China released the results of the seventh national census this week. According to the National Bureau of Statistics (NBS), China's population on the mainland reached 1.41178 billion in 2020, an increase of 5.38% from 2010. The average annual growth rate was 0.53%, down 0.04 percentage points from the average annual growth rate of 0.57% from 2000 to 2010, implying a low growth trend in the past decade.
Facts and Figures
-- The birth rate continues to fall. China recorded 12 million new births in 2020, the fourth consecutive year that the number of new births fell. The continuing drop in the number of women of fertile age, the delay of childbirth, and the rising cost of childbearing and parenting are all factors leading to the shrink of the newborn size.
-- The aging of the population has further deepened. Chinese people aged 60 or above accounted for 18.7% of the country's total population in 2020, 5.44 percentage points higher than in 2010. China's increasing elderly population is both a challenge and an opportunity. While it will reduce the supply of labor force and increase the burden of elderly care, it can also spur the “silver economy.”
-- The number of children has increased. The number of people aged 0-14 reached 253.38 million, 1.35 percentage points higher than that in 2010. An enlarged children group means substantial business opportunities in the mother & child market.
--Family size continues to shrink. The average household size in China was 2.62 people, down 0.48 people from 3.10 people in 2010. This is mainly due to the increasingly frequent population migration in China and the improvement of housing conditions for young people to live independently after marriage.
Opportunities in the consumption market
Children's economy
As the declining birth rate has led to the decrease in the proportion of 0-3 year-old infants, the proportion of 3-plus children continues to increase, which will fuel the children’s consumption market growth.
Source: CBNData
According to Tmall1, the current mother/infant/child (In Chinese, it is referred to as 母婴, an industry running through the whole cycle of pregnancy, and birth and the growth cycle of infants and children) consumers on Tmall have exceeded 300 million, and nearly 5,000 new brands popped up on Tmall in 2020. Tmall saw a growth rate of more than 40% for food, smart parenting, trendy toys, and other categories and sold 1,364 items with sales value exceeding 10 million yuan in 2020. During the 2020 Tmall Double 11 Shopping Festival, the number of mother/infant/child brands increased by 17.7% year-on-year, and the sales volume increased 24.8% year-on-year.2
Driven by the rising childbearing and parenting cost, consumption upgrading, and demand segmentation, many new sectors have emerged and shown promising growth prospects. Children’s snack is a sector worth of attention by relevant stakeholders. Since 2020, China's leading snack food brands, such as Three Squirrels, Bestore, and Be&Cheery, have rolled out their children’s snack brands. Besides, many startups such as Shamba Star, Yellow Elephant, and Duo Mao Mao appeared, aiming to provide healthier, safer and more diverse snacks for Chinese kids.
Silver economy
With the extension of life expectancy and increase of the elderly population, the elderly consumption market will accelerate expansion.
Source: Yicai
According to the "Focus on Silver Economy-2019 Middle-aged and Elderly Online Consumption Trend Report" released by the JD Big Data Research Institute3, from 2017 to 2019, the number of products suitable for the elderly increased at an average annual growth rate of 39%. With more and more elderly people get access to the Internet, they are expected to become a strong force in China’s online consumption market. Food occupies the most crucial position for the elderly people due to its close relationship with health and well-being. Dietary supplements, milk powder, FSMP, and healthy snacks are all promising categories.
Single economy
Corresponding to the shrinking family size is a growing pool of single adults. In first - and second-tier cities, living alone has been extremely common. Statistics4 show that the number of single adults in China reached 240 million in 2018. The number of those living alone has already reached 77 million and is expected to reach 92 million by 2021.
The single group’s consumption behavior is self-centered and self-demand-oriented. Industries that cater to their demands have been booming, such as tourism, cosmetics, small household appliances, pets, one-person food&beverage, and food delivery. Industries represented by e-sports, games, live-streaming, short videos, and intelligent chat are also flourishing as they can meet the single group’s spiritual demands.
Specifically, new product forms targeting the single consumers are emerging in the food sector, such as half dishes, self-heating hot pot, and mini red wine.
Pet economy
Driven by the single economy, the demand for pets with life-companion functions increases, and the market is also booming. As the 2019 White Paper on China's Pet Industry revealed, the number of pet dogs and cats in China's cities and towns in 2019 was 99.15 million, and the dog and cat consumption market reached 202.4 billion yuan. More than 70% of pet owners were born in the 1980s and 1990s, and most were single.
Single people don't have too much economic pressure from their families, so they are willing to pay for their pets to give them a quality life. Pet food is the largest category and still in a rapid growth trajectory in China’s pet consumption market, with a market size of over 100 billion yuan in 2020.
