HONG KONG: For many of China’s manufacturers of baby and children’s products, painful reverberations from last year’s historic decline in the country’s population are already upon them.
Domestic sales are shrinking and the scramble is on to develop new streams of revenue, whether that be diversifying into products for adults or boosting offerings in overseas markets with younger populations like Southeast Asia and India.
Hong Kong-listed Health and Happiness (H&H), which gains nearly half of its revenue from baby products such as infant formula, food and diapers, is one such company.
Revenue for its Dodie diaper brand slid 12 per cent in mainland China last year as a fresh decline in the birth rate to a record low exacerbated oversupply and caused prices to drop, says interim Chief Executive Akash Bedi.
Global expansion and diversification are H&H’s priorities this year and beyond, Bedi added. The company managed to offset the fall in diaper demand with a 12.5 per cent jump in global revenue for the adult nutrition division housing its Swisse-branded vitamins and supplements.
“In newer markets such as Vietnam, Thailand, India, and Malaysia, the (Swisse) brand has been growing both offline and online channels to grow share,” he said via email.
China’s market for baby food and diapers is the world’s largest at US$37.9 billion, accounting for around a third of global sales annually, according to research from Euromonitor.
But the knock-on effects from China’s first population drop in six decades have been swift and the market is forecast to contract this year for the first time since Euromonitor began keeping track in 2012. Including this year’s fall to US$37.6 billion, it is expected to shrink 2 per cent to US$37.2 billion by 2025.
Birth rate declines are also not expected to end any time soon, with analysts noting young Chinese adults are not keen to have more than one or even any kids due to the sky-high costs of child-rearing, especially education.