One year on, two-child policy a boon for childcare and parenting tech

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China’s one-child policy has had far-reaching effects: gender imbalance, little emperors, as well skyrocketing childcare, education, and parenting consumption. And now, more than one year since the two-child policy came into effect, the online childcare and parenting market is expected to gain a windfall. While uptake of the policy is slower than expected, 17.86 million babies were born in 2016 – an increase of 11.5% compared to 2015. This was also the year with the highest number of newborns since 2000.

As technology savvy millennials start having families, they are approaching childcare in different ways. Online childcare and parenting companies are catering to this consumer segment by offering a combination of e-commerce, parenting focused content and social media. Research firm Analysys estimates that the childcare e-commerce market was worth RMB 293 billion in 2016 and the high growth period is set to continue until 2018.

“With the development of the mobile internet, the consumption behavior of young parents has already undergone a big change compared to the PC era,” Analysys researcher Jing Xiaolei explained in an interview (in Chinese). “Social media and entertainment elements continue to emerge in online spending patterns. User expectations for quality, price, and service have increased.”

Attracted by the potential of the online childcare and parenting industry, investors have poured tons of capital into the market. Baby Tree, a large online parenting community received RMB 3 billion funding in 2016 and is focusing on growing its e-commerce arm Meitun, which sells milk powder, nappies, and toys. Davdian.com (大V店) an e-commerce platform catering to mothers has gained at least RMB 10 million for its series C. While Lamabang (辣妈帮, literally “Band of Hot Moms” in English) is the largest online community for mothers and has 66 million registered users. It has partnered up with Suning, the largest O2O retailer in China to further develop its e-commerce capabilities. Lamabang completed its series D earlier this year for an undisclosed amount.

“When the second child policy is fully implemented, the number of newborns in China can reach 19 million a year,” Betty Cai, Principal of Eight Roads Ventures which invested in Davdian.com, said in an interview (in Chinese). “In the future, the investment in childcare and education could form a massive RMB three or four trillion market.”