1. Marketing to Children - China - November 2012 INTRODUCTION Methodology Definitions EXECUTIVE SUMMARY Decreasing proportion of Chinese youngsters Figure 1: Age structure of Chinese population, 2002-11 Multi-generational households Figure 2: Household composition, by parents age, July 2012 Uptake of paid extra-curricular activities is high Figure 3: Additional paid classes, July 2012 Nearly half of Little Emperors get pocket money from grandparents Figure 4: Sources of childs pocket money, July 2012 Necessities are prioritised Figure 5: What monthly income is spent on average, July 2012 Children in Tier 1 cities lead technology ownership Figure 6: Childrens product ownership, July 2012 A day in the life of a Little Emperor Figure 7: A childs day average time spent on each activity, July 2012 MARKET BACKGROUND Key points How the phenomenon of The Little Emperors emerged Evidence of gender imbalance Figure 8: Age structure of Chinese population, by gender, 2002 and 2011 History of the One-Child Policy Figure 9: China population statistics, 2011 Exceptions to the One-Child Policy Figure 10: Urban exemptions to the One-Child Policy, 2011* One child, six incomes The emergence of the middle class Early retirement leads to active involvement of grandparents CURRENT LIVING SITUATION Key points Property ownership Figure 11: Property ownership and number of bedrooms in the property, July 2012 Type of property owned Figure 12: Type of primary residence, July 2012 Who Little Emperors live with Figure 13: Household composition, by parents age, July 2012 Over nine in ten Little Emperors have their own space Figure 14: Childrens living arrangements, July 2012 Presence of domestic help Figure 15: Presence of domestic help in the household, July 2012 THE NEXT GENERATION OF LITTLE EMPERORS Key points Childcare arrangements This report is supplied in accordance with Mintel's terms and conditions. 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Figure 16: Daycare arrangements, July 2012 Baby personal care purchases Figure 17: Baby products bought in the past 12 months, July 2012 Preference for foreign brands of nappies Figure 18: Brands of disposable nappies bought in the past 12 months, July 2012 Advertising illustrates benefits of wearing nappies Parents look for 'natural' credentials Figure 19: Attitudes towards nappies, July 2012 Baby food and drink purchases Figure 20: How the child is fed, July 2012 Parents' anxieties fuel preference for foreign brands of baby formula Figure 21: Brand of infant formula used, July 2012 Taking a baby around Figure 22: Items used to transport the child, July 2012 Older parents focus on fitness of toddlers Figure 23: Attitudes towards transport of the child, July 2012 EDUCATION OF LITTLE EMPERORS Key points Parents' educational aspirations for Little Emperors Figure 24: Type of degree intended for child, July 2012 Parents aged 20-39 more likely to opt for private school Figure 25: Type of school the child attends, July 2012 Extra-curricular activities enhance academic credentials Figure 26: Additional paid classes, July 2012 Parents wish for a brighter future for their offspring Figure 27: Willingness to fund the childs studies abroad, July 2012 American institutions are favoured Figure 28: Preferred country for childs studies abroad, July 2012 Attitudes towards supporting children financially Figure 29: Financial impact of covering childs education, July 2012 SPENDING POWER OF LITTLE EMPERORS Key points Sources of childrens income Figure 30: Sources of childs income, July 2012 Fathers aged 40-49 most generous with offspring Figure 31: Amount of monthly allowance, July 2012 Mothers require more discipline from Little Emperors Figure 32: Condition monthly allowance is based on, July 2012 Higher-income families attach fewer conditions to pocket money Figure 33: Condition monthly allowance is based on, by household income, July 2012 Childrens financial product ownership Figure 34: Savings account and insurance policies set up for child, July 2012 Focus on education Figure 35: Attitudes towards the childs development and family finances, July 2012 Boys more vocal about what they want Figure 36: Attitudes towards the childs development and family finances, by gender of child, July 2012 FAMILY SPENDING HABITS Key points What families spend extra income on Figure 37: Monthly discretionary expenditure, July 2012 Spending on necessities is prioritised Figure 38: What monthly income is spent on average, July 2012 Clothing purchases for children This report is supplied in accordance with Mintel's terms and conditions. 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Figure 39: Branded childrens clothing bought, July 2012 Girls prefer international brands of casualwear Figure 40: Sportswear brands bought for child, July 2012 Attitudes towards buying clothes for children Figure 41: Attitudes towards childs clothing, July 2012 Dads are more lenient with Little Emperors Figure 42: Attitudes towards childs clothing, by gender of parent, July 2012 Childrens device ownership Figure 43: Childrens product ownership, July 2012 Childrens mobile phone ownership Figure 44: Brand of smartphone owned by child, July 2012 FAMILY LEISURE AND HOLIDAY HABITS Key points Family holiday habits Figure 45: Holidays taken in the past 12 months, July 2012 Overseas travel is growing Figure 46: Holidays taken in the past 12 months, July 2012 Family leisure activities Figure 47: Family leisure activities done regularly, July 2012 A DAY IN THE LIFE OF A LITTLE EMPEROR Key points A childs typical day Figure 48: A childs day average time spent on each activity, July 2012 Who takes care of children? Figure 49: The childs support network, July 2012 How connected are children with other family members? Figure 50: People the child spends time with average time spent with each, July 2012 APPENDIX CURRENT LIVING SITUATION Figure 51: Type of primary residence, by demographics, July 2012 Figure 52: Number of bedrooms in property, July 2012 Figure 53: Number of bedrooms in property, by demographics, July 2012 Figure 54: Type of property ownership, by demographics, July 2012 Figure 55: Household composition, by demographics, July 2012 Figure 56: The childs living arrangements, July 2012 Figure 57: The childs living arrangements, by demographics, July 2012 Figure 58: Presence of domestic help, July 2012 Figure 59: Presence of domestic help, by demographics, July 2012 Figure 60: Presence of domestic help, by demographics, July 2012 APPENDIX THE NEXT GENERATION OF LITTLE EMPERORS Figure 61: Daycare arrangements, July 2012 Figure 62: Daycare arrangements, by demographics, July 2012 Figure 63: Baby products bought, July 2012 Figure 64: Most popular baby products bought, by demographics, July 2012 Figure 65: Next most popular baby products bought, by demographics, July 2012 Figure 66: Other baby products bought, by demographics, July 2012 Figure 67: Brands of disposable nappies bought, July 2012 Figure 68: Most popular brands of disposable nappies bought, by demographics, July 2012 Figure 69: Next most popular brands of disposable nappies bought, by demographics, July 2012 Figure 70: Other brands of disposable nappies bought, by demographics, July 2012 Figure 71: Attitudes towards nappies, July 2012 Figure 72: Most popular attitudes towards nappies, by demographics, July 2012 Figure 73: Next most popular attitudes towards nappies, by demographics, July 2012 Figure 74: How the child is fed, July 2012 Figure 75: Most popular how the child is fed, by demographics, July 2012 Figure 76: Next most popular how the child is fed, by demographics, July 2012 Figure 77: Brand of infant formula used, July 2012 Figure 78: Most popular brand of infant formula used, by demographics, July 2012 Figure 79: Next most popular brand of infant formula used, by demographics, July 2012 This report is supplied in accordance with Mintel's terms and conditions. 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Figure 80: Items used to transport the child, July 2012 Figure 81: Car seat/booster car seats used to transport the child, by demographics, July 2012 Figure 82: Pushchair/buggy used to transport the child, by demographics, July 2012 Figure 83: Sling used to transport the child, by demographics, July 2012 Figure 84: Back carriers used to transport the child, by demographics, July 2012 Figure 85: Travel cot used to transport the child, by demographics, July 2012 Figure 86: Attitudes towards transport of the child, July 2012 Figure 87: Most popular attitudes towards transport of the child, by demographics, July 2012 APPENDIX EDUCATION OF LITTLE EMPERORS Figure 88: Type of degree intended for child, by demographics, July 2012 Figure 89: Type of school the child attends, by demographics, July 2012 Figure 90: Most popular additional classes paid for, by demographics, July 2012 Figure 91: Next most popular additional classes paid for, by demographics, July 2012 Figure 92: Most popular willingness to fund the childs studies abroad, by demographics, July 2012 Figure 93: Most popular financial impact of childs education, by demographics, July 2012 Figure 94: Next most popular financial impact of childs education, by demographics, July 2012 Figure 95: Agreement with the statements Independence is an important treat a child has to learn and I am teaching trying to teach my child to be independent, by demographics, July 2012 Figure 96: Agreement with the statements I would like to offer my child a carefree childhood free from pressure and I dont want my child to feel pressured all the time, by demographics, July 2012 Figure 97: Agreement with the statements I want my child to focus on its education instead of wasting time on activities such as watching TV and Study is the most important activity for my child, by demographics, July 2012 Figure 98: Agreement with the statements If I want to buy something for myself, I first check if I cannot better spend that money on my child and I am concerned about my childs ability to live independently after it leaves home, by demographics, July 2012 Figure 99: Agreement with the statements My child has a significant influence on household decisions ie what food is bought, where to go on holiday etc and I need to purchase a property for my child before he/she gets married, by demographics, July 2012 Figure 100: Agreement with the statements I am worried about our financial situation if I try to fulfil all my childs needs and I cut back on household expenditures to pay for items my child would like to have, by demographics, July 2012 Figure 101: Agreement with the statements I want my child to pursue the career that we as parents have chosen for him/her and My child will always be