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SCMP Reporter

Kent Tsang and Simon Leon run Lerado Hong Kong, one of the world's largest makers of baby strollers in terms of sales volume.

The company has been profitable for the past decade, and is expecting an even better year in 2000 thanks to the Year of the Dragon.

Many Chinese aim to have a child in the Year of the Dragon as they believe the baby will have a prosperous future - although the hundreds of 'Dragon babies' beginning Form One this year who will be forced to travel to schools far from home due to class overcrowding may disagree.

'We have saved 20 per cent of our production capacity for unexpected orders in the latter part of the year,' said Mr Leon with a great deal of enthusiasm.

'We have also reserved 200 acres of land in Zhongshan [in Guangdong province] for further expansion.' There is little doubt that the baby care products market is big business all over.

In the United States alone, US$4 billion of the US$300 billion to US$400 billion parents spend annually on their children goes on baby products.

In Asia, the market for such products has increased tenfold in the past five years.

As the market expands, however, so does the number of players in this niche market. Cut-throat competition in a crowded marketplace has meant diminishing profit margins and, in some cases, even losses.

Mr Leon, who is also the financial controller of Lerado, attributes the profitability of the company to exports to western markets, which has helped Lerado survive despite the Asian financial crisis. Lerado draws 75 per cent of its sales from the US.

A further local success story is that of Cameron Honarvar, a corporate financial analyst until five years ago, who runs Karin's Korner, a specialised baby care product chain.

Mr Honarvar said he realised that there was a market for specialised baby equipment which was manufactured according to legislated safety standards and even the high- quality products that were available in Hong Kong were very expensive to buy.

Tired of frequent travelling, jobs in investment banking and business development for several years, the New York University graduate packed away his suits to start Karin's Korner in 1995, just after the birth of his daughter Karin.

Karin's now has three retail stores across the SAR.

Mr Honarvar is spreading his reach to other countries in the region and recently opened a store in Singapore, while the opening of one in Taiwan is slated for the coming months.

While Karin's Korner focuses on Asia, Lerado occupies a comfortable 50 per cent of the US baby stroller market.

'The western parents place safety and reliability above prices,' explains Mr Leon as the main reason for the success of his company's products in the US. Analysts say this is why Lerado has a major advantage over its rivals and also the reason why the company's investors remain happy.

Another brand name which is popular among local young mothers is Tommee Tippee, which produces products like cups, carriers, toys and pacifiers.

However, the earnings of Mayborn PLC, the company that produces the brands, has been hurt by under investment in production equipment and extra charges for out-sourced manufacturing for a number of years.



Little bubs are big business