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Japanese consumer goods giant Kao to boost R&D, investment

By Cheng Yu | China Daily | Updated: 2019-12-19 10:31

How do you see the role of the Chinese market in your global layout? How much does China contribute to your total revenue globally?

China is an important market for Kao, both in terms of business and social value. China is the largest market for Kao outside Japan.

We have seen revenue increase progressively in China. Today, it accounts for about 8 percent of the firm's total revenue worldwide.

The percentage exceeds 10 percent if we include revenues from e-commerce where we sell our products directly from Japan to China.

Since revenue has seen double-digit growth here in China at least, we will of course beef up our investment here.

China's economic development is experiencing growth pressure amid global trade uncertainties, what's your investment plan in the country next year?

As Chinese consumers are receptive to new products and innovations, we will scramble to bring more cutting-edge products and solutions to the market to meet demand. We will make better use of bilateral economic platforms and similar opportunities to introduce more products here.

We should not worry about the current global economic uncertainties as the situation will improve sooner or later.

We believe that China's economy is developing steadily and is expected to grow more. We at Kao also hope to make a contribution to the country's economic development.

How do you view the potential of the Chinese market? What do you see as the most resilient part of the Chinese economy and how do you plan to align your business with it?

China has made substantial leaps during its economic development while Japan has developed step by step.

For instance, Chinese consumers use smartphones more frequently than those in Japan. China has also witnessed a large number of applications including online payment as well as the rapid development of 5G, which have all surpassed Japan.

This is the charm of the Chinese market. Compared with markets like the United States and Europe, which are already mature, China always brings some surprises and opportunities.

What do you think of China's new e-commerce platforms including Xiaohongshu or Red? What opportunities do they bring to Kao?

Emerging platforms should act as our sales weapons. These platforms haven't emerged in Japan. We should make good use of these platforms.

But at the same time, offline sales are also critical. Thereby, for Kao, both online and offline efforts will be treated as equally important.

Is there any product that is designed specifically for the Chinese market?

Usually, Kao will launch and sell its products in both Japan and China, like the fine fiber technology we introduced at the CIIE. But we don't exclude the possibility of designing specifically for the Chinese market.

Kao's diaper business seems to be facing a slowdown in China amid fierce competition, what do you think the reasons are and how will the company adjust its strategy to regain its lead?

The diaper business still has a big market share in China. Total diaper sales haven't declined in the market. The slowdown is mainly due to the development of other Kao business lines in the market.

To regain a peak, Kao is bringing more innovative diaper products back to the market. For example, the latest diaper we introduced to the Chinese market is softer, permeable and absorbs more water.

Faced with fierce competition in the Chinese market, what do you think is Kao's unique selling point?

Kao has a strong competitiveness in terms of technology. Some technologies can be called the world's first.

We also pay great attention to research and development. R&D investment is 4 percent of the total, which is much higher than that of similar companies in the field.

What are the major challenges for Kao in China in the coming one or two years? How will you deal with them?

As we mentioned, Chinese consumers are tech-savvy and they are receptive to new products and solutions, which brings both opportunities and challenges. For Kao, we will continue to boost our efforts here to increase our contribution and innovation.

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