Childcare services boom in Korea

Despite South Korea's lowest birth rate in the world , shares of baby care companies in the country have been on a strong growth trajectory. Analysts say the growth is due to parents increasing their spending on their only child.

Child care services in Korea, birth rate drops to record low, picture 1 — Nurses care for newborns at a postpartum care center in Seoul. Photo: Yonhap

Agabang & Company, which sells clothing, skincare products and a variety of baby care items, has surged more than 70% on the Kosdsaq stock market this year, according to the Korea Exchange. This is considered a significant success for Agabang & Company as South Korea's total fertility rate falls to 0.72 by 2023.

Agabang & Company rose 5.91 percent to close at 6,450 won on Thursday, a day after Statistics Korea announced that the country's quarterly total fertility rate fell to a historic low of 0.65 in the October-December period last year.

Explaining Agabang & Company's upward trajectory, an analyst at Yuanta Securities pointed to the "10 money bags" - a term that refers to a family consisting of parents, grandparents, as well as uncles and aunts, totaling about 10 people. These families are noted for spending lavishly on a child, often the only child in the "extended family".

“At first glance, it might seem like the declining number of babies could be causing the childcare industry to shrink,” the analyst said. “But in reality, it’s making children rare and special, which in turn causes their families to spend more on appropriate goods as a way to show their love.”

Child care service in Korea, birth rate drops to record low, picture 2 — A customer looks at strollers at a baby goods store in Siheung, South Korea. Photo: Bloomberg

He pointed out that online transactions for baby care products in 2022 were worth 5.23 trillion won, up 0.7 percent from the previous year. During the period, the number of births fell to 230,000 from 249,186.

Luxury goods for children are also seeing a surge in sales. Shinsegae Department Store said its total sales of imported children's goods increased 15% last year. Lotte also saw sales of high-end children's brands such as Fendi Kids and Givenchy Kids increase 10% last year.

Not all baby care companies are thriving on the stock market. However, they are getting attention from foreign investors. This shows the growth potential of baby care companies in Korea in the future.

Ngoc Anh (according to SCMP)

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