► In recent years, the scale of the online parenting market in China has increased enormously.
► There are plenty of challenges for the market players from growing concern about the platform’s reliability to high competition.
When Chinese authorities ended the famous ‘One Child Policy’ in 2015, they unintentionally gave a push to a new gig economy.
After the rules restricting having a second child were slowly relaxed to allow more couples to do so, if they fit certain criteria, the birth rate started to increase immediately. According to the National Health and Family Planning Commission, the number of newborns increased by 7.9 percent between 2015 and 2016 under the new two-child policy, with second babies comprising 40 percent of all births.
In the meantime, there was a lack of services providing parenting knowledge. “The living conditions for moms of our generation have greatly improved, but their sources of useful information besides their parents’ experiences are still scarce,” Li Danyang, founder of Niangao Mama – an online platform providing childcare products and parenting services.
Niangao Mama focuses on the parenting information deficit in modern China. To help educate parents, the company’s staff produces daily multimedia content on topical issues such as the traditional misconception that feeding babies more salt will help them grow stronger. Another post on their website offers babyproofing ideas for the home through cartoons and videos. Recently, the platform has also added e-commerce services to the company, providing products like picture books, toys and baby food.
In fact, Li was not the only one to notice this gap in the market. The parenting push has given rise to a number of similar online platforms aiming to attract middle-class moms and dads. In addition, some already existing companies started expanding their suite of products to include parenting-related content. VIPKID, for instance, launched a site to help parents teach their infants to learn English.
Meanwhile, e-commerce giants such as Taobao and JD.com, alongside cross-border startups like Beibei and Mia.com, are competing to win over the 150 million internet users, who will buy kids’ products on their mobile devices, according to projections from iiMedia Research Group, a consulting agency in the mobile internet industry.
Currently, Mama Net and Babytree (1761: HKEX) seem to be the leaders in the industry – with 26.5 million and 16.1 million Monthly Active Users (MAU) on their apps as of August 2019, respectively. Like Niangao Mama, these apps are also a space for knowledge sharing, advice-seeking and an online marketplace for maternity products.
Babytree was founded in 2007, earlier than many of the above-mentioned platforms, and is headquartered in Beijing. In the beginning, the company operated an online parenting community based on social networks and content, with major revenues from advertising. In 2015, it began to step into the maternal and child e-commerce field. It currently runs an online platform for parents to exchange know-how called Babytree Wetime, and another where users shop for baby goods and purchase early education services called Babytree Pregnancy.
The company also plans to expand from online to offline services through Babytree play centers. These centers will be operated in the community neighborhoods, which include daycare facilities, early-childhood development courses as well as family play and retail areas.
Moreover, the company also has global ambitions. As the first global market to expand, the company invested in India. With over 460 million internet users, India is the second largest online market, ranked only behind China. Additionally, in 2018, India had a fertility rate of 2.28, which surpassed China's fertility rate of 1.64. Therefore, a combination of high active internet users and high fertility rate made India a perfect place to invest for Babytree. According to the company's financial report, Babytree recently led a USD 8 million Series A funding round in Healofy, a leading pregnancy and parenting platform for Indian parents.
The parenting market also attracted Chinese tech giants. While Alibaba supports Babytree, Tencent supports Mama net, the internet platform that has received strategic investment (link in Chinese) from Tencent since completing their Angel round in 2011. Other key strategic partners include China Next Generation Work Committee and China Social Welfare Foundation. Mama net’s platform differentiates itself by providing an online one-on-one voice-based question and answer service with doctors – a 3-minute quick response to answer all questions about pregnancy, pregnancy and child feeding.
Another significant company in the market is Lamabang. The company provides similar services to Babytree and Mama net. Users can consult with the platform's professionals by sending them messages and images and can also contribute posts and participate in forum discussions. The platform also has an e-commerce channel, which sells products for both mothers and infants.
Lamabang is funded by eight investors. Suning.com and Weipinhui are the most active investors. The company has raised a total of USD 130 million in funding over 4 rounds. Their latest funding was raised on Feb 10, 2017, from a Series D round by Suning.com.
Looking ahead, there are plenty of challenges for the market players. First, there is a growing concern about the platform’s reliability. Last month, a three-month-old baby died after her mother followed an online childcare consultancy platform’s advice. The new mother put the infant to sleep face-down and opted not to intervene while watching the baby crying through a monitor – as the online platform controversially advised that she do so. The incident was made public and sparked criticism over the online parenting consulting business.
Second, the low regulations in this burgeoning industry give many firms easy exit and entry, increasing the level of competition and reducing credibility and revenues. According to the local news media the Paper, there are various unattended issues regarding the lack of authorized standards and the vague definition of business services under current regulations. Also, there are insufficient standards to determine credibility for professionals operating in this sector, the news agency added.
“The market for child-rearing platforms is a mixture of good and bad,” said Liu Kun, the founder of a platform called Super Early Childhood Education Experts, who has a doctoral degree in preschool education. “Although some have professional theoretical backgrounds and social responsibility, a large number have neither professional knowledge nor experience.”
Lastly, while the population keeps growing, the growth rate is slowing down. This means that there will be fewer and fewer mothers and fathers in need of these services in the future. And this relatively small number of parents will have many options in the online parenting market, putting a cap on companies’ growth potential. Some of the successful firms like Babytree try to eliminate this challenge by investing in emerging markets such as India. However, this strategy might not turn out as successful as planned, since they will face a lot of local competitors.
Therefore, it seems like in the future, the most innovative and authentic companies would be most likely to survive – even dominate China’s online parenting industry. However, the picture seems not very pleasant for the newcomers to the market.