able to rely on us financially independent of his/her age, by demographics, July 2012 Figure 102: Agreement with the statement I am likely to struggle financially once my child grows older, by demographics, July 2012 Figure 103: Most popular attitudes towards the childs development and financial burden (any agree), by demographics, July 2012 Figure 104: Next most popular attitudes towards the childs development and financial burden (any agree), by demographics, July 2012 Figure 105: Other attitudes towards the childs development and financial burden (any agree), by demographics, July 2012 APPENDIX SPENDING POWER OF LITTLE EMPERORS Figure 106: The childs income, by demographics, July 2012 Figure 107: Condition monthly allowance is based on, by demographics, July 2012 Figure 108: Savings account set up for child, by demographics, July 2012 Figure 109: Insurance policies set up for child, by demographics, July 2012 Figure 110: Type of degree intended for child, by demographics, July 2012 Figure 111: Type of school the child attends, by demographics, July 2012 Figure 112: Most popular additional classes paid for, by demographics, July 2012 Figure 113: Next most popular additional classes paid for, by demographics, July 2012 Figure 114: Most popular willingness to fund the childs studies abroad, by demographics, July 2012 Figure 115: Most popular financial impact of childs education, by demographics, July 2012 Figure 116: Next most popular financial impact of childs education, by demographics, July 2012 Figure 117: Agreement with the statements Independence is an important treat a child has to learn and I am teaching trying to teach my child to be independent, by demographics, July 2012 Figure 118: Agreement with the statements I would like to offer my child a carefree childhood free from pressure and I dont want my child to feel pressured all the time, by demographics, July 2012 Figure 119: Agreement with the statements I want my child to focus on its education instead of wasting time on activities such as watching TV and Study is the most important activity for my child, by demographics, July 2012 This report is supplied in accordance with Mintel's terms and conditions. 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Figure 120: Agreement with the statements If I want to buy something for myself, I first check if I cannot better spend that money on my child and I am concerned about my childs ability to live independently after it leaves home, by demographics, July 2012 Figure 121: Agreement with the statements My child has a significant influence on household decisions ie what food is bought, where to go on holiday etc and I need to purchase a property for my child before he/she gets married, by demographics, July 2012 Figure 122: Agreement with the statements I am worried about our financial situation if I try to fulfil all my childs needs and I cut back on household expenditures to pay for items my child would like to have, by demographics, July 2012 Figure 123: Agreement with the statements I want my child to pursue the career that we as parents have chosen for him/her and My child will always be able to rely on us financially independent of his/her age, by demographics, July 2012 Figure 124: Agreement with the statement I am likely to struggle financially once my child grows older, by demographics, July 2012 Figure 125: Most popular attitudes towards the childs development and financial burden (any agree), by demographics, July 2012 Figure 126: Next most popular attitudes towards the childs development and financial burden (any agree), by demographics, July 2012 Figure 127: Other attitudes towards the childs development and financial burden (any agree), by demographics, July 2012 APPENDIX FAMILY SPENDING HABITS Figure 128: Most popular branded childrens clothing bought, by demographics, July 2012 Figure 129: Next most popular branded childrens clothing bought, by demographics, July 2012 Figure 130: Sportswear brands bought for child, July 2012 Figure 131: Most popular sportswear brands bought for child, by demographics, July 2012 Figure 132: Next most popular sportswear brands bought for child, by demographics, July 2012 Figure 133: Most popular attitudes towards childs clothing, by demographics, July 2012 Figure 134: Next most popular attitudes towards childs clothing, by demographics, July 2012 Figure 135: Most popular products in childs possession, by demographics, July 2012 Figure 136: Next most popular products in childs possession, by demographics, July 2012 Figure 137: Other products in childs possession, by demographics, July 2012 Figure 138: Brand of smartphone owned by child, July 2012 Figure 139: Most popular monthly discretionary expenditure, by demographics, July 2012 Figure 140: Next most popular monthly discretionary expenditure, by demographics, July 2012 Figure 141: Other monthly discretionary expenditure, by demographics, July 2012 Figure 142: What monthly income is spent on, July 2012 Figure 143: Most popular what monthly income is spent on, by demographics, July 2012 Figure 144: Next most popular what monthly income is spent on, by demographics, July 2012 APPENDIX FAMILY LEISURE AND HOLIDAY HABITS Figure 145: Holidays taken in the past 12 months, July 2012 Figure 146: Most popular any holidays taken in the past 12 months, by demographics, July 2012 Figure 147: Next most popular any holidays taken in the past 12 months, by demographics, July 2012 Figure 148: Other any holidays taken in the past 12 months, by demographics, July 2012 Figure 149: Leisure activities, July 2012 APPENDIX A DAY IN THE LIFE OF A LITTLE EMPEROR Figure 150: A childs day overview, July 2012 Figure 151: A childs day overview, July 2012 Figure 152: People the child spends time with, July 2012 Figure 153: Attitudes towards childrens discipline and upbringing, July 2012 This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 5 6. Consumer Lifestyles: Meet the Little Emperors - China - November 2012 Introduction More than eight in ten Chinese families in tier 1 and tier 2 cities now have only one child, the so-called Little Emperor. As parents dont get a second chance to conceive, the pressure not to fail in raising their only child is intense. It created the now infamous images of the rather stereotypical, but not wholly inaccurate, representation of Tiger Mums. These mothers tend to be hyper-involved in all aspects of their childrens upbringing and push their Little Emperors towards academic success, even at the expense of their leisure time. This pressure to succeed leads to a heavy investment in babies and young children, in order to improve their education, career and future earnings prospects, whilst also catering to their every need. However, as a result of mollycoddling, children develop expectations of their own as to what they should be provided with as they grow up. This report delves into how the modern urban Chinese middle class family operates and structures itself around the single child, which is crucial to understanding how to design, market and sell a range of products and services to this important consumer segment. Quite simply, brands and manufacturers ignore the Little Emperor at their peril. Methodology Mintel conducted online consumer research in July 2012 on a sample of 1,500 internet users aged 20-49 who are classified as middle class with one child aged under 16. Definitions Research carried out for this report identifies members of the middle class by the following characteristics: Minimum Personal income: RMB7,000 (US$1,110) per month in tier 1 cities; Minimum RMB5,000 (US$793) per month in tier 2 cities Minimum Family income: RMB15,000 (US$2,379) per month in tier 1 cities; Minimum RMB10,000 (US$1,586) per month in tier 2 cities Profession: white-collar office workers in either state or private business, self-employed or SME business owners Education: college level degree holders or above Assets: property owners (must own property or be paying mortgage on a property) Own a car. To ensure that we dealt with those middle class Chinese who were part of sizeable middle-income communities and so could display shared patterns of consumption This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 6 7. rather than being the exception within their immediate community, we only surveyed consumers in Shanghai, Beijing, Guangzhou, Chengdu and Nanjing. So, for instance, cities such as Xian or Hefei were excluded as, although there are middle-income consumers in these cities, they do not have the number or spread of retailers, brands and services to compare with those cities chosen as yet. We have also excluded cities where many middle-income people live, such as Shenzhen and Dongguan, on the grounds that they are majority transient/migratory manufacturing cities and so skew survey results and do not really represent a settled middle class community. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 7 8. Consumer Lifestyles: Meet the Little Emperors - China - November 2012 Executive Summary Chinas Little Emperors are the youth of the countrys nascent emerging middle class. Growing up in families with higher-than- average discretionary incomes, no siblings and active grandparents, they are the beneficiaries of rising expenditure on children. However, a rigid education system and a heavy burden of expectation means that they are under pressure to succeed while the absence of second chance parenting leads many parents to seek to protect their child through spending on items that they believe will safeguard their future. -Matthew Crabbe, Research Director, Mintel Asia-Pacific This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 8 9. Decreasing proportion of Chinese youngsters FIGURE 1: Age structure of Chinese population, 2002-11 Source: National Bureau of Statistics/Mintel China is still the worlds most populous nation, with 1.3 billion adults or 19% of the worlds population overall. Falling birth rates and improved life expectancy mean that the population will have an older skew in the near future, prompting concerns about the reduction in the nations workforce and the ability to support the growing elderly population. The National Bureau of Statistics forecasts that the population of those aged 12-19 will decline by 18.2% by 2020, compared with 2010. The proportion of youngsters is set for even further declines by 2050. