A management consultancy and an insurance giant have joined force to launch a device to record the heartbeat of an unborn child, with the ultimate aim of marketing products and services to their Chinese parents-to-be.
Insurance giant Allianz and BCG Digital Ventures, the innovation and investment arm of management consultancy Boston Consulting Group, have funded and launched a "baby tech" company called Kaishi, with the XinKaishi heart-rate listening device its first product.
XinKaishi - meaning "start of a new heart" – is a small, pink, mouse-shaped device that records a baby's heartbeat, which can then be shared with friends and family via social networks WeChat and Weibo, and uploaded to an accompanying app. Women can upload to a journal within the app, join chat forums and even track their baby's kicks.
While a mother-to-be app might be expected to provide information on nutrition and health, insurance would not seem an obvious topic in pregnancy. However, as BCG Digital Ventures CEO Jeff Schumacher told CNBC's Closing Bell in July before the product launched: "How does a baby monitor sell insurance? Their need state flips from 'I'm having a baby,' to 'I have to protect my baby' and therein lies the insurance products that can be sold on the platform."
Insurance products from Allianz will be "bundled" within the app, according to Kaishi CEO Steve Mallouk, speaking to Marketing Media Money by phone.
While the device retails at 498 yuan ($72), it is the app that may be most lucrative in the long-term, because brand partners can market directly to parents-to-be via content. Kaishi will take five to 15 percent commission on products sold via the app, and is currently discussing deals with toy manufacturers, banks and tech companies.
China is the world's largest e-commerce market, according to Kantar Worldpanel, and baby products as well as general skincare dominate it. An estimated 16 million women gave birth in China in 2015, and this is likely to rise as the lifting of the one-child policy passed its first anniversary in October this year.
The policy has meant that women rely on brands for information more than family members, Mallouk suggested. "These women don't have reliable or trusted family connections they can get information from and they are very interested in getting the latest information.
"What we want to do is provide a central, highly relevant, highly reliable place to learn about all the different products and services they need to know about as they go through pregnancy," he told Marketing Media Money by phone.
But he said that marketing from partners will not be a "hard sell," based on research it did with pregnant women in the country. Informative content will instead be the focus.
"You won't see what I call 'hard advertising' anywhere in our app… There been a lot of stories historically around companies selling products that weren't necessarily safe. Therefore there is a bunch of skepticism around anything that's heavily advertised to them."
The device is currently available via sites including JD.com, Amazon China and Babytree.com, while the app is in Mandarin only at the moment. Mallouk claims that there are 5,000-6,000 devices currently in circulation in the country and around 25,000-30,000 downloads of the app in the past two weeks.
In 2017 XinKaishi will launch "two to three devices in the post-natal space," according to Mallouk, and app content will be even more customized. "A bunch of other data feeds and sources will allow us to provide even more tailored advice to our users for a much longer period of time [beyond pregnancy]."
Further investors are expected to join BCG Digital Ventures and Allianz, and Mallouk is using BCG's relationships with senior executives to meet with potential brand partners. Kaishi has 25 employees based in Shanghai and expects to expand to English-speaking countries in the coming months. Next year's focus will be creating app content and "having [users] link the app to purchasing," and Mallouk expects to break even in year three (2018).
Allianz Asia-Pacific chief executive George Sartorel said in a statement that the venture would help it acquire long-term customers. "This is a step in creating new ways to build digital relationships with consumers in China that will drive long-term quality relationships with Allianz customers. It's very different to the ways we acquire customers in China today – but consistent with the innovation that the market requires."