Big profits from the baby business

Song Zhenghuan, chairman and CEO of Goodbaby Group, displays a stroller that was produced by the company in 1992. [Photo / China Daily]

Luckily Song Zhenghuan loves kids.

You could say, he was destined to serve them.

From when he co-chaired a high school in East China's Jiangsu province, to his running today of the world's best-selling children's stroller brand, Goodbaby.

In China, the company is known as Hao Hai Zi - that translates into "good baby".

It controls almost half of the country's stroller market, with revenues of 2 billion yuan ($315 million) last year.

Its list of other corporate statistics makes equally impressive reading:

It's the biggest supplier of strollers in North America and Europe; it provides two out of every five strollers sold in the United States; it now has customers in more than 70 countries; it makes over 10,000 strollers a day under 15 different labels for mostly overseas brands; it employs 100 engineers, designers and market researchers; and a 20,000-square-meters R&D center is staffed by another 200 researchers.

So when you consider that its founder had no experience of making anything before, let alone a world-beating piece of engineering, this truly global business started just under a quarter of a century ago, is a staggering success story.

Song said his number one aim is to create the world's best-known brand of infant and child products. And by that list of achievements so far, he is clearly well on the way to achieving it.

Ask him what's the most crucial ingredient in making his business such a success and the 64-year-old former teacher provides a simple answer: "Innovation and marketing are always the key."

It's a doctrine he uses throughout the interview with China Daily, as he sits in his bright, airy, spacious office, lit by natural light shining through tall glass windows.

The former educationalist may not be as well-versed in the curve of different components of a value chain, but he exudes an enthusiasm for his product which is infectious, and has guided the dramatic and spectacular development of what is now a global leader.

Like so many successful innovators, Song Zhenghuan said he never set out to be an entrepreneur.

But his role as the vice-principal of a school in Kunshan - the county-level city where he was born and raised - came with some unexpected duties that landed him the opportunity to steer his way in the direction of running the baby products giant.

A quarter of a century ago, when the Chinese economy was first starting out on its road to a market economy, Song's school was on a pilot program to help it create businesses to fund itself.

He and his fellow teachers borrowed money to open a factory making metal products.

His initial successes were countered by major setbacks, especially one he remembers making microwave ovens for a Shanghai-based company.

But Song was determined to turn around the fortunes of the school's fledgling production lines to compensate for hefty losses by his fellow investing co-workers.

In 1989, thanks to a student's father, Song won a contract to make parts for strollers.

With no experience whatsoever, he learned from scratch.

He studied how people sit in chairs, sat in libraries day and night, and looked at designs he managed to get from a nearby chair factory.

Finally, he struggled to bend a shabby chair in shape - or what he thought it should be - and brought it to the office.

When a colleague saw it, he asked what it was, let alone whether it was a baby stroller.

"But what if I add wheels, and made the wheels such, that if they could be folded in, the stroller could be used as a rocker as well?" he remembers thinking.

Song's masterpiece became a star overnight and soon dominated the then domestic market.

It took him just a year to pay off the start-up debt - a reflection of just what a hit the stroller was.

His "rocker-stroller" not only won Song a national patent award but also underlined to him the importance of designing finished products and owning brands.

To meet growing demand, the company invested heavily in specially made equipment from Shanghai to handle the growing orders, as it developed its niche.

Meanwhile the company took part in national industry fairs across the country and distributed large, colorful posters, showing a cute baby clapping hands on the stroller.

Such an upbeat, high-profile image was "a very rare occurrence two decades ago", he said, when Chinese businesses still tended to err on the modest, with most advertisements offered little more than a thank-you note and a telephone number.

Going back to his much-used formula of innovation and marketing, always being key, he added: "You must have hit products, and at the same time they must be eye-catching.

"You cannot succeed without these," he remembers drumming into his 20-strong team at the time.

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