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 9 10. Multi-generational households FIGURE 2: Household composition, by parents age, July 2012 Base: 1,500 internet users aged 20-49 who are classified as middle class with one child aged 0-16 Source: QQSurvey/Mintel Home ownership is a prerequisite for starting a family, thus all Chinese middle class families own their home either outright or on a mortgage. Houses are uncommon (8%), with over eight in ten families living in condos or apartments. The urban middle class tend to dwell in multi-generational homes. Approximately a quarter of the middle class Little Emperor households Mintel surveyed had parents or in-laws also residing with mother, father and Little Emperor. Younger couples tend to be more likely to have their parents living under the same roof, as younger children require more intensive care/help from grandparents. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 10 11. Uptake of paid extra-curricular activities is high FIGURE 3: Additional paid classes, July 2012 Base: 839 internet users aged 20-49 who are classified as middle class with one child aged 5-16 Source: QQSurvey/Mintel High academic expectations result in intense competition for university places; thus nearly nine in ten children in Chinese middle class families are involved in some kind of paid extra-curricular or after-school activities. Such activities often enhance core academic credentials and serve as differentiators for university entry. Looking beyond the domestic higher education sector, a third of Chinese urban middle class parents are willing to finance their childs postgraduate studies abroad and a slightly smaller proportion would pay for their childs undergraduate degree overseas. Despite the exorbitant fees and cost of living, American institutions are favoured by six in ten Chinese parents. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 11 12. Nearly half of Little Emperors get pocket money from grandparents FIGURE 4: Sources of childs pocket money, July 2012 Base: 839 internet users aged 20-49 who are classified as middle class with one child aged 5-16 Source: QQSurvey/Mintel Nearly all Little Emperors receive a monthly allowance, with older parents and in particular mums aged 40-49 being the most generous with their offspring (98%). This is likely owing to the fact that parents in this age group are considerably wealthier compared with the younger ones. The six-pocket phenomenon comes to the fore in this instance, with grandparents highly likely to chip in (50%), whilst other family members also play their part (20%). Amount of monthly pocket money is positively correlated with household income. In addition, families living in Beijing (Chinas most affluent city) appear to be the most generous with their Little Emperors, as over three in ten (31%) give their children pocket money in excess of RMB500 a month. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 12 13. Necessities are prioritised FIGURE 5: What monthly income is spent on average, July 2012 Base: 1,500 internet users aged 20-49 who are classified as middle class with one child aged 0-16 NB: housing includes mortgage, bills, home maintenance, Food and drink includes all food and drink expenditures in and out of home, Transport includes car fuel, train fares, Finance includes monthly saving, insurances, account fees, Leisure, Entertainment and Technology for your household includes electronic gadgets, dining out, theatre tickets, Holidays and travel includes airplane tickets, hotel fees, Spending on the child includes costs for education, afternoon classes, treats, clothes Source: QQSurvey/Mintel Chinese middle class families invest the largest share of their monthly disposable income on savings, investments and financial products (17%) to provide for pensions, healthcare and educations etc. Over a tenth (11%) of monthly incomes is spent on the needs of children, with younger parents (aged 20-29), who tend to have lower disposable incomes, spending proportionately more (15%). In particular, as the main income providers, males aged 20-29 are especially likely to contribute nearly a fifth of their incomes, at 19%. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 13 14. Children in Tier 1 cities lead technology ownership FIGURE 6: Childrens product ownership, July 2012 Base: 839 internet users aged 20-49 who are classified as middle class with one child aged 5-16 Source: QQSurvey/Mintel Over nine in ten Little Emperors have their own bedrooms, which is fully stocked with toys and electronics devices. Desktop, laptop and tablet computers are amongst the most popular devices, as they can also be used to help with studying. Tablet (47%) ownership is now higher than laptop ownership (44%) amongst Chinese middle class children, largely owing to greater portability and interactivity. Tier 1 kids have more electronic items than those in tier 2 for reasons of cost, though TVs are more common in tier 2 cities and are widely available across China at relatively low prices. Similarly other novelty items such as eReaders are more commonly found in childrens bedrooms in tier 1 cities (53% in Beijing) as opposed to tier 2 locations (just 33% in Nanjing). This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 14 15. A day in the life of a Little Emperor FIGURE 7: A childs day average time spent on each activity, July 2012 Source: QQSurvey/Mintel Commuting to school, classes, extra-curricular activities and homework take up on average eight hours each day, meaning that a large chunk of a Little Emperors day is spent on activities related to their education. This is hardly surprising, considering that six in ten parents indicate that they want their child to focus on studying rather than wasting their time on things like watching TV. As mothers and fathers are typically the ones most heavily involved in taking care of their offspring, it makes sense that parents and family tend to spend 10% of their time with their Little Emperor. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 15 16. Consumer Lifestyles: Meet the Little Emperors - China - November 2012 Market Background Key points The emergence of the Little Emperors is directly linked to the high proportion of one-child families in China. Growth in the Chinese middle class gave rise to increased consumption and rising aspirations towards product ownership, further fuelling the trend of families catering to the wishes of their only children. Lower age of retirement (between 50 and 55) amongst Chinese women paves a way for grandparents to get involved in child caring as well as spending on their Little Emperor grandchildren. How the phenomenon of The Little Emperors emerged Chinas so-called Little Emperors are the generation of single children born largely in the 1990s and 2000s. The term Little Emperor Syndrome came to be widely used in China in the 1990s to describe those single children who appeared to be the recipients of excessive amounts of attention from their parents and grandparents. Although China had enacted the One-Child Policy in 1979, it was not really until the 1990s that a Chinese urban middle class with significant amounts of disposable income came into existence in the countrys tier 1 and tier 2 cities able to lavish spending and attention on their single children. In essence, the Little Emperors were the result of a combination of the One-Child Policy twinned with the rise of a substantial middle class in urban China (see Mintels Consumer Lifestyles: Chinas Middle Class China, June 2012). This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 16 17. Evidence of gender imbalance FIGURE 8: Age structure of Chinese population, by gender, 2002 and 2011 NB: Numbers may not sum due to rounding Source: National Bureau of Statistics/Mintel China, of course, is still the worlds most populous nation, and has the second- highest number of young people in the world, behind India (a country with a very different family planning regimen and no One-Child Policy). However, China has the most severe gender imbalance with a male-to-female gender ratio among young people up to the age of 19 of 1.14, suggesting that for every 100 boys there are just 88 girls. Perhaps this gender imbalance becomes more relevant at a later post-teen stage, but it does reinforce the perception that boys are considered more desirable by families than girls and has a host of inherent implications for society, child raising practices and spending on children as shown below. History of the One-Child Policy FIGURE 9: China population statistics, 2011 Birth rate 12.31 births per 1,000 population Death rate 7.17 deaths per 1,000 population This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 17 18. Sex ratio (at birth) 1.14 male(s)/female Infant mortality rate 15.62 deaths per 1,000 live births Population growth rate 0.481% Chinas One-Child Policy was launched in 1979 after the population topped 1 billion. China's fertility rate dropped from 5.8 children per woman in 1970 to 2.7 in 1978 and the government believes the One-Child Policy curtailed population growth by preventing 400 million extra births (approximately the total population of China in 1937). In some circumstances, families are exempt from the One-Child Policy and today, only 20% of children under 14 are from single-child families according to the State Population and Family Planning Commission (SPFPC). However, the policy has been most effective in cities rather than the countryside and consequently the number of one-child families is far higher, at above 80% in most tier 1 and 2 cities. In urban China, residents have faced heavy fines and can lose their jobs if they have a second child. Many increasingly financially stretched couples now prefer fewer children and cannot afford, nor have room for, any more. But in the countryside, where parents depend on children to help them and support them in their old age, there is still a preference for multiple children. Rural families in China have been targeted with inventive campaigns to encourage family planning, including being paid not to have more children, or campaigns in the countryside attempting to appeal to fledgling entrepreneurs. Exceptions to the One-Child Policy FIGURE 10: Urban exemptions to the One-Child Policy, 2011* Source: State Population and Family Planning Commission/Mintel If both parents are from one-child families ie both are single children Both parents are university graduates The first child is severely handicapped or disabled An RMB50,000 (US$8,000) fee is paid (applies to migrants to urban areas) A Chinese citizen is married to a foreigner Twins Adoption Registered as an official category of ethnic minority ( xiaoshu minzu and therefore exempt entirely from the One-Child Policy) Chinas rapidly changing demographic profile with a falling birth rate and enhanced longevity suggests that the countrys population pyramid will increasingly trend towards an older society in the coming decades. The National