(Yicai) May 16 -- The Chinese maternity and baby product sector has experienced a long-awaited rebound in the first quarter of the year.

The business performance of listed companies engaged in the maternal and baby product industry has improved. For example, Shanghai Aiyingshi reported a 6.4 percent increase in business revenue in the first quarter, versus a decline of 8 percent last year. The chain retailer’s revenue from the baby formula business jumped 17 percent in the period, compared with a fall of 12 percent last year.

“Sales stabilized in the first quarter,” the owner of a maternal and infant product shop in Weihai, Shandong province, told Yicai. Revenue from the baby formula business, which had been declining, has now stabilized, the owner noted, adding that its baby diaper, snack, and garment business also showed signs of recovery.

The above company’s sales shrank about 30 percent per year in the past two years, the owner pointed out. 

Sales of infant formula increased, which is mainly thanks to the recovering birth rate, Cao Tianwei, general manager at maternity and child industry-focused media Zhongying Shangqing, told Yicai, citing owners of multiple stores.

Meanwhile, Song Liang, an independent dairy analyst, said that the rebound in the maternity and baby product industry is also due to the fact that companies adopted proactive market strategies, such as launching customized products with dairy firms and introducing self-owned branded products, which have improved their business performance.

Another reason is the increase in the sector’s centralization degree, as some small and medium maternal and baby product chains, as well as individual shops, finally surrendered to the continued shrinking of the market share and were forced to shut down.

A total of 1,337 Chinese maternity and infant product companies had closed this year as of yesterday, while only 798 new ones were opened, according to statistics from corporate information platform Qichacha.

Despite the signs of recovery in the first quarter, market insiders told Yicai that the impacts of the shrinking population have not yet ended, so it is still too early to speak about a turning point.

The number of kids aged zero to three years old plunged 43 percent to 28.5 million last year from 2018, according to a report from consultancy firm Frost and Sullivan. The Chinese government has adopted measures to support fertility, but the number of newborn babies between 2023 and 2027 is still expected to decline, even if at a slower pace. 

Editors: Tang Shihua, Futura Costaglione