Four years ago, Sun Yiping bought her three-year-old daughter a gift ahead of the child’s first day in kindergarten. It was a smartwatch that sends the location of her kid to her phone in real time and allows her to listen in on her daughter at school through a built-in mic. In other words, the smartwatch functioned like a tracking bracelet.
“We were separated from the kid [when she was at the kindergarten],” the 32-year-old Beijing native said. “And we were worried that something could happen to her.” The smartwatch on her daughter’s wrist would offer her peace of mind, she believed. (However, as it turned out, the kindergarten banned students from wearing smartwatches.)
Millions of parents in China feel the same way as Sun, especially given the frequency of alerts for missing children that pop up on their smartphones. The Reunion system, the Chinese equivalent of America’s Amber Alert, sends notifications to smartphones within a certain range whenever a child is lost. It is managed by China’s Ministry of Public Security and was co-developed by Alibaba. Since it went online in May 2016, Reunion has issued nearly 4,300 alerts.
For parents, the threat of losing their young ones, however remote, is real.
These parents’ anxieties over their children’s safety have opened a niche market for child-specific smartwatches. By focusing on soothing their anxieties, Chinese smartwatch vendors have managed to secure sizeable market share despite fierce competition from foreign tech giants.
In 2018, children watch vendors (including white-label manufacturers) shipped nearly 21.6 million units, according to IDC. That year, there were 240 million children aged 14 or under in the country. In other words, on average, one out of every 11 kids bought a unit in 2018. By comparison, only 6.5 million smartwatches for adults were sold last year.
The emergence of a market for children’s smartwatches gave rise to Xiaotiancai, a company whose name literally means “little genius.” The Chinese brand isn’t well-known outside China, yet it is Apple’s biggest local competitor in the smartwatch market instead of more established peers like Huawei and Xiaomi.
The Dongguan-based smartwatch vendor, which was founded in 2010, shipped nearly 1.5 million units in the first quarter of 2019, according to IDC. By comparison, 2 million units of the Apple Watch were shipped to China in the same period.
Globally, Xiaotiancai controlled 9.2% of the smartwatch market in the first three months of 2019, trailing behind Apple and Samsung, according to tech marketing research firm Counterpoint.
What’s a smartwatch really for?
Xiaotiancai’s smartwatches—some of which sell for more than USD 200 per unit—allow school children to call their parents, tag their locations on a shared map, take selfies, and even pay for goods and services with mobile payment codes.
Similar functions are boilerplate in products made by most other Chinese wearables vendors, often at a fraction of the price. But Xiaotiancai, which is also known as Imoo beyond China, has a unique edge—its messaging app Weiliao, which lets users add a new entry to their contact list by placing smartwatches next to each other. It’s a feature that is exclusive to the company’s own line of wearables.
“To a certain degree, it does create a social barrier,” said IDC China Research manager Sophie Pan. The exclusive social networking function of these smartwatches has a major impact on young children who are naturally more likely to seek conformity in their social groups, she said.
“Children’s smartwatches have social attributes,” said Zhang Yi, founder of Guangzhou-based research firm iiMedia. He made the point that Xiaotiancai was the first vendor to discover the connection between the product’s sales and its social attributes.
“For students in the same class, Xiaotiancai users can communicate with each other via their smartwatches, but they can’t reach other brand’s users,” Zhang said, echoing Pan’s observation. Xiaotiancai has cornered the market by establishing its own communication network. The idea is simple: if you’re off the network, then you’re missing out on your friends’ conversations.
The exclusivity of this social networking function makes the smartwatch less of a necessary gadget for school children, and more like “a ticket to the mainstream social circle” on campus, as a recent TF Securities research report noted.
Yet those making the actual purchases see a different side in the matter. Many parents are paying premiums for their children’s “social tickets,” but for them, the major selling point of kids’ smartwatches is their ability to sooth parents’ separation anxiety, industry insiders said. And there is the added bonus of limiting broader access to the internet, according to Gao Fang, deputy head of Shenzhen Children’s Intelligence Products Association. For parents, the social attributes of wearables are mere side notes.
“Parents don’t want their children to use smartphones for fear of the unhealthy information and addictive games,” Gao said. “That’s why more and more families are turning to smartwatches.”
Losing cachet?
Children smartwatch sales saw 150% growth on JD.com, one of China’s major e-commerce platforms, during its annual 618 shopping event this year. Pan’s team at IDC estimates that China’s annual shipments of children watches could reach 28 million in 2023.
It was in 2015 that parents in China decided that smartwatches were must-have accessories for their kids. Growth in sales has tapered since then, going from 53% in 2017 to 16% last year. “We can clearly see that its growth potential is gradually shrinking, and growth will gradually slow down,” said IDC’s Pan.
But vendors are confident that they’ll be able to make headway in this market. These wearables, according to Gao, are still products of “rigid demands” for urban Chinese families until “one day a new product is released and replaces smartwatches to meet parents’ demands [for safety concerns].” But that day may not be upon us for at least a few years, she added.
Here’s the rub—kids outgrow their age-specific smartwatches, and as new models are rolled out, it’s natural for many parents and kids to pick up new gadgets. And just like mobile phones, there are rules about how they can be used at schools. Some school administrators see them as distractions in the classroom. On many campuses, students are prohibited from wearing smartwatches.
After cycling through four smartwatches from different vendors, Sun’s daughter, who is now a second grader, rarely wears any of them now. She might sport one on her wrist once a week. “Her school bans smartwatches on campus,” Sun said.