Aubrey’s arrow targets Chinese modern love
The internet is reshaping traditional dating and what in the 1990s seemed outlandish to many, has become a reality in continuous growth.
As of March 2017, there were about 700 million Chinese internet users. Investors will be well aware of the opportunities generated by China’s vast army of online shoppers, gamers and travellers; but the internet is also playing a vital role in the country’s “love industry”.
According to research conducted by YouGov, some 43% of Chinese nationals have used internet dating at some point. Family pressure to marry is high, especially for women, which gives rise to an industry of for-hire boyfriends and, in some cases, to serious relationships.
On average, women in China get married with 25 while men do it with 27. The one child policy has caused many selective abortions based on gender as Chinese families favour boys over girls. Stephanie Li, investment analyst at Aubrey Capital Management, said in this respect: “My mum had three or four abortions. I am here just because they thought I would be a boy.”
As a result, some 118 boys are born for every 100 girls, against a global average of 96 to 100. Currently, there are 9 million boys more than girls in China, contributing to the struggle of boys to find girlfriends given the competitive pressures. However, it is not just the boys who are facing the challenge: single women above 25 years old are stigmatised and considered “leftover”.
This is explained by the cultural element, which comes on top that challenge posed by demographics in the Asian country.
Chinese parents dedicate themselves much more than their western counterparts to ensuring their daughters get married with “established men”, who refer to those whose jobs and annual income are taken more into account than their other virtues.
With this amount of societal and family pressure, it is not perhaps surprisingly that a growing number of single people in the country are looking for different channels to find the love of their lives. According to the National Bureau of Statistics, there around 300 million single people in China over the age of 15.
Both the demographics and the culture in China give room to great investment opportunities. Edinburgh-based Aubrey Capital Management is one of those betting on the opportunities arising from the “modern love’s industry” in the country. Recently, Aubrey initiated a position in Momo – a Chinese’s social media app – which owns the Chinese Tinder TanTan.
Momo acquired TanTan last February for $760m, creating a giant in the country’s booming online dating market.
Stephanie Li (pictured), investment analyst at Aubrey Capital Management, considers that online dating is just in the early stages of its development.
“Whilst true love might not be the only motivation of everyone who uses Tinder, comparisons between the US business and TanTan are indicative. TanTan began generating revenue in January this year. From speaking to the management, they are guiding for revenue to increase significantly through H2 2018 as they roll out monetisation features. We are estimating TanTan to go from almost nothing this year to 10% of revenue in 2 years’ time,” Li said.
Aubrey Capital Management also cited the case of Tinder as an indicator to explain its trust and bet on the Chinese dating app. “By comparison, Tinder started monetising the app in 2017, and doubled subscribers and more than doubled revenue in 2017. Tinder had 3.1 million subscribers and $400m revenue as of end of 2017 while it was ranked the second highest grossing app globally in the year.
“The long term growth will be supported by structural shift from dating offline to online. The Chinese are incredibly tech savvy, and we expect the adoption of the dating apps to prove to be just as successful as seen in the developed economies. Better to be a Tinderella than a leftover.”
As a whole, the firm considers emerging market consumption is clearly undergoing a secular change. Equally obvious for Aubrey is the tendency for emerging market consumers following trends already seen in the developed world. There is no reason why the pursuit of love should be any different.