands accounted for up to 65 percent of the total market share in China for offline sales of milk powder and diapers, according to Nielsen.

This is because consumers’ trust in the quality of foreign brands still exceeds that of local brands, Bali said.

Bloom & Grow, a Hong Kong-based distributor of international baby, children’s and maternity brands to Asia, now considers the Chinese mainland its “most important market” because of the huge business potential in growing families.

Founder Alexandra Dickson Leach said the company records growth in almost all categories as Chinese parents search for products with a design edge or unique functionality, despite higher prices compared to local brands.

Among the company’s best-sellers are baby carriers by American brand Ergobaby, which increased fivefold in online sales on Amazon China in 2016, as reported by International Business Daily.

Innovative improvements

Toys “R” Us, the popular US toy retailer that operates more than 135 stores in China, still plans to open more stores in China despite the company’s financial restructuring at home.

In May 2017, Roy Sammartino, managing director of Toys “R” Us China, said China is the company’s fastest-growing market.

Local companies are making improvements in terms of innovation, development toward the high-end market and expansion of distribution channels, according to Bali.

Annil, a children’s wear company based in the southern city of Shenzhen, targets the middle- and high-end market with products that adhere to an environmentally friendly design philosophy. Last year, the company became the first of its kind to be listed on China’s A-share market.

Even though the brand now ranks second in China’s children’s wear market, sharing the same ranking as foreign giant Adidas, both take only about 1 percent market share, according to Annil’s annual report.

“The child-wear market is still in a growth stage. It grows fast but is relatively fragmented,” said Cao Zhang, chairman of Annil. He noted that more domestic and foreign companies are entering the market.

H&M from Sweden, Gap from the US, Zara from Spain, Uniqlo from Japan, as well as luxury brands like Burberry, Dior and Armani, have all rolled out children’s wear products in the Chinese market.

Last year, US toy manufacturing giant Mattel announced a strategic partnership with the Chinese clothing brand Three Gun Group, which will enable both companies to launch their first codeveloped product line of clothing for newborns and infants.

Cao Chunxiang, deputy manager of Three Gun Group, said the company will be able to break new ground in the infant and toddler industry.

Cao from Annil pointed out that domestic brands have yet to take a high market share at home, and competition will intensify with the entering of more foreign brands.

“For domestic brands, winning trust from consumers with high-quality products is of great importance. At the same time, we need to expand our distribution channels to improve the brand’s influence,” he said.

Online boost

With more than 1,400 stores nationwide, Annil also runs its own e-commerce center and online service team while partnering with major e-commerce platforms in China like Taobao, Tmall, and In its annual report, online purchases accounted for around one-fourth of its total sales.

Online channels have become a key way for brands to reach consumers as nearly 80 percent of families purchase mother-infant products online, according to research company iResearch.

Wang Huainan, founder and CEO of the Chinese parenting website Babytree, said that along with the second-child policy, young mothers – whom he categorized as “network generation” consumers – are driving the online sales boom in the mother-infant industry.

“Mothers even haitao for quality products,” said Wang, referring to the Chinese term for domestic consumers shopping overseas or paying third parties to buy products and ship them to China. Cross-border shopping is an important component for mother-infant e-commerce platforms.

The Nielsen report showed that over half of the surveyed mothers make purchases on overseas sites as foreign products are thought to be of better quality.

According to Wang, millions of users visit Babytree every day to check for mother-infant products, learn and exchange pregnancy or child-care experience, and document their children’s growth, making it one of the best-known websites for Chinese mothers online. The company also announced monthly revenue of tens of millions of dollars since 2016.

“All consumers are more likely to trust experienced big brands,” said Wang.

Babytree adopts a strategy of community-based e-commerce to analyze what is being discussed in its online forum, to recommend suitable products from its e-commerce platform, and even to develop goods in response to demand.

For example, in July 2017, noticing that mothers in its online community were concerned about possible allergies caused by baby tissues, Babytree partnered with a local paper company to create a product using special weaving techniques instead of potentially harmful preservatives.

