Is Z Gen Gen gentry’s parents’ business ready?

The report comes from CNBC’s China Connect Newsletter this week, which brings you insights and analysis on promoting the world’s second largest economy. Like what you saw? You can subscribe here.

Hello, I’m Anniek Bao, a Singapore-based journalist who wrote about China’s economy and business, filled this week for Evelyn. Welcome to another version connected to China.

This week, I looked at how businesses focusing on China’s $644 billion baby care market meet a new generation of parents, shaped by modern parenting values and spending habits.

From stroller manufacturers to coding apps, Chinese companies are facing a new type of customer: Gen Z parents, different ideas about raising children and spending.

Young Chinese parents are digital, have global prospects, and prefer experiential learning. This mindset is shaping the way they spend and where they are.

“When you have young, digital, international and metropolitan parents, their spending patterns are very different from those of older people,” said Joe Ngai, chairman of McKinsey’s Greater China. He added that many people now prioritize children’s experiences such as golf courses and ski trips.

“What we’re seeing is more spending on the kid level, (creating) a more advanced market,” Ngai said. Businesses that cater to enrich programs, extracurricular courses and family-centric travel will benefit the most, he said.

For businesses selling infant formula, crib or maternity clothing, lower fertility rates have been attracting growth, and China in 2024 still has nearly triple the year for newborns in the U.S., a scale that makes its baby care division a too big prize to ignore.

The baby care and maternity market is estimated to reach RMB 46,300 (approximately US$645 billion) According to industry data, annual growth rate in 2025 is about 7%. Iresearch’s report in February.

The initial boost in Beijing’s stimulus may be seen in baby care and maternity products, and then expanded to areas such as pediatric health care, early childhood education, tailor-made minor insurance products, and technical services designed to support family life.

“Think about strollers and formula today, but tomorrow’s Pre-K, private coaching and family travel – all the way to digital learning tools such as coding apps and smart parenting apps.”

Deterrent and selective

Parents are also becoming more selective and demanding when purchasing goods.

Andy Li, head of Shanghai Oliver Wyman, said that before committing to using the product, young Chinese parents tend to spend more time comparing choices, reviewing details and searching for peer reviews online. “New parents are becoming more acute.”

This has raised the bar for the brand because it is no longer sufficient to provide quality and the company must also explain why its products stand out.

“How to differentiate your claim, your product is a major challenge from other players in the market,” Lee said. He noted that giving parents more transparency into the items they buy, especially when it comes to nutritional content, will drive first-time purchases, ensuring retention and brand loyalty.

This raises long-term concerns about the safety of Chinese products, an issue that still resonates with Chinese parents nearly two decades after the 2008 infant formula group scandal.

“For middle-class families that are still plagued by the 2008 baby formula scandal, many continue to choose foreign brands,” said Yaling Jiang, an independent consumer analyst focusing on China.

To show how quickly public sentiment will happen driven by tech-savvy parents, some domestic baby care brands have raised prices a few days after Beijing launched a new home subsidy, which has quickly and strongly opposed it on social media.

According to e-commerce price tracker Manmanmai, the price of a baby wipe jumped from 39 yuan on July 31 to 119 yuan on August 1, while the price of local formulas jumped more than 50% in a few days.

Young parents accused the company of “depriving subsidies” before money arrived, and some called for boycott. Some After that, the brand apologizedthe addition is described as periodic adjustment.

But this highlights a generational shift: Gen-Z parents are value-driven, social media-savvy, and quickly summon brands they believe in.

Beijing’s promotion

In the first in the country, China launched last month National Children’s Parenting Subsidy Programeach child under three years of age is allocated RMB 3,600 (USD 503) per year. This is the first time Beijing has provided such subsidies for the eldest son, with past measures aimed at couples with second or third children.

The government bets on subsidies to reduce financial stress on parenting and alleviate the so-called “fertility anxiety” among young couples.

In addition, Beijing announced on Tuesday that children’s tuition waiver for the last year Public preschool classes and some private kindergartensstarting with the upcoming fall semester.

These measures complement China’s efforts to reduce childcare costs as the country stares at the population crisis, driven by a sliding in birth rates.

China has seen three Continuous population declineand Seven consecutive years The birth rate dropped, A humble rebound in 2024. The silent birth rate is also due to a decline in marriage rate, the lowest level in the last half century 6.1 million new couples.

According to official data estimates by economists intelligence, the birth rate fell to 9.7 million last year, more than half of the 18.8 million people who lifted the 18.8 million family-limited policy on limiting the size of their families in 2016, while the fertility rate was slightly higher than 1.0.

Fertility rate refers to the average number of children in a woman’s life.

In recent years, China has raised its birth quota to three per couple, tax relief for parenting and moved to after-school tutoring costs. Local officials have tested bolder incentives RMB 10,000 bonus In Inner Mongolia Monthly allowances for larger families In Shenyang.

But experts say economic incentives alone are not enough to change mindsets, especially among educated women in urban cities, who continue to face tough choices between career development, high childcare costs and elderly care burdens.

Millennials and Gen Z are also part of what is known as the “sandwich generation”, which balances care for older parents and young children. “When you still have older parents to support, because there is no particularly supported pension system, then a lot of your income goes up there instead of building your own family,” said Harry Murphy Cruise, head of economics research at Oxford.

According to one Population Research Think Tank.

Lin from Asia Group said that in most dual-income families, recruitment assistance in first-tier cities such as Shanghai is also untouchable.

“For well-educated, single millennial and Gen Z women who don’t have children, there is an increasing awareness of the physical and mental burden of marriage and childbirth.”

She noted that the RMB 3,600 subsidy only paid about 10 cans (800 to 900 grams per share) of baby formula.

For now, Beijing’s bet is that having a little extra cash (and the triggered expense) in parents’ pockets could at least give the country a higher birth rate, even if it doesn’t produce a baby boom.

China’s Byd fell for the first time in monthly delivery. In July, China’s leading electric vehicle manufacturer Shipment 341,030 unitsabout 10% lower than 377,628 in June. Domestic rivals Li Auto and Nio also recorded a drop in delivery.

NVIDIA denied China’s allegations that its chips had a “kill conversion.” China’s Cyberspace Administration said last week it needed NVIDIA to provide documents about its so-called Vulnerabilities in the company’s H20 AI chipit targets the Chinese market.

Chinese text has high scores for video AI models. Tiktok Parents Hold the first and third In a research company Manual analysis‘The highest ranking text-to-video generated AI model, and based on Beijing Kuaishou’s Clint AI ranked fifth.

– Yeo Boon Ping

Mainland China and Hong Kong stocks have the upper hand in trade in the region as investors digest new tariff comments from U.S. President Donald Trump.

From mainland China CSI 300 Grow 0.18%, while Hong Kong Hanging Forest Index – Including major Chinese companies – rose 0.17% as of 12:19 pm local time (12:19 ET). Data from LSEG shows that the age of the mainland benchmark has risen by 4.28% so far.

– Lee Ying Shan