Brands weighing up new opportunities after China's removal of one-child policy

New two-child policy predicted to create dramatic growth in consumer spending, but brands need to be authentic rather than greedy in boosting their market share

China’s landmark axing of its one-child policy has put several brands, particularly those in the children’s market, on high alert for how best to connect with what could be a potentially doubled consumer base in the next few years.

In place since 1979 to deal with population growth, the one-child policy was abolished last month. It will be replaced in March by a new two-child policy as China’s government attempts to tackle the economic burden of an ageing population and other social challenges.

The sea-change in policy could create new opportunities for brands. According to a recent Credit Suisse survey, from 2017 the new babies could create an additional 120 billion yuan (US$19 billion) to 240 billion yuan (US$38 billion) in consumer spending each year.

However, it is difficult to predict with any certainty what could happen, given that past easing of the one-child policy has not led to significant economic growth, said Ernest Tan, national chair of Edelman China’s consumer marketing practice.

"Families are under continued pressure to give their child the best they can offer. Although the growth in population might be minimal, the baby product industry is expecting greater demand," Tan told PRWeek Asia.

Brands must also be very authentic in how they approach any new PR strategy around the two-child policy, Tan said, for many Chinese consumers will be put off by companies that are purely out to make money from new, larger families. 

"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," he 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."

Despite the unpredictability of what the new two-child policy will mean, Darren Burns, president of Weber Shandwick China, says there have already been some positive signs for brands.

"Obviously this is great news for those focused on the children’s market – a boost for toy makers, education institutions etc. We’ve already seen some commotion in their share prices," he told PRWeek Asia

"I believe it’s also a boost for those players that are focused on 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."
 
Another aspect for brands to consider is the high cost of raising a child, which is a hot topic for parents in China at the moment, Burns said.

Adding another child to a family will place additional strain on family budgets, and companies could look into addressing this to connect with Chinese families.

"Parents believe it is very costly to raise a child in major Chinese cities," Burns said. "Any brand or NGO that could help alleviate that issue would do well."

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