HONG KONG—Just hours after Beijing this month announced plans to abandon its one-child policy, an advertisement appeared on Chinese social media for a mobile app connecting pregnant women and new mothers with doctors.
The ad, from Shenzhen-based startup Mami Zhidao (“mommy knows”), featured four doctors dressed as comic superheroes. “We are here so you can feel comfortable to have babies,” it said.
It remains uncertain how much Beijing’s policy shift can boost China’s birthrate, but Mami Zhidao founder Liang Liang and other entrepreneurs say they have high hopes for the business of catering to mothers and children. Last week on Singles’ Day—China’s equivalent of the Black Friday and Cyber Monday shopping events in the U. S.—the baby-goods category was among the top performers on Alibaba Group Holding Ltd. ’s online marketplaces.
Venture capitalists say startups focusing on baby goods and services have potential to grow even as China’s economy slows, because of strong demand for safe, high-quality baby supplies. While other Internet ventures are finding it harder to raise capital, baby-products startups are getting backing from prominent investors, such as Sequoia Capital China. Baby-goods shopping sites Beibei and Mia.com reached $1 billion in valuation in their latest fundraising rounds, as did Lamabang, a social network for young moms.
“The market is growing. Younger generations are getting richer and they want better services,” says Mr. Liang, who founded Mami Zhidao last year. It has since attracted two million users and backing from a venture-capital arm of Japanese telecommunications company SoftBank Group Corp.
Research firm Analysys forecasts China’s market for businesses that serve mothers and babies—online and offline—will increase 15% to $244 billion this year and more than double by 2020.
Analysts forecast growth for the baby-related market even if Beijing’s policy shift doesn’t boost the birthrate significantly, because middle-class parents are willing to spend more on better products and services—especially through online channels, where such products are easier to come by than in China’s brick-and-mortar stores.
The market has caught the attention of the country’s biggest online-shopping companies, Alibaba and JD.com Inc., which are offering more imported baby goods on their sites. Demand is fueled by concerns over the safety of domestic products, lingering from a tainted-baby-formula scandal that shook China in 2008. Infant formula and baby food are among the most popular items for Chinese shoppers buying goods from overseas. According to a survey by iResearch, 75% of such online shoppers said they have bought baby formula at least once.
Alibaba and JD face competition from startups whose specialty sites seek to serve new Chinese parents seeking both high-quality baby products and parenting advice.
“The Chinese family is changing,” says Liu Nan, founder of Mia.com, which finds merchants abroad—from a German baby-clothing brand to a Japanese dietary-supplement maker—and brings their products to China. The startup has attracted top China venture backers including Sequoia Capital China and early-stage investor ZhenFund. It was valued at $1 billion by a $150 million fundraising round—led by Chinese Internet search provider Baidu Inc. —in September, when many Chinese tech startups struggled to raise funds after China’s stock market fell sharply this summer.
Shi Wenqian, a 25-year-old former bank employee in the eastern city of Wuxi who is six-months pregnant, uses a website called Babytree to gather information such as what food and beverages to avoid. Safety, not price, is the priority, she says. Like many other moms in mainland China, Ms. Shi plans to buy baby formula and food from Hong Kong when the baby arrives in February.
Shenzhen-based startup Mama Lianmeng (“mother alliance”), runs a social shopping site where new moms form groups and compare notes to find affordable but safe baby products.
For mothers choosing baby products, “the biggest problem is trust,” said co-founder Kong Qing, who previously worked at Chinese Internet company Tencent HoldingsLtd. Backed by venture-capital firms including Morningside Ventures, the site hosts more than 2,000 groups of mothers and 300,000 users.
“The market has a lot of room,” Ms. Kong says. “There are so many mothers who are not being served yet.”