Published on October 28, 2008
The Big Little Economy (24th Sept 2008)
THE PRECIOUS CHILD A convergence of falling birth/fertility rates + technology advancements + increasing global affluence could lead to unique market and strategic opportunities arising from the Little Economy1. 1 Children - defined as pre-0 to below 15 years of age
Since the 60s-70s, fertility rates have fallen worldwide • 1970 to 2000 - “major and unprecedented fall” in global fertility rates. • A trend in both the developed and developing world. • No European country is maintaining its population by birth. • Fertility < 2.1 in 23 developing countries including China (fertility = 1.7 in 2000-2005). . Europe Pacific Americas Asia U.S. Africa Source: World Fertility Patterns 2004, UN Population Division
The fall is global and will persist into the future • In 2000-2005, world fertility = 2.65 (Developed – 1.56; Developing - 2.58; Least Developed – 5) • By 2040-50, world fertility < 2.1 (replacement rate) Shrinking Global Population Source: World Population 2004, UN Population Division
For the country, shrinking population poses a real threat • “The rapid ageing of the developed world is pushing the global economy towards the edge of a demographic abyss.” (Commission on Global Ageing) • In the next 10 years, the population of Japan will start to shrink, followed within the next few decades by the EU and even China. “To Shrink a City”, The Economist “Ogama in Ishikawa prefecture canvassed an industrial-waste company from Tokyo to. .replace replace its paddy fields, cedarwood plantations..” “… administrators are starting to think about the implications of population decline…. set about trying to shrink the city. …... “Sullivan County Australia …. population has virtually flat-lined…” “2/5 of all U.S. counties are shrinking…. Children are disappearing even more quickly.”
Various drivers have contributed to this fall... Drivers • Improved status of women (higher education, career opportunities) • Rising income and wealth • Use of contraceptives, legalization of abortion • Technology advancements (mechanization) I. TRENDS - driving forces • Government policies (e.g. state-sponsored housing, childcare) “..beginning of the decline began in the late 60s with the advent of the pill”
.. including Rising Infertility Rates.. • Global average infertility2 rate is 10-15% and rising. • Fertility - linked to social, behavioural, biological, environmental factors and increasingly, genetic factors. National Infertility Rates U.S. >10% Europe 1 in 7 couples, could double over next 10 yrs Singapore 20% China 10% Sub-Saharan Africa 20% “American men are becoming less fertile and more likely to experience testicular cancer than their forefathers…” “From 1988 to 1995 (7 yrs)…, American women.. (with) fertility problems jumped from 4.9 mil to 6.1 mil, a 25% increase.” 2 Infertility is defined as 12 mths of unsuccessful conception for women < 35.
.. that spawned the birth of the Baby Business/Market.. • ‘The field of reproductive technology has become a fast growing and profitable economic sector’,… human reproduction, would unleash a new cycle of market creation, exuberance..’ (Harvard Biz School Professor) • … an increasing demand for ‘designer babies’, choosing SAT scores, character, etc. • Other related industries – fertility drugs, selling of sperm/egg, stem cell research, cord blood banking, cloning, cross-border adoption, surrogacy,… Louise Brown, now 29, is the world’s 1st test-tube Patients at Third Hospital, China's biggest authorized baby. Her birth heralded the taking off of the IVF fertility center and its first to produce a test-tube baby. industry in 1978. “Demand knows no limits. Couples will mortgage homes, sell cars, deplete savings..”
.. which is fast-growing, lucrative and very international. UNITED STATES • In 2004, > 1 mil underwent ..fertility treatment. “(Market is)… growing at dizzying rate….” U.S. US$3bil fertility market, 2004 Average sperm: $300 IVF US$1.04 bil Average egg: $4500 Premium sperm: $2,950 Fertility Drugs US$1.33 bil Having a baby to call Premium egg: $50,000 Diagnostic Tests US$375 mil your own: Priceless IVF cycle: $12,400 Donor Eggs US$38 mil Surrogates: $59,000 Donor Sperm US$74 mil Adoption: up to >$40,000 Embryo storage: $250 Surrogate Carriers US$27 mil Sources: ‘The Baby Business’, Debora Spar, Harvard Business School Press, 2006 ‘How to Pay for Kids’, Businessweek, 15Nov07 The Trade in Infertility, Newsweek, 12Apr06 BRITAIN • The Sunday Times Rich List in 2004 announced that fertility treatment had become the most lucrative medical speciality. Top 2 richest doctors plus others were fertility experts. • Industry worth £500 million in 2004 (£3,000 for 1 IVF cycle) ASIA – INDIA, SOUTH KOREA, THAILAND • “.. becoming big business in India .. Industry brings > $450 million a year into India..” • “In India and South Korea, fertility has become a fast-growth export industry.”
