News and Insights

China’s Little Emperors are Coming

June 2, 2021

Children in China celebrated one of their most anticipated days of the year on June 1. But notwithstanding stress from school, Children’s Day is pretty much every day for most kids in China, with devoted parents willing to spend lavishly to provide a healthy, well-rounded childhood for these little emperors. According to state media outlet Economic Daily, the children’s goods and services market in China is estimated at almost USD700 billion. Most parents spend 30 to 50 percent of their household income on their young family members, making them the biggest spenders of China’s fast-growing middle class. Needless to say, the country’s 254 million children (aged 14 or under) hold tremendous power over household purchasing decisions.

However, the landscape has, in some ways, changed over the years – especially in three areas with the highest spending beside basic necessities: education, extra-curricular activities, and travel.

Education remains Chinese families’ biggest investment for their children, yet Western-style education is no longer the only preference among parents. In hopes of promoting patriotism and moral value to children as young as in kindergarten, guoxue (national studies) is quickly gaining traction. The program typically covers the classics associated with Confucius, ranging from philosophy and poetry, to ethics and etiquette. Estimated to be a USD73 billion business, there are currently at least 1,800 Confucian schools across China and counting. The increasing popularity of guoxue has also led to exponential growth in demand for study trips that integrate education, culture and tourism, with itineraries featuring various guoxue inclusion, including the art of chess, tea appreciation, architectural philosophy, and more. Eighty percent of participants are schoolchildren aged between three and 16.

These days, children’s weekend schedules look different, too, with the inclusion of fun extra-curricular activities to aimed at nurturing talent. Ninety-two percent of families enroll their children into an average of two to four classes. Interests have expanded a lot in the recent years, with less academic-focused courses such as sudoku and languages, and an uptick in physical activities such as winter sports (thanks to the 2022 Winter Olympics), horse riding, swimming, baking, and playing with Legos.

With the Chinese government’s recent announcement of the three-child policy to boost falling birth rates, there are plenty of opportunities on the horizon. This major shift in family planning on the mainland could birth new businesses, prompting us to rethink and reimagine new consumption patterns and how businesses might adapt to cater to the market.

Take travel, for example. In China’s classic multi-generation style, family travel will move from 2+2+1 (parents + grandparents + one child) to 2+2+X. Currently, the market is mostly comprised of post-80s parents (45 percent) and post-90s (30 percent), who are paying 20 percent more on the average for travel products and services. To better serve travelers in this lucrative market in the future, it would be prudent for hotels to reconsider room configurations that allow a higher proportion of multi-bedroom suites and connecting rooms, and entertainment facilities to provide more space and activities that accommodate a wider age range. We will see strong growth in alternative accommodations such as cottages, holiday homes, caravans, glamping sites, and more as family travelers grow savvier. Car rental companies will need to reconfigure their offerings as one seven-seater may not accommodate bigger families. There will likely be even more demand for travel planners to organize customized tours that address the interests and needs of different family members.

This is just one of many examples sure to unfold in the next few years. While the future of the three-child policy is unclear, we can be certain that the dynamics of the children’s market is evolving at a faster pace nowadays. In time, we will see new demands and trends driven by China’s future little emperors.

TAGS: Travel & Hospitality