Facing a rapidly aging population and an artificially suppressed birth rate, China has finally abandoned its 35-year-old One-Child Policy and is encouraging citizens to produce a second child.
The decision made at a meeting of top leaders on Thursday has received widespread media attention. On Sina Weibo, the Chinese equivalent of Twitter, the hashtag: “Will you have a second child?” has been visited 40 million times
More importantly, the change in policy direction will further open up a wide variety of markets, helping manufacturers and e-commerce platforms, and boosting online education and medical services.
According to figures from Huatai Securities and Founder Securities, if the policy is successfully implemented, one to two million new births can be expected each year, with 20 million new births expected by 2018.
Below are the sectors that will likely benefit the most from the revised family planning regulations:
Infant-care e-commerce sites
The online trading volume for infant-care products in the third quarter 2015 exceeded RMB 23.48 billion (USD 3.7 billion), a 129% year-on-year increase, according to a market report.
Due to the high demand, many infant-care e-commerce sites have found success with recent fundraising efforts. In September, Mia.com, China’s leading maternity and infant e-commerce site raised USD 150 million in its latest round of funding, placing its valuation at USD one billion.
E-commerce and online shopping have proven to be popular in China. Market leaders Alibaba and JD.com dominate the sector but many competitors have sprung up to provide specifically to the maternity and infant product sector and will likely see improved business prospects in light of the new baby boom.
Online education is another big winner, because Chinese parents have traditionally prioritized children’s education.
By the end of August, 106 different online education companies had finished a new round of funding. 40 of those startups raised seed funding, 38 concluded their A-series and 17 moved on to their B-series funding, according to Tencent Tech.
In June, the Chinese social network giant Tencent tapped into the online education market by investing USD 20 million into Fengkuang Laoshi, or “Crazy Teacher”, which focuses on educating kids from kindergarten level up to year 12(K12). The site completed a B series funding of USD 24 million in July.
IResearch estimates the online education industry has an annual growth rate of 19% and expects the market value of the sector to reach RMB 160 billion by the end of 2015.
According to research released by Mmbang.com, a social platform for mothers to share their parenting experiences, about 93.6% of inexperienced mothers downloaded apps providing basic information about infant care and regarded them as a good source of advice and information.
(Jing Gao has contribution in the story.)
Top image from Baidu.