.. which is fast-growing, lucrative and very international. The Baby-Making Industry is a highly Exportable and Tradable sector due to international differences in product availability, price, quality, regulations. “Shanghai has slammed the door on IVF applicants until 2009, citing a shortage of high-quality donated sperm….” “baby-shoppers ..assemble inputs from around the world - sperm from Denmark, an egg from Russia, a surrogate mother from California.. some even switch countries midway through treatment, starting in Britain, .. travelling to Russia, Spain or America.” Popular fertility treatment destinations Denmark For donor insemination (well-regulated, quality-checked and guaranteed to be anonymous). Cyros Int’l is world’s largest supplier and exporter of sperm. Spain For eggs (£800 payment ensures supply of eggs) U.S. For advanced technology and selected fewer restrictions (e.g. California – signed surrogacy agreements offer guarantees of ownership, gay/lesbian couples can hire U.S. surrogates). Though payment is technically not allowed in U.S., compensation can be very high. India For surrogacy (> doubled over last 3 yrs). Permitted and inexpensive. IVF costs 1/5 of that in UK. E. Europe For eggs. Some U.S. clinics fly frozen sperm to fertilise eggs in e.g. Romania. The resulting embryos are frozen and flown back to U.S. to be implanted in the womb.
.. which is fast-growing, lucrative and very international. Other new products and services have sprung up rapidly in the reproductive and related sectors 1 “Japanese scientists create ‘artificial womb' for IVF eggs” Straits Times 28 Jul 2007 4 U.S. frozen sperm and related services internet market alone estimated at US$45 mil in 2002 (that’s 70% of the $65 mil sperm-bank services market in the U.S.). 2 FertilitySCORE™ is the 1st “at home” male sperm test kit (Australia) 5 Stem Cell Extraction and Storage …. from adult blood; fat removed by liposuction; children’s baby teeth; leftover embryos; and most recently, menstrual fluid. Charges range from $600 to > $8,000. 3 6 Cord Blood Banking Private banks charge $1000->$2000 for “statistically very low possibility of future need ”.
And for the individual, each child becomes more precious. With increasing affluence, parents/grandparents are spending a whole lot more on children ….. Adoption: $22,500 Childcare: $47,300 Clothing: $14,683 ► Education: $44,465 Fertility: $17,500 Healthcare: $20,353 Toys: $39,182 INDIA: Children’s birthday parties > US$4,000, iPod Mini as party favor. In a country of 1.1 bil where 32% < 15 yrs old, party planners say that the birthday industry may one day rival the wedding industry ($11bn a yr). Families (rich/poor) spend 1/3 to ½ of incomes on their children. 2 in 5 Koreans have no nest egg for old age, U.S. infant/toddler clothing sales outpaced having spent it all on children. the adult-apparel market in 2006. .. $600 billion of adult spending is now quot;influencedquot; by children. ‘Junk Culture’, Time Magazine, 4 Oct 2004 Rich kids, poor kids • 86 countries have not achieved universal primary education. Worldwide market for American teenagers spend > $150 bil a yr or > GDP of • Under-nutrition still affects 143 mil edutainment toys expected to reach $7.3 billion by 2011. Finland, Ireland or Chile. kids < 5yrs old. Enquirer (Sept 2005)
And for the individual, each child becomes more precious. Education, especially, is a huge and growing expenditure • In India (Chennai, Delhi), good preschools charge 10 times more than colleges and double the fees of leading education institutions like the Institute of Info Tech. • In Hong Kong – parents spend up to HK$33,000 a mth per child on education incl. school fees, English lessons, revision courses, music, swimming and ECA. Expats are also paying for debentures for int’l pri/secondary schools (price of which rose from HK$600,000 in 2004 to HK$3 mil in late-2007). • In South Korea, it costs S$370,000 to bring up a child (17% rise from 2003) in 2007. School fees form the bulk. The private tuition market is 33.5 mil won or 4% of GDP - exceeding even the entire state education budget of 31mn won for 2007. The private English education market is US$15.8 billion (S$22 billion) a yr, fuelled by families who spend an average of 700,000 won a mth on their children. Typical total spending on a child by age (S. Korea) Age 0-2 S$36,000 “… costs of raising children Age 3-5 S$43,000 can add up quickly. The S$219,000 biggest and most common Elementary School S$90,000 driver is education.” The Middle School S$50,000 Million Dollar Kid, WSJ. High School (Age 15) S$57,000 S$151,000 University S$94,000
