Roundtable Discussion at '2017 Future Healthcare 100': New Opportunities and Challenges in the Trillion-Dollar Maternal and Childcare Market

The “2017 Top 100 Future Healthcare Companies” Forum, themed “The Era of Species Explosion,” was held at the Beijing Marriott Hotel from December 15 to 17, 2017.

The maternal and infant industry is a sector brimming with opportunities, with an estimated market size of RMB 2 trillion.

Unlike other niche sectors, the needs of maternal and infant consumers are highly fragmented, with distinct requirements at each stage—such as ages 0–1 and 3–6. This fragmentation harbors significant industry opportunities, providing ample room for enterprises to leverage their strengths.

At the Maternal and Child Health Sub-forum on December 16, a roundtable discussion was held on the theme “A Trillion-Yuan Industry: New Opportunities and Challenges in the Maternal and Child Sector.” The panel featured Jiang Wei (Moderator), Co-founder, Director, and COO of YuXueYuan; Song Jingwei, Co-founder of XiaoDouMiao; Sun Qi, Founding Managing Partner of DaoTong Investment; and Liang Qi, CEO of Aier Shidai Medical Technology (Beijing) Co., Ltd.

Sharing centered on industry demands, changes, and current hot topics; VCBeat (WeChat: vcbeat) has compiled the guests’ key insights.

Jiang Wei: What opportunities still exist in the maternal and infant industry? Does your company have any comprehensive development plans for this sector within its business operations?

Song Jingwei:The maternal and infant industry is product-centric and characterized by life cycles; as long as human reproduction and needs exist, there will be a market. With rising consumer spending power, I believe there are abundant future opportunities stemming from the derivation of both essential and non-essential needs related to food, clothing, housing, and transportation.

Xiao Dou Miao is currently focused on the field of vaccination. The maternal and infant sector can also extend into the broader healthcare industry, with the key being to provide auxiliary services to users.

From the perspective of merchants, what kind of services to support subsequent sustainable development involves future industrial paths. I think there will be new products and some core technologies that can continue to emerge, supporting new market opportunities.

Jiang Wei: Daotong Investment focuses on the management of obstetrics and pediatrics, including pharmaceuticals, and will concentrate on these areas in the future, paying attention to emerging opportunities within these industries. Why make this choice?

Sun Qi:I focus on these three points because there are not many startups, especially in the most common sector of maternal and infant e-commerce. This presents an opportunity for entrepreneurs, but not for investors, so it is basically not worth considering.

It is crucial to identify the pain points and inefficiencies in this market, uncover unmet needs, and determine how to effectively penetrate it.

Jiang Wei: Are these three fields characterized by high barriers to entry?

Sun Qi:For hospital management companies focusing on maternal and child health, expansion is a natural progression driven by the gradual maturation of the external environment. You should prioritize investing in such companies, although this strategy is contingent upon several prerequisites.

Currently, a significant amount of capital is flowing into the healthcare sector. However, it is not feasible to entrust the management of public hospitals to just any entity. First, there must be a qualified entity to assume trusteeship; second, physicians and hospital administrators must step forward. In the early stages, we observed physicians launching their own ventures. After three or four years, professional hospital management companies—such as private hospitals—began exporting their services and entering the market with new models. This is a gradual process that requires time to mature.

Technology is indeed crucial. In the maternal and infant industry, business models focused solely on service provision and information matching have lost their value, as most opportunities in this regard have already been exhausted. Over the past decade, the internet has transformed various industries, undergoing significant ups and downs across sectors. Looking ahead, there is a need for new approaches, particularly at the technological level. In the maternal and infant sector, certain emerging technologies deserve attention, and it is essential to seize these opportunities in a timely manner.

Jiang Wei: In the new era, the opportunity to gain a foothold in niche markets through opportunistic strategies has diminished. However, focusing on emerging technologies or adopting relatively asset-heavy business models—whether by entering the vaccine sector or highly specialized areas such as pediatrics—remains a promising approach.

Sun Qi:I believe online maternal and infant businesses are moving offline, ultimately to form a closed loop, monetize users, and create paid scenarios. In terms of both product offerings and pricing, online e-commerce cannot match the scale and depth of JD.com.

Jiang Wei: There is a high prevalence of ear diseases among adults, resulting in significant demand. Has Aier Era considered expanding into other areas?

Liang Qi:The maternal and infant sector represents a vast market. In fact, seizing a single niche and penetrating it deeply presents a significant opportunity. Since every child requires vaccination, focusing on the specialized area of vaccines can build a company that attracts a substantial user base. While expansion is necessary, achieving deep professionalism in a focused niche already constitutes a large market in itself.