Bureau of Statistics has indicated that it expects that Chinas population of 12-19-year-olds will drop by a significant 18.2% over 2010 by 2020. Chinas teenage population is set to decline further still to approximately 9.1% of the total population in 2050, from 13.8% today. The government has introduced various exemptions to the One-Child Policy in Chinas major cities (though to a far lesser extent in the countryside). Despite this it seems that the Little Emperor-led model three-person household will remain the This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 18 19. dominant form of family unit for some time to come among the rising urban middle class a Shanghai Academy of Social Sciences survey in 2011 found that over 90% of Shanghai couples are now eligible to have more than one child, but that 45% of families had ruled it out as an option due to cost, apartment size and that they were simply used to three-person families. One child, six incomes In essence the Little Emperors ( xiao huangdi) were the result of the One-Child Policy twinned with the rise of a substantial middle class in urban China with greater rates of disposable income to spend. The traditional preponderance in urban areas for women to work (an over 70% female labour force participation rate in Chinas major cities) means many middle class families with one child now have two sources of income while a combination of increased longevity and low retirement ages, by international standards, means many Little Emperors have four active and supportive grandparents. This led to the so-called six-pocket syndrome, or the four-two-one family structure, with six disposable incomes available to be lavished on the one child. This is, of course, a change in the traditional family structure in China based on the Confucian system and extended in nature of power in a household being devolved in a patrilineal form from the father, to the mother and a multitude of offspring with supporting aunts, uncles and grandparents. Invariably now in urban middle class China the modern household structures entirely around the regulation one child the Little Emperor. This greater devotion of spending on one child, and the general funnelling of financial resources downwards within the family, is significant to the development of Chinas urban consumer market overall. In many obvious categories, from toys to snacks and gadgets to childrens clothes, parents shower their single child with material goods and give in to every demand from their offspring; it is not uncommon for children to be the best-dressed members of their families. Data collected exclusively for this report show that nearly two thirds of Chinese parents agree that if their child wants an item of clothing they would generally purchase it, and over a quarter want to buy the best brands for their only child (see Family Spending Habits section). National Bureau of Statistics forecasts expect Chinas teenage per capita disposable income to rise to about RMB10,500 (US$1,665) by 2014. That equals to an estimated RMB875 (US$139) per month, not including what their families spend on them. This is approximately 10% of a tier 1 household average income and it seems likely that any amounts given to children by parents are being added to and supplemented by contributions from grandparents and other family members. Little Emperors have been influential in many other areas of family spend where the family eats out, goes on holiday, the car they purchase, etc. This can be due to excessive pandering to the childs wants and desires or simply giving in to pester power. It is also the case that, while high expectations to succeed are placed upon the single child, there are also high expectations on the parents to provide. For example, Mintel data show that nearly six in ten (58%) Chinese parents started saving early for their childrens education, in order to be able to afford to send them to the best university (see Spending Power of Little Emperors section). This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 19 20. The emergence of the middle class The Little Emperor phenomenon would not have been possible without the rise of a Chinese urban middle class, undoubtedly the biggest driver of much of the growth of consumption in China. Mintel defines the Chinese middle class as those people who are urban, invariably white-collar workers and have a household income of approximately US$9,000- 30,000. As of 2011 there were about 30 million households in China falling into the middle class description thats approximately 13.5% of all urban households in China. Given that a household is typically mum, dad and a Little Emperor, that makes the middle class roughly 100 million people. Above that there are higher earners Golden Collars adding a few million more (including their own Little Emperors) and below that those now considered xiaokang (or comfortable) who hope to move up into the middle class and raise their own Little Emperors with them. With current wage growth, urbanisation and rising living costs, we expect the number of middle class households to comfortably break the 35 million mark by 2015 making approximately 15% of urban Chinese middle class households totalling 105 million people. Assuming the average and dominant household structure to be three people, this means there are approximately 35 million Little Emperors in the middle class, plus an undefined number in the Golden Collar social class and a fledgling group of Little Emperors in the xiaokang social class. This would roughly add up to an estimated 50 million or more Little Emperors. Early retirement leads to active involvement of grandparents According to Chinas National Bureau of Statistics, women (who constitute fully 48.5% of Chinas total population) tend to be employed if of working age. Over seven in ten urban women aged 18-64 are employed and the employment rate of mothers aged 25-34 with a child under the age of 6 is 72%. This is higher than many other developing and developed countries and means that stay-at-home mothers are rare. The retirement age for women in China is low by international standards. The mandatory statutory retirement age for women in the private sector is 50 years of age for non-managerial positions and 55 years of age for managerial roles. Life expectancy is improving and in 2011 it was 72.82 years for males and 77.11 years for females, whilst the mean age of marriage for women in China is now 24 years old with children coming, on average, within the next three years. All of the above means that urban women marry relatively young, overwhelmingly have one child while in their later twenties and have parents who have retired at 50/55 (or 60 universally for males). This means that grandparents are taking on a large part of childrearing and are intimately involved in the development of their grandchild, with many assuming the routine primary care responsibility and much of the spending associated with those early years. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 20 21. Consumer Lifestyles: Meet the Little Emperors - China - November 2012 Current Living Situation Key points Home ownership is viewed as a prerequisite for starting a family, thus all Chinese middle class families own their primary residence, with nearly six in ten owning it outright. Grandparents play an increasingly important role in childrens upbringing, especially as the costs of hiring domestic help are becoming less affordable. This is especially true of younger parents aged 20-29, three in ten of whom have their grandparents living with them. Over nine in ten Little Emperors have their own room, which could improve their concentration, but could also require more supervision from parents or grandparents, or domestic help in their absence. Only under a quarter of Chinese middle class households have no plans for hiring help around the house, with the tendency to have domestic helpers rising substantially with household incomes. Property ownership FIGURE 11: Property ownership and number of bedrooms in the property, July 2012 Is your property owned outright or bought on a mortgage? How many bedrooms are there in the property you live in? Please only count the number of fully enclosed bedrooms, not counting the living room as bedroom unless it is a studio apartment. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 21 22. Base: 1,500 internet users aged 20-49 who are classified as middle class with one child aged 0-16 and own a property Source: QQSurvey/Mintel Given the expectations that home ownership is a prerequisite for marriage and having children, all middle class families own their homes, with the majority (59%) buying their property outright. This is especially evident amongst families with the highest level of household income (RMB25,000+), at 73%. Over half (54%) residences occupied by the Chinese middle class families have three bedrooms and a further 23% have four or more bedrooms, allowing children, grandparents and any live-in domestic helpers to get their own space. The higher the income, the more spacious is the home a family can afford, with over a third (36%) of households with incomes in excess of RMB25,000 who have four bedrooms or more in their home. Type of property owned FIGURE 12: Type of primary residence, July 2012 Thinking about your current living arrangements, which of the following best describes your primary residence? This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 22 23. Base: 1,500 internet users aged 20-49 who are classified as middle class with one child aged 0-16 Source: QQSurvey/Mintel Over eight in ten properties owned by the Chinese middle class families are condos or apartments, whilst only 8% own a house. House ownership is most common amongst families living in Shanghai (10%) and Nanjing (13%), and has a high positive correlation with household income. This finding illustrates that, whilst modern Chinese households may aspire towards owning a bigger property, owning a house is out of reach for all but a small minority of wealthy middle class families. Overwhelmingly, over half (56%) of families with the highest incomes (RMB25,000+) have at least one parent with a postgraduate qualification. This sheds a light on just how important higher educational attainment is in modern Chinese society. It also puts into perspective parents adamant desire for their children to go to a good university and succeed academically. Mintel data show that nearly six in ten (58%) parents started saving money for their childrens education early on, and over half (56%) are prepared to spend a significant amount of money to ensure their children compete with the