And for the individual, each child becomes more precious. Not only do parents spend more, they change their lifestyles to suit the needs of their children “AMERICAN cities seeking fast growth thought they had the answer in the young, single professional. But … when singles marry and raise kids, they move home, dashing growth trajectories. The result is that big cities like New York, Los Angeles, Boston and San Francisco lose out.. The lesson for urban planners seems to be that family-friendly cities win over the cool, hip cities, said Mr Joel Kotkin, a noted expert on urban economic trends.” “Britons leaving this... ...for this” (ST Dec 13, 2007) Unfortunately, as many as half of them 'For young families, especially, the chance to raise a family in a (working professionals) leave for the suburbs safe, out-of-doors, sporty country where your income allows you once their children reach school age - CEOs a more enjoyable standard of living is very attractive.‘… for Cities’ “Kids in Cities” Report HONG KONG - Actor Jet Li secretly moved to SGP last yr “Hedge fund bosses want to move to SGP (from HK) for his daughters' education (Hong Kong's Next Magazine) for their children's sake”, Straits Times 27 Aug 2007 “HK and SGP find the price of success may be just too high” Newsweek Int’l, Aug. 6, 2007 Education, once an afterthought in expatriate relocations, has rapidly become a vexing issue in both cities. Hong Kong's competitiveness is being negatively affected by the inability of incoming investors to find places in school for the children of their expatriate staff members..
IDEAS AND IMPLICATIONS II. IMPLICATIONS + IDEAS Assisted Early Kids’ City General Reproduction Education (Blue Sky Industry Industry Potential)
II. IMPLICATION 1 (Reproductive Industry) 1. The baby- conception market is set to grow further. Assisted Reproduction Industry
Why the baby-conception industry? We have strong existing players and strengths in related technologies and services delivered Asia’s 1st IVF baby in 1983) “New local invention extracts stem cells with placenta “World’s 1st mother-daughter 'juicer‘”, ST Jan 15, 2008 egg donation”, April 2007 The 2 NUS academics patented the device last year. 3 performed in Canada by SGP- companies from SGP, Japan, Britain are keen to develop it.. trained doctor Dr Seang Lin Tan “Infant medicine among 4 to get sub-specialty “Out in 450 seconds” recognition”, ST Oct 15, 2007 ST Dec 14 07 SINGAPORE will recognise … Neonatology, the care KKH performs a 'crash and treatment of newborn infants, in which Singapore is caesarean' under 8 mins already the best in the world.. (int’l norm is 20-30 mins), quot;Singapore scores medical first”, Agence France Presse, Aug. 14, 2001 NUH and SGH.. transplanting umbilical cord blood from a non-related donor to successfully treat thalassaemia..
Why the baby-conception industry? We can capitalize on our reputation for high-standards and trustworthiness to gain a further premium “The industry in China is believed to be huge.. more than 10 million Chinese families need artificial fertilization, according to Xinhua News Agency. There is a Sino-US joint venture hospital which treats more couples than any other in China” Source: Fertility industry takes off in China, ChinaDaily, 30 Mar 2005 By growing the sector and raising the standards, we can help improve the service for ourselves and perhaps boost our population. “About 15 per cent of Singapore couples do not get pregnant successfully within 12 mths of trying to have a child” (SGH website)
Sub-sectors of the industry Diagnostics and AR procedures Diagnostic AR Procedure II. IDEAS (Reproductive Industry) (Done in SGP or by SGP-trained doctors) (Done in SGP) 1.5-2 weeks 1.5-2 weeks (extraction) “In a few years there may not be many countries left that perform the latest AR techniques. The ones that remain - like Israel, perhaps - may see business boom.”
