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China’s Societal Shift: How To Increase The Birth Rate & What This Means For The Toy Business

In China’s recently released census, it became obvious that China has a decreasing birth rate, and therefore a structural demographic challenge is looming. Needless to say, China’s government is working to change this situation and to stimulate birth rates.

In the last week we have seen a number of media articles looking at this issue. The Wall Street Journal, for instance, highlighted an initiative to reduce education costs. Many interviews have been published with Chinese people stating that it is too expensive to have children, so over time the society has become used to having just one child and putting everything they can into that child’s education and development. This has in turn led to a situation where private and supplemental education has become a major cost for Chinese parents. As such, we anticipate many more initiatives across the board to reduce the cost of raising children across China. Here’s the link to the Wall Street Journal article:

We also came across another article talking about ‘Chicken Parenting’ in China, which highlights how intense and pushy some parents have become in China. Included in this article is a sample daily schedule for a child which basically is all about education and very little about fun and play. In many ways this is concerning because of course we know that playing is an important part of the development of children. More specifically though this suggests that the Chinese toy market would offer a lot of potential for toy & game companies offering educational products. Here’s the article referenced:

The outlook for the toy business in China looks positive overall. Despite decreasing birth rates, it is clear that action is ongoing to incentivise more births and to reduce barriers or discouraging factors to families having more children. We can’t be sure when all these measures will take effect, but it is clear that significant action is under way to reverse the trend. Moreover though, China’s parents are increasingly investing very heavily in their children’s development, and as the relatively recent advent of consumer society continues to mature, it looks likely that toys with educational and developmental benefits have increasing opportunity in China, especially as disposable income continues to develop alongside further economic growth.

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