With fewer babies than ever being born in China, companies making children’s products are setting their sights beyond milk bottles, baby carriers and strollers to stay in business.
“We now have a lot of parent-child outfits. Right now the sales volume of adult clothing is actually pretty large. We have considered (making) pets clothing as well, but our team is relatively small,” said Yan Zhang, the founder and CEO of Shanghai children’s clothing brand NATUNAKIDS.
China dug itself into a demographic hole largely through its one-child policy imposed between 1980 and 2015. Authorities raised the limit to three in 2021, but even during the stay-at-home COVID times couples have been reluctant to have babies.
The country’s population fell for the first time last year in six decades, a significant milestone that is expected to result in a long period of decline in citizen numbers.
Zhang said the record low birth rate has not yet had a major effect on her business, but that she expects sales to fall in the next three to five years.
With impending changes to the industry, some customers are concerned about their favourite brands going bust.
“Brands diversifying is a good thing. If there’s a brand we’ve always liked, we hope it can continue to stay in business. Because for us consumers, we have a certain loyalty to brands,” said 34-year-old Shunshun Chen.
“We don’t want to go through the process of understanding a brand that we’re unfamiliar with from scratch,” added Chen, who is the father of a four-year-old.
As China looks set to cede its status as the world’s most populous country to India this year, market analyst Shaun Rein warns of a bleak outlook for the baby industry.
“Baby companies are going to face declining margins, bad revenues, and their stock prices are going to collapse because its going to take them one, two, maybe even three years to come up with a new strategy and execute, to be able to offset the weakness of low (number of) babies,” said Rein.
By Reuters