II. IMPLICATION 1 (Reproductive Industry) 2. Early education is the most lucrative and fast-growing of Early children-related Education industries. Industry
Why the early childhood education industry? The fundamentals have changed. It is now a highly lucrative and growing market that is within reach of the masses. - one of the most price inelastic, next to Health/Medicine - service based on want, not need (> limiting) - commands premium fees, skills-based Schools in SGP Annual Fees “The Kindergarten Express”, ST 27Jan07 The lucrative preschool industry..draws 40,000 new pupils a yr, is riding a NUS (Arts & Social Sci) S$6360 wave of change....the early childhood scene has never been so vibrant NUS Masters Prog S$5450 Australian Int’l School SGP (Pri) S$21,088 There's preschool, there's play-school and now there's Baby School ST 30Dec07 SGP American School (Pri) S$19,450 There are 111 infant schools that incorporate learning.. up from just 19 in 2003…fees range Pat’s Schoolhouse S$16,080 from $1,000 to $1,400 a mth… almost all 20 infant EtonHouse S$18,000 schools are full with waiting lists… GEP preparatory course: $1,500 for 8hrs “Expat school offers guaranteed place for a cool $165,000” Tanglin Trust School starts scheme... ST Dec 15, 2007 “Price of a place in United World College? $200,000” .. ST 11Jan08 “MBA for tots?”, ChinaDaily, 4Oct06 SGP education fever. catching on among Children’s EMBA, an early business Koreans....parents’ annual family income > administration program for kids aged 3-6 S$145,000. .. mthly expenditure of a mother appeared in Shanghai (fees US$2,500), here with a child > $5,000. The fathers shuttle.. every weekend… ST 23Jan08
Why the early childhood education industry? II. IMPLICATION 2 (Early Childhood Education) We have very strong existing and emerging players (reputation) - Private: EtonHouse, Julia Gabriel, Chiltern House, MMI, CherryBrooks, Mindchamps, - Public: SOTA, Junior Sports Academies (JSAs), Future School “Students prepare for opening of Arts School”, ST 21Dec07 (4 arts disciplines: dance, music, theatre and visual arts) “Junior Sports Academies to nurture champions” ..4 JSAs.. focus on 6 sports - badminton, netball, swimming, “Bar raised for preschool centres and teachers” table tennis, track and field, and wushu, ST 28Deb07 ST5Mar08 “A peek into a School of the Future”, ST 28Dec07 “New school to nurture inventive .. adopt technology to spearhead innovation in Minds”, School of Science and teaching and learning.. The 5 ‘Future Schools’ are Technology to have practice-oriented Beacon, Canberra Primary, Jurong Secondary, focus, small class sizes, ST5Mar08 Crescent Girls' School, Hwa Chong Institution.
Why the early childhood education industry? It is a highly tradable/exportable market - national branding of education is catching on - parents increasingly willing to send their children for good environment and services - companies can easily expand overseas to capture more returns for SGP “Indian-style education system catches on in Japan”, ST Jan 3, 2008 “Koreans sold on an education in Singapore”, ST Jan 23, 2008 Cherie Hearts is among the growing number of SGP kindergartens exporting their own pre- Increasingly active M&A scene school curriculum.. It joins .. Kinderland, Modern Montessori Int’l, Learning Vision who have set “Temasek buys 12% (S$512mn) of up centres in .. M’sia, Hong Kong, Australia, ABC Learning”, becoming the 2nd China, India, Sri Lanka, Bangladesh, Nigeria largest single investor in the world's largest publicly traded childcare provider, ST Jun07. “Hong Leong Group makes its foray in to education”, Jun07 U.S. buys into SGP SGP buys into SGP SGP buys into Australia
Expanding the early education sector A. Source for short, high quality program providers to launch programs in SGP (e.g. MENSA for kids, John Hopkins, Warwick) Attract related events to establish SGP as a node for premium early II. IDEAS (Early Childhood Education) education activities (e.g. WCGTC World Conference, World’s Children Festival, Third Arts Olympiad Artworks) 800 attendees in 2007 B. Help develop a premium national brand for our private early education providers and to explore grooming a through-train institution in the long term.