Looking ahead, while the entire family revolves around the child, many of the child’s needs remain unmet. At this stage, our primary goal is to deliver high-quality services to these children and refine our approach within this specialized sector.

Jiang Wei: Aier Times is promoting the standardization and normalization of physical maternal and infant care institutions. As an investor, how do you view standardization and normalization?

Sun Qi:Physical institutions all face these challenges. If we examine this issue, the first point is that teams often have a strong presence across different locations. Since medical licenses are managed on a territorial basis, approval in Shanghai’s Changning District does not guarantee approval in Huangpu District. That said, there are differentiated approaches. For instance, services such as audiology and pediatric optometry do not necessarily require a full medical license; they can operate under a lightweight model, such as consulting studios. Patients with more serious medical needs can then be screened and referred to a licensed central clinic for treatment.

Second, operating chain and physical clinics requires substantial unseen backend efforts. This includes gradually refining a comprehensive system for talent screening, recruitment, performance evaluation, and incentives, as well as establishing a physician partnership model.

The same applies to the healthcare supply chain. It is impossible for a single entity to handle every aspect in-house. Establishing an external matching system requires significant time and effort to achieve standardization. Online consultation systems also demand considerable expertise and effort to implement effectively.

Regarding our investment in Willing, if it is to replicate its model across China, it is essential to identify patterns in site selection, licensing, and acquisition; standardization is crucial.

Jiang Wei: Therefore, patients only see what is on the surface, but in reality, the underlying standards are critically important.

Sun Qi:In fact, operating a chain is even more challenging than running a standalone unit. The more extensive the chain model, the greater the management capabilities required; the demands and complexity of management increase exponentially.

I am personally not very optimistic about the franchising model. With the franchise trusteeship approach, the barriers to entry are already fully established; however, a single medical incident can ruin the entire brand. The larger the scale, the less room there is for error. Therefore, I believe one must exercise extreme caution when opting for franchising. Of course, there are differing views within the industry on how to achieve significant value and effective control in this context.

Jiang Wei: I believe that investment firms specializing in healthcare are distinct from those in the broader investment industry. They not only need to grow alongside portfolio companies but also require a markedly different mode of engagement.

Sun Qi:Regarding healthcare, especially medical services, we must maintain the right mindset: avoid impatience and remain calm and composed.

Of course, slow growth is not the only characteristic or approach in healthcare services. Integrating healthcare with consumer-oriented models and leveraging mergers and acquisitions can enable faster institutional development, representing a viable business model. Weirnuo has indeed expanded rapidly, establishing 12 wholly owned and self-operated clinics, while achieving strong revenue and growth performance. Our first year focused on scaling up; now we are prioritizing financial performance—first expanding in size, then strengthening our capabilities.

It took a full year to fully streamline operations at the Shanghai flagship store, which is no small feat. Therefore, while medical services are generally slower to scale than internet-based businesses, they are not inevitably sluggish; with the right approaches, they can accelerate. This ultimately hinges on an organization’s integration capabilities. In the same competitive arena, success is determined by genuine operational expertise.

Jiang Wei: Xiao Dou Miao does not have offline institutions, but in fact, the rapid development of Xiao Dou Miao is closely related to offline institutions. There are so many community hospitals across China, and vaccination services are all integrated with your system. How do you achieve standardization and normalization when collaborating with these institutions?

Song Jingwei:Both healthcare and preventive health are subject to stringent requirements; vaccines, in particular, involve highly standardized processes and demand a high level of medical expertise.

A series of protocols exist for vaccination. Xiao Dou Miao is also strategically positioned in this sector. For instance, regarding offline standardization and normalization, we collaborate with the National Health and Family Planning Commission to develop corresponding standards. We also engage in product development, offering complementary products designed to help outpatient clinics achieve standardization and normalization. Furthermore, leveraging information technology, we aim to enhance the on-site service experience, including the safety of vaccine administration.

We simplify processes for all offline institutions while leveraging data-driven insights to enhance vaccination safety.

The configuration of offline personnel is also crucial. We have implemented a strategic layout to provide physicians with a comprehensive suite of services. By leveraging disease prevention and control mechanisms, we have established an internal system featuring standardized and normalized educational tools. Thus, we have made concerted efforts in terms of both workforce size and the standardized, normalized development at the grassroots level.

Jiang Wei: Xiao Dou Miao’s achievements are quite evident. In fact, I believe it can be regarded as a platform-based service. As a platform, for instance, will industry barriers still exist in one or two years?

