Goodbaby Strollers on the Move

!±8± Goodbaby Strollers on the Move

I would be willing to that bet you have never heard of Goodbaby. Yet they control 70% of the stroller market in China. They manufacture two out of every five strollers sold in the U.S. And they have a 15% market share in Europe primarily in the luxury model category. There is a very good chance that you have a Goodbaby product in your home and do not even know it. Goodbaby makes 10,000 strollers a day, most of them for overseas brands. In all they make 15 different labels.

Song Zhenghuan was intent on becoming the world's number one maker of infant and child products. But when he designed a rocking chair in 1989, one of his employees mistook it for a stroller. Song added wheels and the rest as they say is history. As of May 2009, the company was still privately owned but the initial public offering was on many investor's radar.

Goodbaby opened its flagship store in Shanghai in 2006. Its targeted market is middle-class Chinese families. Ironically, not far away is a competitor who caters to wealthier Chinese families willing to spend big money on foreign label products. Goodbaby not only owns a share in this store too, but many of the products for sale there are made right in China by Goodbaby.

Song Zhenghuan's number one challenge today is to make the Goodbaby label a top seller in its own right. He faces the challenge of overcoming global bias, which he admits was brought on in part by unscrupulous Chinese companies who produced shoddy and dangerous baby products. He knows it will take time but he is confident that China will someday enjoy the same reputation that Japan does for producing quality goods.

Song has taken an interesting route to baby stroller mogul. He began his career as a math teacher eventually becoming a vice-principal. When China first began experimenting in capitalism, some schools were required to create businesses to fund themselves. So Song borrowed from his fellow teachers and opened a microwave oven factory which was a resounding failure.

Eventually, through alumni connections, the factory got work making stroller parts. Song quickly saw that profits would be higher on finished products. Over the last 20 years, Goodbaby has been innovating stroller design. They feel their R&D is what sets the company apart from their competitors. That and the fact that they made a combo rocking chair/stroller work.

Goodbaby has produced strollers under the brand names of Cosco, Safety First and Eddie Bauer to name a few. Other non-stroller brand names manufactured by Goodbaby are Quinny, Nike Kids and Tommee Tippee. One distinction that has set them apart from other Chinese manufacturers of infant and child products is that Goodbaby has welcomed foreign investors and taken advise from their experience. This has helped them understand the expectations of the world market.

In 2006, a China focused private equity firm, the Pacific Alliance Group, bought a 67 percent stake in Goodbaby, effecting what some call the first western style leveraged buyout of a Chinese company. It was this equity firm that was expected to take Goodbaby public. But that has not happened. And instead, PAG has hired Morgan Stanley to sell their shares to other interested private equity firms.

This sale is going to have a very high profile because traditionally, the Chinese government has not easily approved foreign investments and the private culture of business ownership in China is strong. What started as one factory is now more than ten specialty factories and they have their own industrial park employing over 16,000 people.

What's next? Goodbaby plans to grow its online presence as many young Chinese parents like to shop on the internet. If history has been any indication, expect to see a lot more of Goodbaby in the years to come.