3. Countries are seeing the demographic threat. Responses include building child- Kids’ City friendly infrastructure and branding cities child- friendly.
Branding cities child-friendly Attracting children helps to attract talent (their parents) and we have existing strengths to leverage on Mr Joel Kotkin, author of The City: Leaving for children’s sake…. A Global History, said Singapore 'Those who reject HK are the ones with families,' has an 'underestimated secret said Mr Quane, 31. 'Pollution used to be the main weapon'. 'Its family-friendly image reason, now education is coming to the fore.' is a big plus. Many expatriates speak of this and it is a factor in quot;About 1/2 of white families leave Chicago when attracting and retaining talent,' their children are school-age,quot; says Commissioner of Children and Youth Services. AmCham says the lack of int’l schools here is becoming a ‘fairly acute’ problem. Some foreigners turn down job offers, others put off relocating here, Todayonline, 31Aug07. “Asia's 1st garden for children opens here” ST 2Oct07
Child-friendly infrastructure Countries are investing resources and efforts into child-friendly infrastructure and environment for children II. IMPLICATION 3 (Child-friendly City) Germany, Stuttgart (government) “City for Children” Committee - drive Stuttgart as the “Best place in the world for children” to live in by 2010. “Believes.. will convince foreign talent to stay”: • Create ‘Children Oases’ around city • Boost toddler care places, extend after-school care • Intergenerational centres incorporating elderly housing with kindergartens • Assimilation programs for expat kids (45%) • Children’s forums to canvass views on city planning Canada (government) “Child-Friendly Cities and Participatory Planning and Design in Canada” Research program funded under the “Initiative on the New Economy” Program 2002-2005. The research recognized that kids/youths are not future citizens—they are active citizens here and now. “Winnipeg’s Art City: Children, Art and Urban Revitalization”
Branding cities child-friendly Developed and developing countries alike are branding themselves “Child-friendly” Unicef’s “Child-Friendly Cities Initiatives (CFCI)” II. IMPLICATION 3 (Child-friendly City) • CFC (launched in 1996). In high-, middle- and low- income nations alike, a growing number of municipalities have made the political decision to become quot;child friendlyquot;. 867 Child-Friendly Cities “Few subjects.. are of more passionate interest Austria, Belgium, Finland, France, to our readers than how to raise their kids” Ireland, Spain, Norway, Netherlands, Italy, Sweden, UK, New Zealand, Australia, Japan, Philippines, Thailand Philippines started the ‘Most Child- friendly City’ award in 1999. “The Real Brain Drain - Why Putting Children First is So Important for Australia”
Branding cities child-friendly A. Enrich and enhance our city branding (multi-dimensions) for children Wannado City run by children aged 4-11, includes government, entertainment, schools, retailers, bank, post office, hospital, etc “What makes a great city tick?”, ST Jun 07, MONOCLE Top urban elements for an ideal city: II. IDEAS (Child-friendly City) • Green space projects, • Clear city signage, • Child-friendly shops and services B. To build more child-friendly zones/infrastructure “Cities ramp up kid-friendly hospitality”, By USA Today Designs by After > a decade of wooing ‘Carve’, Dutch young professionals with loft company apartments, nightclubs, Internet cafes, cities are .. new challenge: hanging on to them once they start having children
II. IMPLICATION 1 (Reproductive Industry) 4. There is no premium cap to the children’s market. It is General where the blue ocean (Blue Sky strategy works best. Potential)
a) Media / TV / Online Networks A Marketer’s Dream… • “KGOY” - Kids Getting Older Younger • “Trans-toying” turning everyday objects into toys • MTV and Nickelodeon (SEA): young audiences are the “darlings of marketeers” as they are really the decision-makers in the family. In 2005, The Wiggles earned > AC/DC + Nicole Kidman (Australia's richest entertainers). In 2006, Nickelodeon’s business surpassed MTV’s. Belgian Foops!, the 1st social networking site for GEN Z (signed up > 12,000 born and unborn babies). “Rush to create virtual playgrounds for kids”, ST 1Jan08
