Will China’s Three-Child Policy Spark a Kidswear Boom? | China Decoded, BoF Professional

As Chinese kids return to school this week, their parents are facing a new era of child rearing in the world’s most populous country — one that will likely coincide with impressive growth in the children’s fashion market.

Prior to the pandemic, China’s children’s fashion segment (encompassing both children’s clothing and footwear for newborn to 14-year-olds) was already growing at a rate faster than its men’s or women’s fashion sectors, clocking 12.5 percent year-on-year growth in 2019, according to data from market research provider, Euromonitor International.

In 2020, the pandemic caused a slight decline: the children’s fashion market in China dropped 3.75 percent year-on-year to a total value of 290.83 billion yuan ($44.85 billion). But the sector is expected to come roaring back this year, with Euromonitor estimating sales of 346.6 billion yuan ($53.46 billion) in 2021, representing growth of close to 20 percent year-on-year.

This boom is set to continue, with the market expected to reach 421.6 billion yuan ($65 billion) by 2023, at a compound annual growth rate (CAGR) of 13.17 percent (from 2020 to 2023).

Looking to the future, there has been a lot of focus on the loosening of China’s infamous one-child policy as a further growth driver in kids’ consumer goods categories. A two-child policy was instituted in 2016, and a three-child policy was announced earlier this year, formally passing into law in recent weeks.

Though there are pressing reasons for Beijing to boost its historically low birth rate, the three-child policy has been met with widespread scepticism from the general population. Chinese parents say raising a child in cities such as Beijing, Shanghai or Guangzhou has become so expensive — and intensive, as competition for university places, for example, ramps up alongside the growing expectations of China’s burgeoning 400 million-strong middle class — that raising more than one child is an economic burden simply too great for many to bear.

Yang Zengdong, a teacher based in Shanghai, is the mother of two daughters. She was thrilled with the lifting of the one-child policy in 2016, having long desired a sibling for her oldest child, Chenchen, but she won’t be taking advantage of the new legal right to have three kids.

“I don’t think the three-child policy will have a big impact; it will only influence a small group of people. The majority still have no intention of having a third child,” Yang said.

The continued success of the Chinese childrenswear market, however, isn’t reliant on the three-child policy. While a baby boom would obviously bode well for this market, there are other factors driving growth in the kids fashion segment that aren’t going away any time soon.

A New Generation’s New Priorities

Today’s new generation of parents come from completely different economic and familial situations than their predecessors, leading to vastly different priorities, said Chen Shu, senior business strategy planning manager at Balabala, a Chinese childrenswear market leader with a 4,800 store-strong retail network in China.

“The mums who are having kids are now mainly post-90s and 99 percent of them grew up in single child families due to the one-child policy; they are very comfortable with a small-sized family,” Chen said.

A new generation of parents has become more emotional, spontaneous and fashion conscious in the way they purchase childrenswear.

“For these young mums, price isn’t the first consideration [when shopping]. They are looking for something fun, interesting, trendy and they are willing to pay a brand premium if the brand is giving them what they want,” she added.

In other words, it’s not more kids, but higher proportional spending by family members of households with just one or two children that is likely to drive market growth.

According to Angelito Perez Tan, Jr., the chief executive of consultancy, RTG Group Asia, Chinese parents have previously taken a more “pragmatic” approach to buying childrenswear, conscious of how quickly kids grow out of clothing and also the fact that school age children in China are almost all required to wear school uniforms, lessening the need for a lot of clothes. But recently, that attitude has changed.

“A new generation of parents has become significantly more emotional, spontaneous and fashion conscious 10,” he said.

Chen says that, while this shift is driving the premium segment in particular (with growth in premium price points outpacing growth in the mass market for childrenswear in recent years), there aren’t large-scale players in this part of the market as yet, only niche local and international brands occupying tiny slivers of market share.

That might change soon with Balabala’s next move; it plans to launch a premium line in 2022 to capture the mid to higher-end of the childrenswear market.

“We still have the mass market price point, but we are increasing the price range to attract more consumers. A lot of consumers are upgrading what they are trying to buy and we still want to capture that market share,” she said.

A Shift in Influence

As in the West, social media and the rise of “mumfluencers” on platforms such as Xiaohongshu have become a vital part of the purchasing journey for this new generation of Chinese mothers.

“The busy mums today might follow two or three KOLs (influencers known locally as key opinion leaders) to see what outfits they are recommending, to see what kinds of trends they are seeing for the next season and that will have a huge influence on their purchase decision,” Chen said, adding that Xiaohongshu in particular is a key tool for Balabala’s messaging.

Kids play a different role in the family than they did even ten years ago; they actually have a voice and their voice is very important.

As well as keeping abreast of the trends and changes impacting this generation of new parents, Shu explained that another societal shift in China has changed the way Balabala performs its market research and positions its products.

“Kids play a different role in the family than they did even ten years ago; they actually have a voice and their voice is very important,” Chen explained. “So we actually interview a lot of kids as well to see what’s popular in school, what are they talking about with their friends?”

In addition to collaborations with the usual western children’s entertainment giants, like Disney and Sesame Street, Chen says, these days Chinese kids are also increasingly into homegrown films, books and television shows. As a result of feedback from Chinese youngsters, Balabala will soon launch a collaboration with Jingling Meng Ye Luoli (Ye Luoli’s Fairy Dream), a popular Chinese animation.

International brands looking to capitalise on China’s children’s fashion boom had better move fast, and move smart, according to Perez Tan, Jr., who sees the broader trend towards domestic brands also evident in the children’s category.

“This can potentially create a challenge for international brands,” he said. “If [they aren’t] equipped to understand current domestic trends, or are unable to find ways to be culturally relevant, that disadvantage will only be further exacerbated.”



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