The first thing five-year-old Shi Youxun does when
he gets home from kindergarten every afternoon is switch on the computer. But he
doesn't just sit there playing games. Instead, he chooses from dozens of
programs that teach him about science, drill him on spelling, or test his math
skills. And when Youxun isn't navigating with the mouse, he's busy memorizing
Chinese poetry or practicing his English. "We started him on the alphabet when
he was one or two years old," boasts his grandfather.
Shi Guojun, a retired Shanghai aviation worker with whom the boy lives during
the week so his parents can work. "We want him to pick up two or three foreign
languages, and then in the future we can let him focus on music and art."
Shi Youxun is a typical product of China's new urban middle class. With four
grandparents and two parents to care for him -- Youxun is an only child -- he is
a member of what is known as a "one-mouth, six-pocket" family, a result of
China's one-child policy initiated 24 years ago. The first group of single
children, especially the boys, became known as "little emperors" for the
attention and luxuries that were showered on them.
In China's increasingly competitive society, parents these days are more
concerned with their child's success in later life and are desperate to give
Junior an early edge. "Today's moms and dads are looking for ways to get their
kids ahead," says Christopher Mumford, chief operating officer of Beijing-based
BabyCare Ltd., which sells nutritional products aimed at infants and pregnant
women. "They are looking to supplement a kid's education starting from Day
Zero."
KIDDIE CASH
That's creating opportunities for companies peddling everything from health
supplements to interactive English-language teaching software aimed at kids.
Although no one knows exactly how big this market is, foreign companies are
keen to sell to a potential customer base that grows by 22 million newborns
every year.
True, the majority of those babies are in the impoverished countryside, but
what the cities lack in fecundity they more than make up for in purchasing
power. "Some parents are spending US$10,000 per year for kindergarten," marvels
Dulce Lim, head of Asia-Pacific publishing at The Walt Disney Co. in Hong Kong.
"The market has really evolved."
Disney started out in China in 1994 with Mandarin versions of Mickey Mouse
and Donald Duck comic books. A year later, it introduced children's books.
Today, with more than 10 million comics and 2.7 million books sold, it's moving
full speed into educational products.
Magic English, a US$225 Disney package that includes workbooks, flash cards,
and 26 videodisks, has been "phenomenally successful" since it was introduced
two years ago, Lim says. This summer, Disney launched interactive educational
CD-ROMs featuring the likes of Winnie the Pooh and 101 Dalmations' Cruella
DeVille. In April, Disney plans to start selling Baby Einstein, a series of
videos that bombard infants and toddlers with images and classical music that
supposedly make them more receptive to learning later on. Next year, Lim says,
Disney China will license its characters to Emeryville [Calif.]-based LeapFrog
Enterprises Inc. for use in interactive talking books that spell a word aloud
when a child highlights it with a stylus.
Disney isn't the only company looking to combine education with computer
technology in China.
This year, Hong Kong-based VTech Holdings Ltd. started selling 16
electronic-learning products -- including the Bright Buddies laptop for teaching
preschoolers music, English, and math, and the Girl Fun PC, a purse-shaped
notebook computer.
Time Warner Inc. is testing the waters in Shanghai with an interactive
language course called English Time. The 200-lesson, 40-CD set takes as long as
four years for a child to complete. After successful debuts in Taiwan and Hong
Kong, Time Warner is expecting strong sales on the mainland -- despite the
US$3,300 price tag. "Surprisingly, in Shanghai people will pay that kind of
money," says Trevor E. Lunn, Time Life International's managing director for
Asia. "People underestimate the purchasing power of the Chinese."
Others are taking a more grass-roots approach. BabyCare sells its vitamins
and supplements to young mothers who attend direct-sales sessions. Key to the
company's message is the role of prenatal and infant nutrition in a child's
ability to learn.
"I wasn't healthy during my pregnancy and was lacking parenting information,"
says 24-year-old Wei Yen. She learned the importance of nutrition the hard way:
Her son, now two years old, suffered from a series of illnesses until Wei
enrolled in a three-day BabyCare course. There she learned, among other things,
that putting sugar in her baby's formula -- something her mother insisted she do
-- was nutritional folly. Now her son is healthy enough to attend day care, and
Wei makes about US$400 per month peddling BabyCare products.
The selling efforts of Wei and 5,000 others like her are paying off for
BabyCare. The company, whose investors include the Templeton Private Equity
fund, expects sales to hit US$10 million this year and US$20 million in 2004.
One potentially lucrative set of products that has been slow to take off is
educational toys -- even though many of those that American kids play with are
made in China's Pearl River Delta.
Chinese parents don't regard toys as anything, it seems, more than a means to
amuse kids. Lane Nemeth, founder of Discovery Toys in Livermore, Calif., is
challenging that notion. So her company is selling items such as
three-dimensional puzzles and plastic measuring cups that teach toddlers simple
math through volumes.
"There's a push in China toward math and science," says Nemeth. Meanwhile,
mighty Mattel Inc., which has been selling its Barbie dolls and Hot Wheels cars
in China since 1999, still hasn't introduced its Fisher-Price line of preschool
toys on the mainland. In China, it's still "Day One, Page One," says Executive
Vice-President Bryan G. Stockton.
CREATIVITY 101
The marketing opportunities haven't been lost on Hong Kong publisher Tom.
Last year the company launched a mainland version of Mom Baby Magazine, which
provides tips on pregnancy and child care from doctors and teachers.
"Parents only have one child, and they are very concerned, so this field is
really growing," says Lisa Wu, chairman of Nong Nong Intermedia Group, the Tom
subsidiary that publishes the magazine. With a circulation of 50,000, it isn't
yet profitable, though it has attracted a blue-chip roster of advertisers
including Disney, Johnson& Johnson, and Nestle.
The reluctance of parents to focus on a child's artistic side makes it hard
for companies that try to go beyond the three R's. Hong Kong-based Kids' Gallery
has opened a Beijing franchise offering after-school classes in arts and crafts.
But only 30 of the 100 students enrolled come from Chinese
mainland families -- mainly those whose parents have traveled or lived
abroad. The other 70 students are children of expatriates. "Creativity for Asian
kids is seriously underdeveloped. Education is all about memorizing, rote
learning, and passing exams," says Joanna Hotung, founder of Kids' Gallery. Even
that emphasis, however, should keep companies that help Chinese kids learn
plenty busy in years to come.
Although no one knows exactly how big this market is, foreign companies are
keen to sell to a potential customer base that grows by 22 million newborns
every year.
This year, Hong Kong-based VTech Holdings Ltd. started selling 16
electronic-learning products -- including the Bright Buddies laptop for teaching
preschoolers music, English, and math, and the Girl Fun PC, a purse-shaped
notebook computer.
