In land of consumers, children are kings

PUBLISHED : Monday, 25 May, 2009, 12:00am
UPDATED : Monday, 25 May, 2009, 12:00am

Beijing has put its heart into massive infrastructure spending to buffer the economic damage from plunging exports and crank up domestic demand.

Incentives such as a cut in the vehicle consumption tax and subsidies for rural households to buy home appliances have helped, but greater consumption is needed. Retail sales climbed 14.8 per cent year on year last month, almost unchanged from the 14.7 per cent growth a year earlier.

While officials are hoping white-collar workers will dip deeper into their pockets, some analysts are hailing the country's estimated 400 million children as economic saviours of sorts.

Children are satirically labelled 'young emperors and empresses' on the mainland, doted on by millions of parents and grandparents, a result of the one-child policy adopted in the late 1970s.

Take Mr Qiu, a financial controller at a Shanghai-based five-star hotel. 'Normally, half of my income is spent on my son,' he said. 'I think it is worth it, because I want to give my boy a bright future.'

The financial crisis has not changed Mr Qiu's spending on his son, although he admits he suffered a salary cut.

In Shanghai, an average family could spend as much as 3,000 yuan (HK$3,400) per month on kindergarten fees and 2,000 yuan on English or art training. Last year, the average annual per capita disposable income in the city was 26,675 yuan.

These numbers would underscore the extent to which parents are prepared to spend on their kids as long as they can afford it.

Premium-brand clothes, hi-tech toys and nutritious food have become daily necessities for the young emperors and empresses, boosting the coffers of manufacturers and retailers.

Part of the reason why so much money is showered on children is the fact that today's young parents are themselves the single child of their respective families, born after the one-child policy was introduced.

In Mr Qiu's case, his four-year-old son is cared for by both his parents and his in-laws.

'They wouldn't allow us to save a single coin on the kids, stressing the necessity of educating my son before he goes to school,' he said. 'As a result, we have to cut down on our own expenses to meet their demands.'

A government-owned kindergarten in the city charges a monthly fee of about 500 yuan. But this is not enough for doting parents, who tend to send their kids to private schools that charge more - at least 2,000 yuan - while offering better food and more courses such as oral English.

Many parents now shell out thousands of yuan a year for English courses.

Arthur Chen, an engineer with a foreign-funded medical equipment maker, forked out 6,000 yuan, or a month's salary, for his five-year-old son's oral English course.

'The kid often loses composure in class, and I wonder how much he could learn,' Mr Chen said. 'But it is still better than nothing. As long as he can learn a little, I think the investment is worth it.'

The generosity of today's parents has propelled businesspeople to find ways to profit from women and children amid the country's rising affluence.

With China increasingly integrating itself with the global economy, foreign companies are not only exporting products but new lifestyles to the world's most populous nation.

In March, the world's biggest Barbie flagship store opened in Shanghai as the iconic American doll celebrates her 50th anniversary.

Barbie's entry into China with its 3,700 square metre store on Shanghai's bustling Huaihai Road delighted parents such as Zuo Zhengying, who was among millions of Chinese women who dreamed when they were young of owning a Barbie.

'Barbie was my childhood dream,' said Ms Zuo, a 30-year-old kindergarten teacher.

'But it has become something within reach for our children now. It's not a matter of buying or not buying. It is going to bring a sea change to the mainland's toy market.'

In the United States, most American girls reportedly own at least eight Barbies.

A Barbie costs 300 to 400 yuan in Shanghai, 10 per cent of a company clerk's monthly income.

For boys, one of the hottest toys - model cars - can cost as much as 1,000 yuan, 100 times that of their father's favourite wooden gun that sold for 10 yuan in the 1980s.

'There's no reason why in five to 10 years, China shouldn't be the biggest market in the world for us,' Richard Dickson, Barbie's general manager, was quoted by Associated Press as saying.

Although Mr Dickson acknowledges that the slowing economy would dent Barbie sales in China, Ms Zuo says she could not resist the temptation.

Chinese women and children are now comfortable with western and foreign culture, with Hello Kitty and Transformer toys emerging as their favourites.

'If a new model appeals to my son, it is time to dip into my pocket,' said Mr Qiu. 'I don't see any reason for recession fears in China, since children are becoming the major driving force for retail sales.'

According to Xinhua, the population of the under-14 age group reached an estimated 400 million last year, 30 per cent of the mainland's total, and will increase by 20 million a year, creating a mammoth market for makers of children's products.

The news agency said 90 per cent of urban households spend no less than one-third of their total income on children. A survey by online shop operator found that urban households dedicated 24.2 per cent of their incomes to expenses for their children.

In five major cities - Shanghai, Beijing, Xian, Chengdu and Guangzhou - monthly sales of children's products amount to 4 billion yuan each, a Xinhua survey shows.

Growth of the domestic toy market has moved on to the fast track since 1985 after the country opened its doors and began its ascent as the world's biggest factory for garments, shoes, bags and toys. It is now the world's biggest toy producer, with more than 8,000 manufacturers.

Domestic toy sales have been growing 40 per cent annually and are likely to hit the 100 billion yuan mark next year, according to Xinhua.

In addition, demand for children's clothes stands at 800 million pieces a year and will continue to rise 8 per cent a year. On average, a set of children's clothes costs 150 yuan.

Stationery is also among the bright spots in the retail sector. A school bag now costs up to 300 yuan, compared with less than 10 yuan two decades ago.

Yet no area is more important than nutrition, from the time the children are born, especially these days, when food safety on the mainland has constantly come under threat. China's major milk and milk powder brands, including Mengniu and Bright, were found last year to have added melamine, which can cause kidney problems, to their products.

'We now trust imported food more, after the tainted-milk scandal last year,' said Mr Qiu. 'It has increased expenses, but it is a must.'

The scandal prompted many well-to-do families to turn to foreign brands, and parents have spared nothing to ensure they secure their supplies.

For better or for worse, devoted parents will continue to spare no effort to provide for the modern-day emperors and empresses, a pattern that will sustain their children's children.

Companies that target parents and children as consumers will continue to benefit. Zhejiang province-based Goodbaby Group, which makes strollers, says last year's sales topped US$632 million and expects a 15 per cent jump this year.

The Barbie store in Shanghai goes beyond catering for children; the six-storey pink palace houses not only dolls, which have no age limit, but also Barbie cosmetics and spa facilities for adults.