Challenges ahead

“This product was greatly welcomed (by our users),” said Wang, who believes that catering to consumers’ needs can achieve good results.

Bali from Nielsen said that demand for a better quality of life will be a strong industry trend. This will see brands putting more emphasis on health, safety, convenience and innovation, he added.

Wang said that “new retail” online and offline integration will develop to help brands and companies answer this demand.

“Users can gain knowledge and communicate with others while enjoying personalized shopping recommendations supported by big data analysis. On the other hand, offline (stores) can provide experience-oriented and scenario-based membership shopping services,” said Wang. “Just like Amazon Go and Apple Stores.”

While companies expect more growth to stem from the second-child policy, Bali stressed that the potential demographic dividend would present a major challenge for the mother-infant industry.

“Despite the boost from the second-child policy, changes in people’s lifestyles caused by increasing living expenses may lead to a lower birth rate, which means a possible downturn for the industry.”

Pressure piles on women in the workplace Asia needs more mothers in employment but must tackle prejudice and discrimination

February 5-11, 2018

‘Are you married?”

This was the first question a job seeker surnamed Jiang was asked by a recruiter in Beijing, but her answer “no” did not suffice. “They immediately asked whether I have a boyfriend and where he is,” she said.

“It’s a common question for most local companies,” Jiang said. “The question would be ‘do you have children?’ or ‘when do you plan to have one?’ if your answer is yes.”

Jiang’s case is not unusual in China’s job market.

According to Li Qiang, a senior vocational consultant with Chinese recruitment website, many female job seekers face questions that are irrelevant to their professional skill set or working experience.

“These inquiries will be focused on their marital status, family planning or work-family balance,” said Li.

The situation is gaining more attention with the launch of China’s universal two-child policy. After more than 30 years of the one-child policy, the change allows all families to have a second child. With more families welcoming a second baby, women are worried that employers may now see them as a bigger burden.

“The maternity leave set by law is a relatively long period of time, especially when the second-child policy has doubled the time costs,” said Li. “Besides, salary required during maternity leave and the possibility that female employees might jump to another company (after giving birth) are also quite risky to companies.”

Female graduates attend a job fair at a university in Kunming, Southwest China’s Yunnan province, on Dec 14 last year. China’s universal two-child policy has given rise to fears that employers may now see women as a bigger burden. (IMAGINECHINA)

Since the new policy was launched in 2016, 30 provinces in China have extended maternity leave to an average of 138 to 158 days, according to an inspection on implementation of the new family-planning policy. Mothers in the southwestern Tibet autonomous region enjoy the longest period of maternity leave, at up to one year.

The extension was based on the revised Law on Population and Family Planning adopted in 2016. According to the law, all female employees who give birth are entitled to between one and three months additional maternity leave on top of the 98 days mandated.

Li said extended maternity leave gives working mothers more time to rest and to cope with family obligations.

“But it also means that working mothers will be away from the workplace for a longer time, which will make it more difficult for them to come back,” he added.

Nearly 60 percent of working mothers do not want a second child, according to Zhaopin.

In a poll by the recruiter that focused on women’s career worries caused by childbearing, replacement by others ranked No 1. This was followed by barriers in getting promoted and applying for higher salaries, and the hurdle to make a comeback after childbearing.

“Companies will be more careful when recruiting female employees since they have to deal with higher costs,” Li said.

Golden time

Female employees aged between 25 and 35 suffer the most from this gender discrimination, as they are not just in the golden time of their career development but are also at their peak time of giving birth.

Zhaopin reported that women who are married without children are more likely to face this “reality” in looking for jobs.

In 2017, China’s labor force participation rate of females was 61 percent, as estimated by the International Labor Organization. This is way above the global average of 48.7 percent. The issues faced by career women in China are somewhat shared across Asia and the globe.

On July 12 2017, when Takako Suzuki, a Japanese lawmaker, announced on her blog that she was expecting her first child, it sparked a wave of negative comments. Some said a pregnant woman cannot be an effective public servant and that motherhood would distract her from her government role, as reported by The Japan Times.