best academically (see Education of Little Emperors). This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 23 24. Who Little Emperors live with FIGURE 13: Household composition, by parents age, July 2012 Base: 1,500 internet users aged 20-49 who are classified as middle class with one child aged 0-16 Source: QQSurvey/Mintel The urban middle class are increasingly living in multi-generational homes. Approximately a quarter of the middle class Little Emperor households Mintel surveyed had parents or in-laws also residing with mother, father and Little Emperor. Younger couples tend to be more likely to have their parents living with them under the same roof. Of course their parents are more likely to be alive but also this is the time when intensive childcare is most required. Therefore among parents aged 20-29 the rate of live-in grandparents was 30%. Among lower-income middle class households, with monthly household incomes of RMB10,000 (US$1,585) and below, grandparents were more likely to be living with the family. Outside childcare options, such as private or boarding kindergartens or more full-time childcare/domestic help such as ? ayis, are less affordable to this group. Household composition also varies by region. Guangzhou, with its distinctive Southern atmosphere and Cantonese culture (with a perhaps more traditional and very strong emphasis on inter-familial ties) has far higher rates of live-in grandparents, at 36%, than Eastern and Northern cities. It could be that many families in other cities may have grandparents and in-laws in other cities or parts of the country due to widespread internal migration patterns and This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 24 25. urbanisation. It may be that these grandparents do not care to migrate to another city, leave the countryside or simply cannot make this move to live with their grandchildren due to Chinas rigid internal passport system ( hukou) denying them permanent city residency. Caring for grandchildren is a common experience for many Chinese grandparents who are thought to display a general desire for their grandchild to experience the benefits they themselves were denied during the less economically developed times. It may also be the case that grandparents know less about issues such as diet, good paediatric health and childrearing trends and so tend to spoil children more. Mintel data show that even though parents are primarily responsible for taking care of their offspring, over a quarter (26%) of grandparents buy treats for their children, over a fifth (23%) prepare their meals and nearly a fifth (19%) do their clothes shopping (see A Day in the Life of a Little Emperor section). Over nine in ten Little Emperors have their own space FIGURE 14: Childrens living arrangements, July 2012 Does your child have his/her own room in your household? Base: 1,500 internet users aged 20-49 who are classified as middle class with one child aged 0-16 Source: QQSurvey/Mintel With most middle class Chinese apartments having only two bedrooms (though often claimed as three due to the common practice of subdivision by curtains in the living room), and because of the One-Child Policy, this means that most Little Emperors do actually get their own rooms and personal living space. The ability for the child to have their own individual space and the ability to stamp their personal interests and This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 25 26. hobbies on their room fosters their imagination, whilst also encouraging pester power to develop at a faster rate. Over 90% of Little Emperors have their own bedroom a statistic that holds the same for girls as well as boys despite the tendency to often spoil boys and favour them more. Older children are more likely to have their own space, as they would need more privacy to be able to focus on their studies. Nearly all (98%) children aged 10-16 have their own bedroom. Additionally, this high rate of having their own room is the case across China, with similar rates exhibited in Nanjing as well as Guangzhou, Beijing and Shanghai. Chengdu has a slightly lower rate, at 95%, and this is explained by the fact that the layout of the city has allowed for slightly larger apartments and a greater preponderance of rare, and much sought-after, three-bedroom apartments. Having their own bedroom gives Little Emperors a chance to concentrate on their studies, however, this will also lead to many opportunities for distraction. Mintel data show high device ownership amongst children and, with parents easily swayed by pester power, ownership of games, toys and other modes entertainment is also high. This means there will be a particularly strong market for online and mobile applications/software that lets parents monitor their childrens activities as well as parental blocks or software that allows younger kids to browse safely. Presence of domestic help FIGURE 15: Presence of domestic help in the household, July 2012 Have you hired or are you interested in hiring an ayi (ie domestic help or maid) to help looking after your child and support you with household chores at home? Base: 1,500 internet users aged 20-49 who are classified as middle class with one child aged 0-16 This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 26 27. Source: QQSurvey/Mintel Hired domestic helpers have been playing a greater role in childrens upbringing, linked with the high proportion of parents in full-time employment. In China this takes the form of the ayi who are typically from outside the family, though may live in the house or close by. Rather than the more Western tradition of domestic help being divided into specific responsibilities cleaner, babysitter, nanny etc ayis (literally auntie, and in Guangzhou and Southern Cantonese-speaking China an ? amah) take on a multitude of tasks including cleaning, cooking, daily shopping and childcare. They can sometimes be the sole carer for the child during the day when parents are working or share these duties with the grandparents. Over half (55%) of middle class parents surveyed have some form of domestic help. Though, as with all living costs and salaries, their affordability may now be less than a decade ago, they are still seemingly ubiquitous in tier 1 middle class households. Ayis are more often than not migrant women and therefore relatively inexpensive, the employment arrangements are invariably ad-hoc and unofficial. This means no taxes or social welfare payments are involved, and their employment is a private matter between themselves and the employing family. Live-in ayis are in the minority, with only 14% of families having such arrangements, with the small number likely explained by the small apartment sizes. Domestic help that dont live with the family are much more common, with over a third (36%) of families employing such help either full-time or part-time. The tendency to have domestic help increases with household income, as over seven in ten (73%) families with the highest household incomes (RMB25,000+) have hired help either part-time or full-time. On the other hand, lower-income households are relatively more likely to have grandparents living with them and fulfilling most of the functions of a domestic helper. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 27 28. Consumer Lifestyles: Meet the Little Emperors - China - November 2012 The Next Generation of Little Emperors Key points Over seven in ten (72%) Chinese urban middle class parents bought disposable nappies in the past year, testament to changing cultural attitudes, with parents increasingly shunning the more traditional reusable baby trousers. With food scares dominating media headlines, a preference of foreign brands of baby formula is evident, as Nestl and Wyeth lead the market with 54% of parents who indicate they buy their products. Two thirds of Chinese parents express a preference for 'natural' baby products, linked directly to the food scares. Parents' protective instinct is at play, as they try to shield their only child from any harm. Pushchair ownership has reached the mainstream, with 86% amongst Chinese middle class families who own one. Owning a buggy appeals to parents' desire to ensure their little ones are transported safely. Fast adoption helped the prices to come down, and as a result only 3% of Chinese parents now say that owning a pushchair is unaffordable. Childcare arrangements FIGURE 16: Daycare arrangements, July 2012 During a typical week, does your child go to any of the following? This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 28 29. Base: 661 internet users aged 20-49 who are classified as middle class with one child aged 0-4 Source: QQSurvey/Mintel Over seven in ten (72%) toddlers of surveyed urban middle class families are in some form of kindergarten. This ranges from the local public kindergartens provided by the state (for which a small fee will have to be paid) to private kindergartens and private nursery teachers, which are often caring for a group of children living in the housing compound or immediate area. Nearly one in ten families send their little ones to international kindergartens, which are not usually truly international, but use some form of overseas educational concept, such as Montessori. Boarding kindergartens are a relatively new concept but catching on fast, with children boarding from Monday-Friday for a fee and returning home for the weekends. Public kindergartens are common throughout Chinas cities and so, in most, there are high rates of attendance as high as 44% in Chengdu and Nanjing. Private kindergartens are more common, longer established and within the reach of more parents finances in wealthier cities such as Beijing (30%). Private infant daycare is more common among higher-income families, whilst lower-income families are more likely to rely on themselves or their parents for primary childcare. These early learning options have become spaces where brands can interact at an early age with Little Emperors and their parents. For instance, Chinas dairy companies have worked with both public and private kindergartens to promote dairy consumption. Shanghais Guangming (Bright) Dairy has long been running kindergarten milk programmes offering free milk in an attempt to overcome at an early age the break between dairy consumption as a baby and as a toddler that can cause higher rates of lactose intolerance. