One of my pet peeve is that most of the Chinese stories books sold in Popular are annotated with Hanyu Pinyin. When I was selling educational stuff, I was told that books without Hanyu Pinyin do not sell well. I prefer books without Hanyu Pinyin annotation. In the past, it was really difficult to find books without annotation. I was very happy to find a bookstore that sold quality Chinese story books that did not come with Hanyu Pinyin annotation. These days, there are more bookstores selling quality Chinese children books and many without annotation. Although they are still very few in numbers, we now have other avenues of obtaining such books, e.g. buying online directly from China.
I find that kids tend to rely too much on Hanyu Pinyin so much so that they cannot read Chinese without the annotations. Hanyu Pinyin is not useful in getting the kids to learn character recognition. It is a crutch that a lot of kids cannot do without. Our children are so used to reading English that they naturally gravitate towards alphabets when they see them. So when faced with a passage in Chinese characters (which are all unfamiliar to them) annotated with Hanyu Pinyin, it is very natural that they will start reading the Hanyu Pinyin and ignore the characters. The younger kids who just started school and are not very inclined towards the Chinese language find no incentive to use the Hanyu Pinyin annotation to learn how to read the characters. Basically, they just read Hanyu Pinyin. Even my #3, who can read most of the common words, will gravitate towards reading the Hanyu Pinyin even for words that he can actually recognise and read. This is where Hanyu Pinyin is really not very useful.
Having said all that, I did buy some books that come with Hanyu Pinyin annotation eventually. The reason for wanting the Hanyu Pinyin annotation is not so that my children can learn characters using the Hanyu Pinyin. The reason for needing the annotation is really for ease of reading. You see, my older kids’ Chinese standard is really not good. It is a challenge to try to get them to read more. Take my #1 as an example. Based on his standard, he can read very simple stories without help. But these stories are usually very kiddish, using animal as characters. When he reached his “tweens” years, such stories could not interest him at all. Stories that appeal to him are written in Chinese that is beyond him. If I read them to him, he could understand. But he would never be able to read them independently. He needs to read widely to brush up his vocabulary. So in order to help him to read more books, I have to buy books that interest him that come with Hanyu Pinyin annotation so that he could read them. This is where Hanyu Pinyin is useful.
In summary, for the purpose of learning how to read characters so that the kid can recognise as many characters as possible, excessive use of Hanyu Pinyin is not useful as it can become a crutch that hinders learning. When the child can already read a lot of characters but there is a mismatch between the kind of reading material that interest him and his reading standard, Hanyu Pinyin can be helpful.