Targeting New Moms in China
Written by Wang Fangqing Wednesday, July 21 2010
Snapshot: Xu Yun
SHANGHAI, China – Xu Yun is the founder of CICI International Maternal & Infancy Health Care Ltd, or Yue Zi Xi Xi in Chinese, a Shanghai-based high-end postnatal care club established in November 2007.
Over the past three years, Xu, now 30, has expanded her business from Shanghai to Ningbo, a city that is home to a lot of small entrepreneurs, as well as to Hong Kong. In Hong Kong, her company meets the significant growing demand of wealthy pregnant mainland Chinese women who choose Hong Kong as the birthplace in order to obtain Hong Kong citizenship for their newborn babies, thus ensuring them a higher quality of life than if they were Chinese citizens.
Providing a package of health care service for both moms and their newborns, the club, with four locations, made more than 10 million yuan (U.S. $1.47 million) in revenue in 2009.
Womenetics: What made you start this business?
Xu: It was inspired by my own experience. When I was pregnant three years ago, I was trying to find a place to help me take care of the forthcoming baby and recover fast during the 30-day postnatal period, known as Yue Zi in Chinese.
If I had been in my hometown, I would have spent the 30 days at home, and my parents would have taken care of me because it is a Chinese custom. But I was in Shanghai at the time, and my husband's parents were too old to help.
After a lot of research, I not only found myself a professional service provider, but I discovered how huge the demand was for postnatal care service. I knew it was an investment-worthy business, and I got the support from my husband.
Womenetics: Where did you get the funds to start the business?
Xu: Family fund and our savings. Altogether it was about 500,000 yuan (U.S. $ 73,833). My husband was doing hotel business back then, so we set up our first club in a local hotel with very low rent. It helped a lot.
Also, because the business was very new, people didn't expect a lot from you, which allowed us to purchase expensive equipment step by step. If you open a club now, everything has to be in place from the beginning.
Womenetics: Who are your clients?
Xu: I target different clients in different cities. In Shanghai, most of the clients are well-educated middle-class women. They have the money and they are Westernized enough to understand how important it is to spend the 30 days under the guidance of medical professionals, rather than their parents who usually follow the traditional practice – sleep, eat, and no bath.
In Hong Kong, our target is clear – Chinese women who want to give birth there. Since parturient women go there by train, we put the club next to Hung Hom Station. To be more practical, our service in Hong Kong is charged by day instead of month as it only takes about seven days to finish all the paperwork to get the ID card.
In Ningbo, wives of local entrepreneurs are my clients, and that's why we decorated our club there in a kind of luxury way. Those women love everything expensive, and they enjoy being served.
Womenetics: You have done business in both Hong Kong and China. Which place is easier for a woman to start business?
Xu: Hong Kong is a developed city and sophisticated in many ways including helping start-up businesswomen like me. Examples are high government efficiency, tax-free policy, and tax information reporting.
In Hong Kong, you report once a year, but in China, it is monthly work.
In China, the local polices are often different across regions, so it's a bit complicated. In coastal cities like Shanghai, the business environment is good. I don't know much about inland China, but overall, since every city is trying to attract more business, policy should not be a big problem. However, being familiar with local polices is essential before putting your money there.
Womenetics: What's your next plan?
Xu: We will open a new club in Shanghai this year. Meanwhile, we are also looking into Beijing, Nanjing, and Shenzhen.
We are not rushing into expanding in China because the service is still too new for people in lower tier cities to accept. It's not like that they can not afford our service, but that the idea they find difficult to accept. Time will have to be invested to develop the market.
Wang Fangqing (Frances Wang) is a freelance reporter based in Shanghai. For the past four years, she has been writing for a variety of English language publications, including Tobacco Journal International, Soap Perfumery & Cosmetics and Securities Industry News, reporting business trends in Asia. A Chinese native speaker, she is also fluent in Japanese and English.
