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Yangtuo Bets On Small-town Moms Despite Declining Birth Rates

The infant products e-commerce platform has filed for a Hong Kong IPO, hoping investors will buy into its transformation story after its revenue flatlined last year

Key Takeaways:

Yangtuo's infant products e-commerce platform targets lower-tier Chinese cities, towns and villages that account for 85% of its newborns

The company's revenue flattened in 2024 and it lost money, as it shifts from its original B2B e-commerce focus to a direct sales model with its own brands

China's dairy industry may be past its prime, as plunging fertility rates cause demand for infant formula and other dairy products to slowly dry up. But Yangtuo Technology Inc. hopes to convince investors that there's still potential in the field, saying it understands moms in the nation's smaller markets better than any of its competitors.

The operator of an e-commerce platform selling infant formula and other baby products filed for a Hong Kong IPO at the end of June, boasting an all-star cast of Citic Securities as its underwriter and Fosun, Hillhouse and Lei Jun, co-founder of smartphone giant Xiaomi, among its backers. The company has already raised nearly $200 million over six previous funding rounds, suggesting the Hong Kong IPO could raise another $100 million or more.

Yangtuo's core management team also boasts strong e-commerce credentials, with many of its members harkening from industry leader Alibaba (BABA; 9988.HK). Zhao Chen, the company's 43-year-old founder and CEO, worked for nine years at Alibaba, where he played a key role in the launch of its Tmall Global. COO Xu Hong managed Taobao Coins, Alibaba's consumer loyalty program, and CTO Xiao Jiantao was part of the launch team for Juhuasuan, a group buying site on Tmall. 

Yangtuo's target market is growing, though not very fast, reflecting plateauing demand for infant nutritional products. According to third-party market data in the listing document, China's family care and nutrition product market grew from 2.2 trillion yuan ($307 billion) in sales in 2019 to 2.6 trillion yuan in 2024, averaging just 2.9% annual growth during that time.

The market is dominated by ...