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 29 30. Daily consumption of free milk at kindergarten may lower the incidence of lactose intolerance and so a future child-centred market for milk is grown. Convincing new parents of the importance of dairy products begins at this point. Baby personal care purchases FIGURE 17: Baby products bought in the past 12 months, July 2012 Which, if any, of these products designed specifically for babies and children aged up to 4 years old have you bought for your child in the past 12 months? Base: 661 internet users aged 20-49 who are classified as middle class with one child aged 0-4 Source: QQSurvey/Mintel While considering the range of products parents are purchasing for their Little Emperors, it is nappies that are perhaps most instructive into how childrearing patterns are changing in an environment of greater choice, product awareness, international influence and greater levels of disposable income. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 30 31. Though nappies have now been on the market in China for a couple of decades, they have only recently come to be widely used. The generation of Little Emperors born in the 21st century are really the first generation in China to have widespread use of nappies as a standard item for infants. Before this, and still in poorer parts of urban China, the traditional open-crotch trousers with a hole at the back are still standard. They are inexpensive and allow for early potty training, though are not overly hygienic. Over seven in ten (72%) middle class urban families indicated they bought disposable nappies in the past year. Similarly, the add-on market of disposable baby wipes has appeared 67% of parents claim to purchase these too with high percentages also buying baby-specific creams and oils. The younger the parents, the more likely they are to buy nappies and dispense with the traditional open-crotch trousers. Over a third (35%) of parents aged 20-29 bought disposable nappies as opposed to 29% of over-30s. It is clearly an increasingly generational shift with younger parents seeing nappies as more standard. This indicates the market is only set to grow, as younger parents enter the market and eventually a generation of Little Emperors who were raised in nappies become parents themselves. Swimming diapers are a new product in the market both in China and internationally. They appear to have caught on relatively quickly in Chinas more developed cities, at 16% amongst our respondents. This may be due to the middle class trend for introducing their infants to paddling pools and swimming tanks early on. Nearly four in ten (39%) middle class parents reported buying suncare products for their toddlers. A wider variety of retail channels and greater awareness of skin cancer and other sun-related ailments is helping to grow sales in this category. However, the traditional preferences for lighter skin tone might also be at play here. Preference for foreign brands of nappies FIGURE 18: Brands of disposable nappies bought in the past 12 months, July 2012 You stated that you have bought nappies and/or training pants for your child, which, if any, of the following brands of disposable nappies have you bought in the past 12 months? Base: 514 internet users aged 20-49 who are classified as middle class with one child aged 0-4 who purchased disposable nappies and/ or training pants in the past 12 This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 31 32. months Source: QQSurvey/Mintel As the urban market for disposable diapers has grown (including a niche sub-market in home delivery and removal services for diapers), so the range of domestic and international brands available has also grown. Seen as a foreign item by many parents, overseas brands have done well in the market and have a generally strong brand reputation, although many are now manufactured locally. Procter & Gamble (P&G), which has the largest proportion of regular buyers with 85% of parents choosing the brand, reported its annual sales of its major brand Pampers, introduced in China in 1998, are growing by better than 50%. Local brands have been increasing their market share as well, as they continue building a reputation and strong distribution networks. There are now approximately a dozen domestic companies distributing disposable diapers nationally to most of Chinas major cities. Primary among these local brands is Chiaus, with a strong 36% of parents purchasing them regularly, according to Mintels exclusive research. Chiaus is a brand owned by Chiaus (Fujian) Industrial Development Co., Ltd, a specialist nappies manufacturer established in 2006, indicating how new this type of product is to the Chinese market. The company now produces 11 varieties of baby nappies as well as associated baby tissues and wet wipes. There are also higher-priced niche brands, often from Japan, such as Pigeon and Unicharm. At the moment high-end brands, such as Pigeon, are finding brand traction to a greater extent in the most developed, and richer, cities such as Beijing (37% of parents have bought the brand, according to Mintel data) than in the less developed and more remote middle class enclaves such as Chengdu (where only 25% have purchased). However, it could be argued that when even parents in Chengdu, with less access to niche brands and less disposable income, are purchasing higher-end diapers, then the importance of the sector to parents is clear. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 32 33. Advertising illustrates benefits of wearing nappies Advertising of diapers plays into parents concerns about safe development of their child from a young age. Yvonne Pei, the associate director of external relations for Procter & Gamble in China, explains its advertising style Pampers promotes overnight dryness, and it helps the baby to have a good night's sleep. If baby doesn't have a good sleep, then the baby doesn't have a good mental development. Local companies take a slightly different tack in their advertising. They are more likely to try to educate parents as to why diapers are both more hygienic and better for a babys development. Hengan is a major paper products brand in China with strong market share in tissues, wet wipes and female sanitary products as well as diapers. The company is trying to change consumer thinking about diapers in tier 2 cities where the foreign brands are less readily available and considered more expensive, while diapers are still a relatively new concept compared to their wider adoption in tier 1 cities such as Beijing and Shanghai. Hengan reports that many tier 2 consumers see diapers as wasteful and unnecessary, though attitudes are changing and sales are growing. Parents look for 'natural' credentials FIGURE 19: Attitudes towards nappies, July 2012 Please tell us which, if any, of the following statements regarding nappies you would agree with? Base: 661 internet users aged 20-49 who are classified as middle class with one child aged 0-4 * these exemptions change and are added to regularly as the government will not lift the policy in one go to prevent future expensive spikes in demand for education and healthcare services. Additionally, though not overly significant in overall terms, many Chinese women have been giving birth to their second child overseas, especially in Hong Kong, which is exempt from the One-Child Policy Source: State Population and Family Planning Commission/Mintel % I try to buy baby products that are made from natural ingredients 66 I often worry about the safety of ingredients of the baby products I buy 49 I dont care how much they cost as long as the nappies I buy are the most reliable I can get 48 I am looking for nappies that offer my child the best comfort 47 I would buy organic disposable nappy brands if they were the same price as my usual/preferred brands 38 Disposable nappies cause skin irritation for my child 31 Children wearing split pants are potty trained earlier than those wearing disposable nappies 29 Split pants are a more convenient alternative for my child than disposable diapers 28 This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 33 34. I am more likely to buy disposable nappy brands that Ive seen advertised 28 Split pants are a more natural way for my child to relieve itself 23 I consider split pants uncivilised 22 Split pants are old-fashioned 14 Parents desire to protect their only child from harm comes to the fore when they purchase baby products. Having only one chance to raise a child makes mums and dads (as well as grandparents) fret even more over the perfect way to take care of their little ones and try to provide them with the very best. Rising interest in imported products, certification, organic and green products are all seen as ways to do this. For instance, in the food and beverage sector the rash of food scares in recent years linked to excessive use of pesticides, fertilisers and other chemicals has raised the profile of organic foods (see Mintels Consumer Lifestyles: Food Scares China, September 2012). Brands that are able to display natural or organic qualities are favoured by parents (66%). In much the same way that these consumers might be looking more closely at ingredients labels, certifications and product claims of natural or organic (all trends evidenced in detail in the Mintel Consumer Lifestyles: Food Scares China, September 2012 report), so too it appears they are in other product categories such as nappies. This has been a strength for the foreign brands, such as P&G and Kimberly-Clark, as well as the more niche foreign brands such as Japans Pigeon and Unicharm. It is in the more advanced cities, such as Beijing, that consumers are most concerned about these issues. For instance, 71% of Beijing parents care about diapers having natural ingredients compared to just 58% in Chengdu. However, the fact that even Chengdu comes in at well over half of parents showing concerns, and wanting more natural products, shows the national and widespread concern over product quality and safety. Baby food and drink purchases FIGURE 20: How the child is fed, July 2012 Thinking about feeding your child, which of the following did you feed your child with in the past 12 months? This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 34 35. Base: 661 internet users aged 20-49 who are classified as middle class with one child aged 0-4 Source: QQSurvey/Mintel Over eight in ten (81%) Chinese middle class families purchase baby formula for their infants. This figure remains over 75% in all the cities surveyed and rises to 85% in Shanghai and Guangzhou. Similarly all income brackets within the middle class are using infant formula regularly, whilst three quarters opt for powdered formula. Baby formula enjoys high penetration in the baby food /drink market, despite the recent scandals around tainted infant formula causing deaths. This is owing to heavy promotion by the