b) Nutrition / Health / Medicine / Therapy Health Food (organic, gourmet, halal, kosher) “Babies driving robots at “Use of hyperactivity drugs soars”, University of Delaware” BBC, Mar 07 Robots that help to improve the Global spending on ADHD drugs jumped 9-fold. mobility of infants with Down 1993-2003: use of ADHD medications 274%. Syndrome, cerebral palsy, autism and other disorders Special Needs Education • Singapore - 10,000 kids with special needs with 1700 more diagnosed each year. • Autism (6% kids), Dyslexia (4-10% pop), Intellectual Disabilities (2%), Down’s syndrome (1.2%). • $2000-$4000/mth for therapy on autistic kids; music therapy CDs costs $400-1000 • KKH -3 mths for appt for diagnosis, 2-4 mths to see psychologist, 2-3 mths to see occupational therapist. “You (Singapore) could lead the world in this (handling Dyslexia)”. F1 racing legend
c) Entertainment / Tourism / Events Hotels, Theme Parks / Cruises “There's room for a children's hotel in every major city!” Germany U.S. South Africa U.K. Themepark U.S. Cruise Events / Activities “The kids’ market is very big – it is a multi-million-dollar business” VizPro, Entertainment Co., Singapore A million U.S. youngsters aged 6-17, rely on personal trainers to shape up, improve in sports. 5-day Animation Soccer Camp Aqua Botanist Overnight Course:S$400 : S$200 : S$75 Museum : S$60
d) Technology-related (for “Millennials”) Communication “American teenagers have embraced handphones so wholeheartedly that .. have come to define their sense of self, reported CNET.com… half of kids aged 8 to 12 own handphones.” Security Kids Talk™ is a talking ID wristband (ID Security, Child Tagging) that records name, address, telephone number, allergies, etc “latest parenting growth industry: a multimillion-dollar market in new and ..flashy quot;child-trackingquot; devices.”, The Guardian, London i-kids Mobile In Silicon Valley, Wherify Wireless was selling a US$200 watch that picks up Phone GPS signals, and a child's GPS-implanted backpack for US$900. AUD$274 Others Education (E-learning, E-books), Entertainment (Digital/Virtual Games), Kids-only Laptops “MP3 music players are Advent K among the hottest gift Children’s items this year - for Notebook preschoolers,” ST Nov ₤ 649 30, 2007 Apple iPod Shuffle
e) Others (Blue-Sky) Financial Services (Banking, Philanthropy Management, Trust Fund) POSB – has 360,000 accounts < 12 yrs OCBC – Mighty Savers (gifts, no interest), < 15yrs UOB – Junior Saver’s account (includes life insurance) Citibank, Standard Chartered Bank, HSBC, Maybank Research and Consulting (Research on Product, Market, Child Policy, etc; Franchise Consulting for Kids Business) Designer Chair, ₤ 295 Varied High-value Consumer Products, Specialized Services Clothes, Milk Bottles, Strollers, Toys, Child Care, Convenience Stores, Lifestyle Club, Yoga, Cinemas - “Stars & Strollers”, Babyplanners Bisphenol-free, S$26.90
Assisted Reproduction Industry Early Education Industry Thank you futuresgroup.wordpress.com Kids’ City General (Blue Sky Potential)
Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally ...
Economics is the social science that describes the factors that determine the production, distribution and consumption of goods and services. The term ...
Little Rock: Economy. ... Their cultivation and distribution monopolized the labor pool ... Agriculture maintains a firm hold on the economy of Little Rock ...
T he distribution of income lies at the heart of an enduring issue in political economy—the extent to which government should redistribute income from ...
Economic Policy Reforms 2012 ... others income has risen only a little. ... REDUCING INCOME INEQUALITY WHILE BOOSTING ECONOMIC GROWTH: ...
Distribution and Exchange. ... there are potentially two components of the exchange--pure economic gain and social ... there was very little net loss.
Chapter 9 Channel Management And Physical Distribution. This chapter focuses upon channel management and the related topic of physical distribution.
This document presents details on the wealth and income distributions in ... for Economic and ... economy crashed in the late 2000s and little people ...
The distribution of goods and services depends ... Pure Capitalism: is an economic system in which ... There is little need for government ...