China’s Kidswear Brands Seek Growth in Foreign Markets Amid Domestic Slump

Chinese children’s clothing manufacturers are facing a shrinking domestic market due to declining birth rates, prompting many to seek growth internationally, even venturing into risky areas along the Russia-Ukraine border.

“The local kidswear market is projected to decline over 30 percent in the second half compared to last year, based on visitor traffic across various platforms,” said Mou Hua, the foreign trade director at a children’s apparel company in Huzhou, located in southeastern Zhejiang Province.

The town of Zhili in Wuxing District, Huzhou city, known as “China’s Kidswear Capital,” houses over 14,000 children’s clothing manufacturers. These producers generate approximately two billion garments annually, accounting for about two-thirds of the entire national market.

“A shipment recently arrived at a bonded warehouse in Moscow and will be available for sale by the end of this month. Another shipment destined for Thailand departed on Saturday, September 13, with an expected arrival around the 20th,” Mou explained. The company’s growth this year is largely driven by international sales, with overall revenue expected to increase by roughly 10 percent.

Despite the slowdown in global demand and economic challenges, Mou believes that the international children’s wear market remains more attractive than China’s, especially regarding unit prices and profit margins.

Three years ago, the company shifted its focus to exports. The management team participated in a government-organized charter flight from Huzhou to Southeast Asia, where they quickly established a presence in the wholesale market. Soon after, they expanded into Russia, with plans to develop an overseas warehouse in the Kursk Oblast in western Russia.

Yao Dong, the founder of Mou’s company, spent last winter in Kursk, while Mou himself stayed nearly three months in the spring to oversee local hiring and training. It took almost a year for him to learn how to invest effectively in a region with a low level of market development.

Why Kursk?

Though the risks associated with the Russia-Ukraine conflict are significant, with “air raid sirens sounding daily,” Mou noted that such risks can sometimes be accompanied by rewards. Kursk is a border region that serves as a vital industrial and agricultural hub, featuring one of the world’s largest iron ore production sites. The area has a relatively dense population, and warehouse rental costs there are about 60 percent lower than in and around Moscow.

Once products arrive at the Russian warehouse, they are sold through local e-commerce platforms. To facilitate operations, the company employs Russian staff who speak Chinese. However, over the past year, rising e-commerce and logistics costs have made the team realize that achieving profitability requires retail prices to be at least three times the product’s cost.

This highlights that relying solely on the “overseas warehouse plus local e-commerce” model in emerging markets isn’t sustainable. Instead, a dual approach—pursuing e-commerce while establishing offline wholesale channels—is essential for long-term success.

Having established a foothold in Southeast Asia and Russia, Mou and his team plan to expand further by setting up warehouses in Japan, South America, and other regions. Beyond their own operations, they aim to offer shared warehouse facilities to support other Chinese brands with ambitions to globalize.