In response to the original post - Children learn second and third languages at all ages. The mother's concern with reading skills interfering with first language literacy skills (probably pinyin) is based on speculation

However, you may want to think about how well your students can actually use the literacy skills you are teaching them. Most young second language learners don't actually have the vocabulary to be able to use any literacy skills developed - They may be able to read sight words or decode, but, unless they have a large enough lexicon, most of what they will be reading would be gibberish to them. You might find focusing on speaking and listening (with a focus on vocabulary development in mind) more beneficial. After all, native English speakers don't usually start developing literacy skills (letter identification and letter sounds) until they have had four to five years of whole-day language exposure. This, of course, depends on how much time you have with the students a day (or a week). Im just thinking your time spent in the class, if its limited, may be better spent developing oral/aural fluency. Of course, you know your students best do what you feel they can handle!