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QINGDAO TODAY
在线翻译:
szdaily -> Business -> 
Kao to bolster ‘Made in Japan’ slogan in China diaper market
    2019-08-08  08:53    Shenzhen Daily

LIKE many urban Chinese professionals with young children, Shenzhen-based fintech executive Jacob Cao is a fan of Japanese diaper brands including Kao Corp.’s Merries.

While he knows some Merries are made in China, with little difference in quality compared with higher-priced versions from Japan, he prefers the latter.

“I just get the feeling the Japan-made ones are better, to be honest,” said the father of 20-month-old twin girls.

The perception that Japanese baby products are superior owes much to Chinese aversion to homegrown goods after a tainted milk formula scandal in 2008. It has served Kao well, propelling it to the No. 2 spot in the world’s biggest diaper market despite a late entry in 2009.

But Kao’s sales have been hit after a clampdown last year on “daigou” merchants, who buy goods abroad for resale online in China. More reliant than rivals on daigou sales, its baby diaper sales tumbled 14 percent in the first half compared to the same period a year earlier, the company said this week.

To preserve and bolster the “Made in Japan” cachet, Kao began selling a premium line of “Tender Love” Merries in June, produced in its home market but only for sale in China.

Made of soft, silky fabric, they cost 4.9 yuan per diaper or roughly 200 yuan (US$29) for a medium-sized pack of 40, more than double the price of standard Merries and considered too expensive to market in Japan.

“Our strategy in China is to go for the premium market. We don’t want to go for volume,” said Tomoharu Matsuda, Kao managing executive officer in charge of consumer products.

Promoting made-in-Japan products comes amid emerging competition from Chinese brands in premium diapers and despite Kao’s longer-term goal of producing all diapers for the Chinese market in China, which would help it manufacture and distribute more economically.

Baby diapers make up roughly half of Kao’s sales in its “human health care” division, which in turn accounted for 18 percent of US$14 billion in revenue last year.

Estimated to be worth some US$9 billion in annual sales, China’s baby diaper market is five times bigger than Japan’s and is expected to show a double-digit compound annual growth rate through 2023, according to research firm Euromonitor.

In the past five years, Kao has doubled its China market share to 10 percent, mainly at the expense of Procter & Gamble Co., which has seen its share tumble to 19 percent from 33 percent. Huggies maker Kimberly-Clark Corp. has 8.6 percent and Japan’s Unicharm Corp. has taken 7 percent with its MamyPoko and Moony brands.

P&G, which introduced China to disposable diapers in the 1990s, has also sought to benefit from the made-in-Japan cachet.

Two years ago it began production in western Japan for its brand “Ichiban,” the Japanese word for “best.” Sold mainly in China, they are priced at around 2 yuan per diaper.

Unicharm opened a new factory in Japan’s southern island of Kyushu this year to bolster production of diapers for the Chinese market.(SD-Agencies)

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