As China’s spending on luxury products wanes amid a clampdown on corruption and slowing economic growth, operators of shopping malls are looking to another retail segment: children’s goods.
Recently, a post titled “Staying in fashion by staying away from grandma” went viral on the Internet in China and on WeChat, the country’s most popular instant-messaging service. In the post, urban parents contrasted photos of their children when they dressed them at home against those taken after the kids had stayed with grandparents in the countryside, with many young parents commenting that grandparents are “killers” of fashionable children. Sharp-sighted mall investors are pouncing on this trend, expanding their offerings that sell children’s brands to lure in these hip mom and pops. Malls in Beijing have launched attractions such as a penguin-character theme park, a Snoopy park and a 20,000-square meter children’s play area to attract tot-toting parents. Baby City, the country’s first kids-themed mall, opened earlier this year in the southern city of Shenzhen with an area of 16,000 square meters. Early next year, Shanghai will become home to the world’s largest Disney store.
According to China Business News, in the first year after a Snoopy-themed park was added to a mall on the outskirts of Hong Kong, it attracted an additional three million customers. This inspired the construction of a similar Snoopy park in Beijing’s Huarun Living Mall, where receipts could be used as tickets. The mall expects the Snoopy park to attract 500,000 people this year and boost its sales by at least 100 million yuan ($16.2 million). Chen Yanfei, a research manager at real-estate broker Cushman & Wakefield, says that in addition to recent relaxations of China’s one-child policy, the popularity of television programs focusing on parent-child relations— such as “Dad, Where Are We Going”—also contributes to the emergence of this “chic kids” economy. Young parents want their enthusiasm for fashion and luxury to be reflected in their children and are willing to shell out the cash.
The Wall Street Journal reported earlier this month that the typical cost of raising a child in US is at least $240,000 (not including college costs). A survey done in March of a couple dozen households by Guangzhou Daily showed that respondents spent about 2,700 yuan ($437) a month on their children. Although the average cost of raising a child in China is still considerably lower than in the U.S., the figure is increasing. In 2007, the cost of raising a child accounted for one-fifth of a family’s spending; now the proportion is about one-third, Ms. Chen says.
Cushman & Wakefield said in its second-quarter report on the retail property markets in Beijing and Shenzhen that the gradual implementation of the relaxed one-child policy offers a strategic opportunity for the children’s goods industry. A new baby is able to spur a whole family to buy more, an effect will only be more pronounced in years to come, it said.