With China formally easing its decades-old one-child policy, baby products manufacturers will benefit from a potential baby boom in the country. Among the various segments, baby car seat makers could especially see good prospects as the market is still in its infancy, according to Hong Kong Economic Journal columnist Gao Zhihang. Thus, one of the key firms to watch out for is Goodbaby International (01086.HK).
The National People’s Congress, China’s legislature, approved last November a relaxation of the one-child policy that has been in place more than three decades. With the landmark reform, more couples can have a second child, particularly if either of the parents is an only child. The National Health and Family Planning Commission said on Wednesday that local governments are working actively to implement the policy change.
It is expected that 2 million babies will be born each year after the policy relaxation, as families with solid financial background would surely seek a second child. This would present huge opportunities for makers of baby products.
Gao noted that the prime time CCTV program “Topics in Focus” has done a feature on children’s in-car safety, a reflection of the government’s growing concern over the issue. Some local governments have, in fact, already started tightening the regulations on production and sale of children’s car seats.
Goodbaby designs and manufactures strollers, children’s car safety seats, cribs, bicycles and tricycles. Although the car seats business contributed only around 5 percent or 43 million yuan (US$7.1 million) of revenue in the first half last year, it grew a stunning 175.6 percent pace compared to the year-earlier period.
What is more, the profit margin on the car seats business has reached about 50 percent, which is double that seen in the overall baby care products operation.
US and Europe are still the biggest markets for Goodbaby right now. The overseas markets accounted for a combined 45.6 percent of the total revenue, while the mainland contributed 38 percent. The situation might reverse in the future.
That is why Goodbaby is busy building up its brand in China. Gao said the group would like to produce a reality TV show inspired by the latest megahit “Where Are We Going? Dad!” — a series featuring celebrity dads accompanying their children on 2-day trips to the countryside.
Last but not least, Goodbaby is expanding its online business. Its sales on the Taobao.com e-commerce platform during the “double eleven” shopping festival on Nov. 11 last year were more than three-fold the level seen in the previous year. The company plans to launch over 500 new products this year.
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