According to
Dairy Products China News issued by CCM in December 2013, China will relax its
one-child policy, allowing couples to have two children if just one of the
parents is a single child, according to a key decision approved at the Third
Plenary Session of the 18th Communist Party of China Central Committee on 15
November. This policy shift is expected to lead to more newborns, so the infant
formula industry will benefit from this.
The
timetable for implementation of the policy has not been fixed, the document
just saying that it would gradually adjust and improve family planning policy
to balance the population number in China.
China’s
family planning policy was first introduced in the late 1970s to control the
surging population by limiting most urban couples to one child (some provinces
allowed a second child if couples were both single children) and most rural
couples to two children (if the first child was a girl).
The
changes in policy have aroused people’s attention. Many internet users have
welcomed the change, though others have said they would think twice about
having a second child because of high living costs. Listed companies involved
in mother and child supplies have seen a surge in their shares – Yili,
Beingmate and Xinjiang Western Animal Husbandry Co., Ltd., (a recent entrant to
the infant formula market) all saw their shares rise significantly on 18 November
but fall back on the next day.
China saw
16.35 million births in 2012, and population experts estimate that the policy
shift will add 1 to 2 million more to the annual total in the next 2 years.
Various observers have suggested that the impact will be an additional RMB6
billion of sales every year from 2015, or an increase in sales for the industry
of 20-30% (sales of infant formula reached about RMB55 billion in 2012).
The extra
sales are expected to occur particularly for domestic brands of infant formula.
The new policy will especially encourage more second children in 3rd and 4th
tier cities, as in 1st and 2nd tier cities many couples are less willing to
have a second child due to economic pressures and because the traditional
perception in China that “more children is better” has weakened there more than
elsewhere. It is evident that the multinational brands are typically much
stronger in the latter cities (on the basis of this data, only 16% of their
sales are in 3rd/4th tier) whereas domestic brands hold higher shares in the
3rd and 4th tier cities (which make up 55% of their sales).
However,
some industry experts take a conservative view of the new policy’s impact,
based principally on several areas of uncertainty. Firstly, no timetable for
implementation of the new policy has been fixed. According to the National
Health and Family Planning Commission (NHFPC), the central government will not
set a confirmed timetable for the provinces and local governments will
determine the timing according to what they judge to be practical locally. This
means that it is possible in theory that only some provinces will fully
implement this new policy in the future, with others holding back from doing
so. Additionally, many couples seem to be concerned about the high cost of
child-rearing: several surveys on this topic conducted by the NHFPC have
suggested that 60% of the respondents on average are willing to have a second
child if the policy permits. As a result, the increased number of newborns is
uncertain, so the infant formula industry will be wise to take a conservative
view of the prospects offered by this policy change.
Cheese
Market Growth
Domestic
Dairy Processors Raise Product Prices
Revised
Draft of Food Safety Law Announced
One-Child
Policy Shift Benefits Infant Formula Industry
YST
Launches IPO
Tingyi and
Wakodo to Form JV
Meiji
Dairies Targets Fresh Milk and Yoghurt
New Hope
Dairy Re-enters Infant Formula Market
Synutra to
Acquire YouthbaseBeingmate Diversifies into Children’s Milk Market
Beingmate
Diversifies into Children’s Milk Market
Guangda
Group to Expand Milk Supply
Vitasoy
Launches Grain Milk
Dairy Products China News, a monthly publication issued by CCM on
15th, offers you the latest information on new market dynamics, company
development, new products, technology, packaging and raw material supply, etc.
It also focuses on the government’s direction and polices, helping you get the
whole picture of the industry.
About CCM
CCM is
dedicated to market research in China, Asia-Pacific Rim and global market. With
a staff of more than 150 dedicated highly-educated professionals, CCM offers
Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information,
Import/Export Analysis, and Consultancy Service.
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CCM Information Science & Technology Co., Ltd.
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Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road,
Guangzhou 510070, China
Tel:
86-20-37616606
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