Song Jingwei:Our team excels in vaccination services. While it may appear straightforward, the field demands a high level of professionalism. Although the industry inherently possesses significant value, I believe that entry barriers will gradually diminish over time. Given our current leading position and accumulated expertise, I am confident that we will continue to strengthen our competitive advantage in this sector.

On the other hand, vaccination alone is insufficient, as immunization is intrinsically linked to children’s health; internationally, it is fully integrated with child healthcare services. Xiaodoumiao has extended its efforts in this area, aiming to leverage a robust platform and effective mechanisms to aggregate and integrate high-quality services, thereby achieving greater impact through collaborative synergy.

Jiang Wei: A particularly hot trend this year is paid knowledge, exemplified by platforms such as Himalaya and Dedao. In the maternal and child care and healthcare industries, this represents a significant opportunity. Do you believe paid knowledge holds value, and in which directions should efforts be focused?

Sun Qi:First, it is valuable. Some players have already ventured into these areas, such as Teng Ai. There are greater opportunities for paid knowledge services in the healthcare sector.

Pure healthcare services are low-frequency, as people do not seek medical consultation for every minor issue. In contrast, the maternal and child health sector is relatively high-frequency; demands such as gynecological conditions, child education, and pediatric preventive care all occur with considerable regularity, resulting in substantial user volume and strong stickiness.

Currently, some maternal and infant platforms feature channels for patient education and interaction. However, from a product perspective, these offerings are not yet well-developed. Successfully implementing a paid-knowledge model demands strong operational capabilities, including effective communication and the ability to mobilize users. Nevertheless, the paid-knowledge sector as a whole is likely to present significant opportunities.

Jiang Wei: I am more inclined to believe that there is no inherent demand for paid services in the maternal and infant sector. The reason for my skepticism is that this demographic does not require systematic learning; instead, they seek solutions only when problems arise, such as by consulting physicians or paying for premium medical services.

Sun Qi:It’s hard to say. For instance, logical thinking is not learned systematically; it does not address knowledge gaps but rather alleviates the anxiety of the middle class, who fear being left behind by the times and unable to keep up with the rapid updating of knowledge, yet lack the patience for extensive study.

Specifically within the maternal and infant industry, many tools are already available to directly address existing problems. The post-90s and post-00s generations are fundamentally different from the post-60s and post-70s cohorts; they are willing to learn and seek understanding, proactively solving problems as they arise rather than blindly accepting viewpoints. Of course, their needs and behavioral patterns still require careful study, as consumer mindsets are constantly evolving. Without the requisite expertise, one cannot successfully handle such demanding tasks.

Jiang Wei: With the advancement of technology, how do you view the impact of big data on changes in the healthcare industry, including its influence on your own business?

Liang Qi:AI and big data are undoubtedly of great importance; however, from a medical perspective, it remains uncertain how close we are to their widespread practical application. In my view, AI cannot replace physicians, but it will certainly serve as an auxiliary tool for the healthcare industry, helping to address certain challenges that have not been resolved in the short term.

Sun Qi:I have discussed this issue on various forums and invested in numerous AI companies. Landing is one such AI enterprise specializing in pathology. Currently, the market is saturated with so-called “fake AI” solutions that lack scenario-specific differentiation. However, this does not imply that AI itself holds no value; I remain optimistic about the integration of healthcare and artificial intelligence.

The biggest challenge healthcare needs to address is supply; high-quality medical resources are scarce, and everyone seeks consultations with top specialists. AI is not intended to replace physicians but must be effectively integrated into products. While the field of medical imaging has seen significant progress, I believe similar advancements will emerge in the maternal and child health sector.

However, big data itself is indeed further from monetization. I believe big data and AI are not the same thing. If AI is integrated with specific scenarios, monetization can be achieved within two to three or three to four years, whereas monetizing big data requires even more time.

Today, many enterprises possess data, including those capable of data processing, cleaning, and modeling. However, very few ultimately achieve monetization. This is true not only in the maternal and infant sector but across all medical fields. Companies like Ant Financial that successfully monetize are truly rare in the industry.

Song Jingwei:Big data can generate value, which is what we are doing now. Data accumulation sometimes serves to establish industry barriers and competitive advantages. As services deepen, a vast amount of data is collected and aggregated. Organizing this data is beneficial to the industry, such as in product manufacturing and planning, thereby reducing resource waste.

From an R&D perspective, vaccine development provides a basis for standardization and helps determine whether it aligns with national needs. From a management standpoint, leveraging such applications and the accumulated data on disease control can yield more effective solutions and strategies, which is valuable to the industry.

Note: VCBeat has made edits and additions without altering the guests’ viewpoints.