government, healthcare professionals and brands throughout maternity clinics and parents classes. In addition, free samples, money-off coupons and direct mail are sent to parents stimulating demand for the product. Advertising that hints that baby formula is better for the child than breastfeeding has been extremely effective at convincing many parents that formula is an essential product for child raising. However, breastfeeding appears to be the preferred option amongst the most affluent families, at 41% (vs 35% on average) amongst those with monthly household incomes of RMB25,000+, whilst usage of baby formula drops off in this income group. This could be explained by the higher exposure to international trends This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 35 36. amongst the more affluent Chinese consumers. This trend is also helped by the growth in baby feeding and changing rooms in public spaces and restaurants. The movement towards breastfeeding is expected to be accelerated by a combination of a growing appreciation of all things natural, continuing product scares around infant formula products and their currently rising prices. Parents' anxieties fuel preference for foreign brands of baby formula You stated that you used infant formula in the past 12 months. Which of the following brands, if any, did you purchase in the past 12 months? FIGURE 21: Brand of infant formula used, July 2012 Base: 533 internet users aged 20-49 who are classified as middle class with one child aged 0-4 who used baby formula in the past 12 months Source: QQSurvey/Mintel Mintel report Consumer Lifestyles: Food Scares China, September 2012 showed that over half of middle class parents had a definite preference for foreign brands of infant formula over domestic ones. This is linked with the food scares and scandals around tainted baby food products, such as elevated hormone levels in infant formula milk reported in 2010 and 2011. This had led to a surge in buying and hoarding of foreign brands of infant formula, believed to be safer, even if manufactured in China. Mintel data collected exclusively for this report confirm the strong preference for foreign brands of infant formula, despite the typical 15-20% premium price tag compared with domestic brands. There is a strong market for infant formula even with breastfeeding making a comeback, with Nestl and Wyeth leading the market with 54% of parents who buy their products. However, domestic brands have some way to go in terms of rebuilding customer trust and loyalty in the wake of the repeated food scares, despite their lower price points. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 36 37. Distribution is key in the market as the middle class expands out from the key tier 1 and tier 2 cities to other locations. Brands with good tier 2 and tier 3 distribution have a better chance of establishing themselves in a strong position. For instance, Synutra, a Chinese company, has a strong position in tier 2 cities, such as Nanjing, despite being relatively highly priced. Over a fifth (21%) of parents in each city purchase it, a percentage that falls to as low as 15% and 16% respectively in the tier 1 cities of Beijing and Shanghai where competition and brand availability are wider. Synutra has built an especially strong provincial distribution system a network comprised of over 650 independent distributors and over 800 independent sub-distributors who sell Synutra products in over 67,000 retail outlets that appears to be paying dividends for the brand. Taking a baby around FIGURE 22: Items used to transport the child, July 2012 Thinking about getting around with your child, which of the following baby mobility items do you own, and which ones do you not have but plan to buy in future? Base: 661 internet users aged 20-49 who are classified as middle class with one child aged 0-4 Source: QQSurvey/Mintel Over eight in ten (86%) middle class urban families own a pushchair, with another 12% planning to buy one in the future. Buggies can be seen as a display of wealth, but are also safer for the child to be transported in. As with nappies and suncare products, pushchairs are not traditional items in China and have been adopted This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 37 38. almost solely by the emergent middle class to date. Pushchairs go with diapers and other modern baby items as products the new middle class want for their Little Emperors. The pushchair market has emerged strongly in all the cities surveyed over 80% in Beijing, Shanghai, Guangzhou, Nanjing and Chengdu and across all financial brackets of the middle class. This perhaps indicates their position, not just as a protection item, but also as a desirable accoutrement to the modern middle class aspirational parenting. Car seat ownership is far from universal, with 66% of respondents claiming to own a car seat (ownership tends to be lower in tier 2 cities than tier 1) indicating that awareness is still growing and resistance to this obvious form of child protection remains. This also means that there are opportunities for more sales if education and awareness continue to be raised. Older parents focus on fitness of toddlers FIGURE 23: Attitudes towards transport of the child, July 2012 Base: 661 internet users aged 20-49 who are classified as middle class with one child aged 0-4 Source: QQSurvey/Mintel Attitudes towards transporting a toddler around vary greatly by gender and age of parents. Mothers, and particularly those aged 30-49 (52%), are more likely to find This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 38 39. carrying a baby around exhausting. Thus, older mums would be especially amenable to purchasing a pushchair to transport their little one, with 87% amongst them who own one versus 83% of younger mums. This especially holds true as only 3% of Chinese urban middle class parents think that pushchairs are too expensive for them. Younger dads aged 20-29 are particularly anxious about the safety of their little ones, perhaps to an extreme, as 17% of dads in this age group carry their toddlers everywhere, so as not to tire them out too much. On the other hand, older parents put more emphasis on exercise, with nearly six in ten (58%) who ensure their children walk as often as possible to stay fit. With four in ten Chinese middle class mums and dads finding it exhausting carrying around the child without any props, the market for pushchairs, and to a lesser extent slings and back carriers, will continue to grow. Whilst in the minority, over one in ten (11%) parents agreed that buggies can be impractical when getting around in large cities, indicating a need for developing more compact and manoeuvrable models. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 39 40. Consumer Lifestyles: Meet the Little Emperors - China - November 2012 Education of Little Emperors Key points A staggering three quarters of Chinese middle class families expect their children to attain a postgraduate degree, testament to the extent to which higher education is linked with future prosperity in modern China. Close to nine in ten children in Chinese middle class families attend extra-curricular private lessons, to distinguish themselves from other students competing for limited university places. Despite the much higher costs, universities in the US are seen by six in ten Chinese parents as the first choice for their offspring, with over four in ten parents justifying exorbitant expenditure as a way for their children to have better career prospects. Parents' educational aspirations for Little Emperors FIGURE 24: Type of degree intended for child, July 2012 Thinking about your childs education, what type of degree do you intend your child to pursue? This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 40 41. Base: 839 internet users aged 20-49 who are classified as middle class with one child aged 5-16 Source: QQSurvey/Mintel Many parents and grandparents wish to compensate for their own material consumer loss having grown up in less affluent times by providing everything for their children right from the baby stage. These parents, and grandparents, are often referred to as lag-behind consumers as they missed out on the consumer boom of the 1990s and are now spending heavily on their children to compensate for this. Education is where parents and grandparents start compensating for their own losses first. Education is central to the Chinese middle class experience, the cornerstone of middle class achievement, as demonstrated in Mintels Consumer Lifestyles: Chinas Middle Class China, June 2012 report. While grandparents of the current infant generation will have largely missed out on a formal education beyond high school due to living circumstances, lack of finances or the chaos of the Cultural Revolution period, invariably the parents of todays infant Little Emperors have received a higher education and benefited from that edge in the job market which then financially allows them to live a middle class lifestyle. Simply put, higher education has been a key component to middle class entry, formation and reproduction. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 41 42. day spent travelling to and from school and an hour of sports activities its easily a ten-hour day before any time can be found for leisure activities or spending time with their parents and family. In a prime example of the burden of expectation, 75% of Chinese middle class parents expect their child to attain a postgraduate degree with only 32% happy that their child completes their education at only graduate level. These expectations are fairly constant across all income bands and cities as well as being expected of both girls and boys. Parents aged 20-39 more likely to opt for private school FIGURE 25: Type of school the child attends, July 2012 Which of the following best describes the type of school your child goes to? Base: 839 internet users aged 20-49 who are classified as middle class with one child aged 5-16 Source: QQSurvey/Mintel Many Little Emperors will have the opportunity to fulfil their parents wishes. Two thirds of middle class children in the cities attend key schools, which are similar to college preparatory schools and aim for the majority of their pupils to go on to higher education of some sort. Partly this high rate is possible as key schools are to be found most commonly in tier 1 and 2 cities such as those surveyed, though are by no means available nationwide to all children. The majority of the rest of the children in the families surveyed are attending regular state schools (19%) and 9% are at private fee-paying schools. