Private early education providers, baby-caring companies, family-oriented lifestyle product producers, and children’s wear makers could be the biggest beneficiaries from a possible lifting in China of birth control limits, according to analysts.
China is considering a plan to scrap all limits on the number of children a family can have, which could be implemented as early as end of this year, according to Bloomberg, citing unnamed official sources this week.
The 1.4 billion population country has already started to feel the effects of an acute shortage of younger workers, who have effectively had the biggest influence on its dramatic economic progress over the past 30 years.
Beijing scrapped its long-time, one-child policy in 2015 and now allows couples to have a second baby without a variety of mainly financial penalties being imposed on the family, in a bid to improve its ageing population problem.
The number of new births fell to 17.23 million in 2017, however, from 17.86 million in 2016, according to the National Bureau of Statistics, blamed on affordability of adding another mouth to feed, education and rearing costs to your family, and maybe having to buy a larger property.
At the same time, the labour force – defined as those aged between 16 and 59 – shrank by more than 5 million last year.
What effect a complete lifting on birth restrictions will have, a raft of baby, child, and family-related product makers are likely to benefit, according to Mariana Kou, head of China education and Hong Kong consumer research at CLSA.
She said we should see the impact flow through to various sectors. Maternity clinics and child care providers are expected to be benefit, and that could also extend to the property market, with more families looking for larger homes to accommodate bigger households.
For education-service providers, the impact or benefits could take a few years to kick in, said Kou, with early education providers cashing in first, followed by those further down the line, including primary schools, after-school tutoring collages and firms, and then high schools.
One of China’s leading preschool education providers is the RYB Education Institution, which last November was hit by a child-abuse scandal. But it now appears to have recovered relatively unscratched with its shares were trading at US$17.05 in the US last week, having fallen at the height of the crisis by more than 40 per cent at the height of its price in October.
Shares in mainland China-listed Shanghai Aiyingshi, which makes a variety of maternal and baby products, jumped more than 10 per cent when Bloomberg broke the news on Monday, and is being tipped as being one of the likeliest winners, according to analysts at Hua Chuang Securities.
Aiyingshi is one of the biggest baby-caring product distributors in China and sells tens of thousands of items, both online and through a chain of retail outlets.
Hangzhou Nbond Nonwovens, a major supplier and manufacturer of baby wet wipes, as well as industrial cleaning cloths, and Shenzhen-based Qianjin Pharmacy, which sells baby diapers, are also being touted by Hua Chuang as strong potential beneficiaries from any new policy.
Sportswear designed specifically for children is another segment that could enjoy significant growth.
“Most [brands] have been starting to ramp up their kidswear businesses,” added Jessica Ye, an analyst at Jefferies in Hong Kong.
China’s largest sportswear maker Anta has an estimated 3,000 stores dedicated to children’s wear in China while its nearest rival brand Li Ning has 500, but plans to grow that to 2,000 within the next two years.
Of the more indirect sectors to feel a boost could even be gold product manufacturers, with items often bought as gifts for newborns or married couples.
“But at this stage that’s still difficult to accurately quantify by exactly how much.” said Ye.