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Children's brands weigh China prospects

News, 09 November 2015

HONG KONG: China's decision to end its one-child policy creates a potentially bigger market for child-related brands, but there will be no sudden explosion in numbers and parents will be sceptical about brands' motivations, industry figures have suggested.

When the policy was relaxed in 2013 to allow couples to have a second child as long as one of the parents was an only child, 12% of those eligible applied, The Economist reported, adding: "demand for just one child becomes ingrained".

Increased living costs and an uncertain economic future are also factors that will inhibit any rush to increase family sizes.

Some 16.9m babies were born in 2014; FT Confidential Research estimated that the new policy, which comes into operation in March 2016 and which permits all couples to have two children, will lead to between 2.8m to 5.4m more babies being born every year for the following five years.

A Credit Suisse survey anticipated the resulting rise in consumer spending could be between $19bn and $38bn a year.

"Although the growth in population might be minimal, the baby product industry is expecting greater demand," Ernest Tan, national chair of Edelman China's consumer marketing practice, told PR Week Asia.

"Families are under continued pressure to give their child the best they can offer," he said, and that means they will be scrutinising carefully the claims made by brands marketing to them.

"For those brands that want to take the opportunity to gain more market share and even launch new products for any new demand, they need to find a good cause and purpose as consumers are more sophisticated and sceptical about the motivation of brands," Tan said.

"Those brands that are seen as greedy and ambitious won't achieve success, while those that provide people with better meaning in their lives will."

One example of what this could mean was given by Darren Burns, president of Weber Shandwick China, who pointed to the area of child development and play.

"We see this as a trend in China now – parents are getting their kids to spend more time playing to develop skills such as team work and creativity," he said.

He also thought there could be opportunities for brands able to alleviate the high cost of raising children.

Data sourced from PR Week Asia, Financial Times, The Economist; additional content by Warc staff