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 42 43. send their children to key public schools (80% vs 59% of parents aged 20-39). On the other hand, younger parents lean towards sending their offspring to private schools (10% vs 6% of parents aged 20-39), perhaps viewing this departure from the traditional education as more desirable. Likewise, tendency to send children to a private school peaks amongst higher income groups, owing to reasons of greater affordability. Extra-curricular activities enhance academic credentials FIGURE 26: Additional paid classes, July 2012 Have you paid or are you currently paying for any of the following forms of private (ie non-state funded) education for your child? Base: 839 internet users aged 20-49 who are classified as middle class with one child aged 5-16 Source: QQSurvey/Mintel High expectations of academic achievement mean the competition for university places is intense, and additional after-school and extra-curricular classes are a common part of a Little Emperors day. Nearly nine in ten (87%) children take part in some form of extra-curricular activity, mostly in art (50%), music (45%) or languages (49%). Whilst these are not necessarily seen as core subjects, Chinese universities often look for activities and extra skills to make distinctions among students with commonly good grades. Activities that are not looked at closely for college entrance, such as sports (except for the elite sports schools), are noticeably less popular with parents (23%). This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 43 44. The ability to have private lessons is largely connected with a households income; uptake of any private classes rises dramatically with income. Equally, private classes appear to be more popular in households with just three members, whilst it's likely the case that grandparents take on a larger role in the child's education in larger households instead. Parents wish for a brighter future for their offspring FIGURE 27: Willingness to fund the childs studies abroad, July 2012 Would you be willing to fund your child to study abroad? Base: 839 internet users aged 20-49 who are classified as middle class with one child aged 5-16 Source: QQSurvey/Mintel This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 44 45. study abroad is growing in popularity for middle class parents for two main reasons. Firstly, a foreign education may well be seen as counting for more when they return than a purely PRC education. Secondly, with places limited at Chinese universities some Little Emperors may only get their under- and postgraduate education by going overseas and paying. Some students, who are finding the high school and college entry exams too hard and the competition too intense, opt for study abroad at pre-university level 7% of parents are willing to fund a year of high school overseas. Annual costs of studying overseas are high: RMB150,000 (approximately US$23,770) to RMB200,000 (approximately US$31,695) for lower-cost UK, Australian or Canadian colleges rises significantly to over RMB250,000 (approximately US$40,000) for elite colleges in Europe and in the US. This is a massive financial burden on parents and they may not realise the true costs (including living costs, rent, flights to and from China, healthcare, etc.) in advance, despite their best wishes. There is some evidence to believe this is the case, as only 15% of parents are willing to admit that sending their children to university is going to be a big financial burden (see below). Richer parents are more able to offer this funding in the group with personal incomes above RMB15,000 per month 95% are willing to fund study abroad, but this drops to 79% in the under RMB10,000 per month group. A very small proportion, only just over one in ten (13%) Chinese parents, agree they would like their offspring to study in China. As many parents and virtually all grandparents were denied a university education and had no chance of studying abroad, they now wish for a brighter future for their Little Emperors. American institutions are favoured FIGURE 28: Preferred country for childs studies abroad, July 2012 Base: 724 internet users aged 20-49 who are classified as middle class with children aged 5-16 and who would be willing to fund studies abroad or have already funded Source: QQSurvey/Mintel Rank 1 Rank 2 Rank 3 % % % US 60 13 10 Canada 15 19 10 United Kingdom 14 39 13 EU (excluding the United Kingdom) 2 5 16 Australia 5 12 20 Hong Kong 2 5 12 Singapore 2 5 11 Japan 1 2 7 Other country - - - Studying abroad has become a regular rite of passage for many teenage Little Emperors, and they are prepared for it by language lessons (49%) well in advance. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 45 46. Given a choice of their child studying anywhere in the world, the US is most preferred and ranked first by 60% of parents reflecting the strong opinion of American higher education (particularly the Ivy League institutions) despite the high costs. For that reason, the pull of American universities is stronger amongst more affluent families as well as those who live in wealthier cities, such as Beijing. Canada and the UK are strong choices both as first or second options. In recent years Australia has become an increasingly popular option for Chinese parents and students in terms of cost, lifestyles and college life. Attitudes towards supporting children financially FIGURE 29: Financial impact of covering childs education, July 2012 Please tell us what impact your childrens education might have on your financial and personal situation? Base: 839 internet users aged 20-49 who are classified as middle class with one child aged 5-16 Source: QQSurvey/Mintel % I started saving money for my childs education early in order to afford a good college/ university 58 I want my child to compete with the best academically, for this I am willing to pay a significant amount of money 56 Its worth paying a lot for education fees because my child will get a higher-paid job afterwards 41 My child is likely to receive financial support from my whole family ie parents, grandparents to pursue a good education 28 I would surrender my last resources to allow my child higher education 26 I cut back on my spend on non-essentials ie leisure activities or luxury goods in order to save money for my child/ childrens education 23 I am willing to take on debt in order to send my child to a good college/ university 17 Sending my child to university will be a huge financial burden 15 I count on my child to support me financially after I retire 5 Despite the high costs, Chinese middle class parents are willing to put their time and money where their hopes are in order to ensure their childrens education, future success and security. Over four in ten (44%) indicate they regularly spend time helping their child with their homework and the majority take their children to school and collect them at the end of the day (see A Day in the Life of a Little Emperor section). Besides encouraging their offspring to study hard, Chinese middle class parents make a lot of financial compromises to ensure they can foot the bill for their childs education. Nearly six in ten parents (58%) start saving for their childs future education costs from birth. Over half (56%) agree that they are willing to pay a This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 46 47. significant amount of money for children's education and over four in ten (41%) believe that their child will get a higher-paid job afterwards. Over a quarter of Chinese middle class parents seemingly would give an arm and a leg to put their children through university, by surrendering their last resources for their childs higher education. However, such self-sacrificing by parents is only necessary when family financial resources are limited, whilst wealthier parents don't have to make the same compromises to provide for the future of their offspring. For example, whilst 37% of mums and dads in Chengdu are willing to surrender all resources for their children's education, only 18% in Guangzhou would do the same. Nearly three in ten (28%) would ask for financial help from the entire extended family to ensure Little Emperors get the best education, with the tendency most evident amongst Nanjing (tier 2) households (34%) with somewhat less wealthy backgrounds. This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 47 48. Consumer Lifestyles: Meet the Little Emperors - China - November 2012 Spending Power of Little Emperors Key points Even though pocket money is a relatively new concept, over nine in ten parents now give their offspring a monthly allowance, with nearly half of grandparents contributing as well. Fathers aged 40-49 are the most generous with their Little Emperors, and also tend to dish out pocket money with no strings attached. Mothers are much more disciplinarian and more likely to require that children do housework, behave well and do well in school before giving them any money. Six in ten parents want their offspring to focus on their education first and foremost, taking care of their financial and other needs, so there are no distractions. Whilst they may have their childrens best interests in mind, this may actually be to the detriment of childrens future independence. Sources of childrens income FIGURE 30: Sources of childs income, July 2012 Specifically thinking about your childs finances, does your child receive monthly allowance ie pocket money or any other sort of monetary funds from you, your partner or someone else? This report is supplied in accordance with Mintel's terms and conditions. Supplied to Hylink Digital Solution Shanghai. Mintel Group Ltd. 48 49. Base: 839 internet users aged 20-49 who are classified as middle class with one child aged 5-16 Source: QQSurvey/Mintel The notion of pocket money, or an allowance given by parents or grandparents to children, is relatively new in China. Children would receive the traditional red envelopes ( hongbao) with some money at Chinese New Year, but not regular weekly or monthly allowances. However, it appears the trend has caught on fast; 92% of parents claim to give their kids a monthly allowance. Older parents and in particular mums aged 40-49 are the most generous with their offspring, of whom 98% provide their kids with monthly pocket money. This is largely because parents in this age group are considerably wealthier compared with the younger ones. Nearly four in ten (38%) have household incomes of RMB25,000+ versus 30% of parents aged 20-29 and 21% of those aged 30-39. The notion of the six-pocket phenomenon is at play here again with 48% of grandparents also giving money to children, with t