The newspaper said that the country’s Ministry of Health, Labor and Welfare found in a survey that 21.8 percent of full-time employees and 48.7 percent of temp staff have experienced workplace maternity harassment, or matahara in Japanese.

Japan is not the only country in Asia where women face such problems in the workplace.

In a poll of 3,000 companies in 2015, more than 80 percent of private firms in South Korea said that only one-third of female employees returned to work after maternity leave, according to The Economist.

Government data showed that 26.3 percent of South Korean women were disconnected from their careers in 2016. The country’s National Statistics Office also said that the proportion of nationals whose career stops due to pregnancy and childbirth is increasing.

In Malaysia, according to the Workplace Discrimination Survey by the Women’s Aid Organization, more than 40 percent of the 222 women polled had experienced job discrimination due to pregnancy.

The top five ways employers discriminate against pregnant women are by making their positions redundant, denying promotions, placing them on prolonged probation, demoting and even terminating their jobs, the organization said.

Marian Baird, professor of gender and employment relations at the University of Sydney Business School, noted the enormous potential for women to engage more in the labor market as Asian economies grow and governments seek to increase labor force participation.

Such efforts can be seen in Japan, which needs more female participation in the workforce as it battles an aging population and stagnant economy. To this end, Prime Minister Shinzo Abe has proposed an initiative called “womenomics”, which aims to raise in the proportion of mothers who return to work after the birth of their first child to 55 percent by 2020. The number is 38 percent at present.

A change effective since January to Japan’s dependent-spouse tax deduction system was believed necessary for encouraging more women into the workplace.

South Korea is considering double maternity leave pay, which will enable female employees on maternity leave to receive 80 percent of their monthly salary, according to The Korea Times.

Admitting that many Asian countries are paying close attention to their policy frameworks, Baird is impressed how the policy regime in the Philippines is “well developed” despite existing problems for career women and across the economy.

The Philippines ranked the 10th best-performing country in the Global Gender Gap Index 2017 by the World Economic Forum. Despite falling three places from the previous year, it remains the most gender equal country in Asia. In contrast, Pakistan ranked 143rd among 144 countries.

High scores

In a 2015 report, the Asian Development Bank also acknowledged the Philippines, along with Australia, Mongolia, New Zealand and Singapore, on its high sub-index score on economic participation and opportunity, labor force participation, educational attainment, and health and survival.

“Asian countries do have a number of policies, such as maternity leave and lactation breaks, which can assist women at work. The problem is often one of compliance and enforcement,” said Baird.

“In more developed policy settings, governments and employers are now paying more attention to paternity leave policies and to quotas and targets to ensure that women are given the opportunities to participate in the labor market.”

Li from Zhaopin said that in China, the percentage of female employees facing gender discrimination decreased from 38 percent in 2016 to an estimated 25 percent in 2017.

He attributed the improvement to the economic transformation from manufacturing to services, and from services to knowledge, which boosts the number of new jobs and brings more opportunities for women.

“They are even more competitive than men in terms of innovative jobs since they are more discerning about the changing world and better communicators.”

According to the white paper on Gender Equality and Women’s Development in China published in 2015, one-fourth of entrepreneurs in China are female, while 55 percent of new Internet businesses are founded by women.

During the Global Leaders’ Meeting on Gender Equality and Women’s Empowerment in 2015, Chinese President Xi Jinping put an emphasis on promoting gender equality and women’s empowerment. This includes updating policies to stimulate women’s potential, raising women’s participation and ensuring women’s equal share in social and economic development.

Li hopes that the social security system can be improved further, especially with a focus on female employees to help with their worries over child care and career ambition. Measures like maternity allowance, social security and tax deduction, or flexible working hours, are all desired by female workers.

Baird from the University of Sydney agreed that both government and business can play a major role in shifting attitudes toward women, while men need to play a bigger role in domestic and care work as well.

“The major challenge is that the policy framework in most countries is not conducive to assisting women participate in the labor market,” she said, “especially women with care responsibilities, of either or both child care and elder care.”

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