China’s maternity and baby industry is facing challenges due to the economic downturn, declining population of childbearing women, and wavering desire for childbirth. Recently, a well-known maternity and baby brand, Kuyoubi, has been exposed to massive layoffs and reports of the boss fleeing.
According to a report by the Chinese industry media “Observation of the Maternity and Baby Industry” on November 27th, the Hangzhou maternity and baby brand Kuyoubi faced a crisis with the boss fleeing overseas, and both the business department manager and director have resigned.
Additionally, Kuyoubi notified its employees this week about possible layoffs, with internal discussions indicating a potential 70% layoff rate and compensations to be paid three months later. The remaining staff have been told to accept pay cuts. However, due to employees not agreeing with the layoff agreements, the layoff process has been temporarily halted. Currently, Kuyoubi owes investors and suppliers over 100 million yuan.
In response to this, Kuyoubi founder, Yang Fan, denied through the official social media account of Kuyoubi the reports of him fleeing, clarifying that he and his family have been in the United States for a long time, not recently. However, he acknowledged operational issues and mentioned bank loans being halted.
Although facing cash flow problems, Yang Fan assured that based on the latest financial situation on the 28th, they have enough funds to pay employee salaries and layoff compensations. Supplier payments are being arranged gradually, with some experiencing slight delays.
Yang Fan also mentioned that the company did not plan a 70% layoff. However, due to accumulated organizational bloating over the years, some layoffs are indeed necessary to streamline operations.
On the 29th, Interface News reported that a former employee of Kuyoubi stated that while rumors of massive layoffs have been circulating within the company, the exact percentages were not clear.
Another current employee of Kuyoubi told Blue Whale News that while layoffs were still rumors, executive departures were indeed happening. They noted the departure of long-standing senior executives who were highly valued within the company.
Another former employee mentioned that Kuyoubi had experienced significant staff turnover in the past two years, with instances of entire positions being left with only one person. There were also complaints about delayed October salaries and dissatisfaction with the layoff compensation proposals.
On the same day, reporters from Caijing News visited Kuyoubi’s headquarters at the Beihao Technology Park in Hangzhou and found that the office space had downsized from three floors to two. Staff members revealed that a month ago, the 16th floor was vacated, and operations were consolidated on the 17th and 18th floors. Several employees confirmed that the company was still operational, but some were seen processing resignation formalities.
The news of Kuyoubi’s crisis has attracted a crowd seeking bargains. On the 29th, the factory store on the ground floor of the headquarters was bustling with shoppers, and baby products were scattered around the store.
According to Tianyancha, Yang Fan is the legal representative of 10 companies, but since 2023, his equity has been gradually frozen. By October 2024, Yang Fan was restricted from consuming and became a discredited person.
Ling Yanzixun’s chief analyst, Lin Yue, told Southern Metropolis Daily that the maternity and baby industry is indeed facing difficulties, with not only Kuyoubi but many leading brands and listed companies struggling. The industry is being impacted by both low-cost brands and the overall market shrinking due to declining birth rates, challenging companies to innovate further.
It is widely believed by demographers that the long-term trend of negative population growth will persist due to the declining population of childbearing women and waning desire for childbirth. This indicates that the contraction trend in the maternity and baby market may be difficult to reverse.