Companies in the baby and maternity business remain largely optimistic about prospects in China but said they need to roll out more customized products as challenges abound, according to industry experts attending the ongoing International Children Baby and Maternity Products Industry Expo.

The creation of new subcategories such as baby supplementary food, children's sunscreen and nutrients dedicated to children represent some of the latest growth points, company representatives and analysts said at the three-day event which ends on Friday in Shanghai.

While as many as 74 percent of surveyed companies reported sales growth, according to latest figures from expo organizer Informa Markets, they admit challenges such as a downward pressure in the birthrate.

Data from market research firm Kantar Worldpanel suggested that while the average purchase volume for maternity products edged up only 0.3 percent from July 2017 to June 2019, average prices leapt by 10.3 percent.

Companies are flexing their muscles to tackle the challenges through the debut of products with higher margins. New Zealand dairy giant Fonterra announced the introduction of Anmum Assura, a high-end formula dedicated to pregnant women, to the Chinese mainland in October as millennial mothers in China are willing to pay for premium products.

"The product's upper-scale positioning is bound to give us an edge in this highly competitive market where consumer expectations are noticeably higher (than the rest of the world)," said Cao Hui, vice-president of Consumer Brands for Fonterra China.

A total of 62 percent of respondents expect to launch new products to meet consumer demand, according to a survey by Informa, the event's organizer, of 3,500 brands, distributors and retailers.

Personal care giant Procter &Gamble is leveraging its dedicated innovation center in Beijing to tailor baby and maternity products specifically for the Chinese market, said Elena Kudryashova, chief executive officer of P&G's baby care segment in China.

She said the baby-related market has expanded three times faster than the rest of the fast-moving consumer goods sector. And the potential of China is not only thanks to the amount of money being spent, but "the level of attention Chinese parents put in the product, which is incomparably high globally".

A joint report by consultancy Frost & Sullivan and maternity-oriented e-commerce platform Babytree forecast spending on maternity and baby products in China will double to around 4.3 trillion yuan ($625 billion) by 2022 and account for 20 percent of average family spending.

But to capture that growth momentum, brands need to extend their product life cycle to serve infants and young mothers, said Jason Yu, general manager of Kantar Worldpanel in China.

"The growth potential is much bigger in niche product segments compared with regular baby formula," he said.

For example, sales of dietary supplements for children increased 48 percent from 2017 to 2018 across first-and second-tier cities in China, Kantar Worldpanel's data showed, whereas sales of children's facial sunscreen surged 12 percent.

The popularity of e-commerce has helped brands better penetrate into lower-tier cities. And their adoption of social networks provides opportunities for brands to navigate consumer preferences, said Zhu Dingping, China managing director for H&H Group's Baby Nutrition and Care department.

"It's China's time now (for the baby care market), because of the large population, modernizing infrastructure and the more confident, technologically savvy consumers," said John Louie, international senior vice-president for Warner Bro's Consumer Products. He pointed out effective licensing with renowned intellectual properties would further boost consumption.