Company News
Are Japanese Diaper Brands 'Collectively Fleeing' From China?
2024-06-07 16:03:20
It's not an illusion. Japanese diaper companies are gradually withdrawing from the Chinese market.
The story begins with Kao Corporation announcing in August last year that it would stop producing diapers in China. In its 30-year journey of cultivating the Chinese market, this company has also had its moments of glory that captured the attention of many. According to industry data, in 2017, the sales of diapers in China were approximately 40 billion, and Kao's diaper sales in China were around 5 billion RMB, accounting for one-eighth of the market share. However, in the first half of 2019, Kao's diaper business saw a significant 60% drop in profit. Then, at the beginning of this year, the news of Haoyue's plan to acquire Kao's Hefei factory for 235 million RMB came out, which is quite lamentable.
In fact, even before Kao sold its Hefei factory, some Japanese diaper brands had already begun to back off. In February 2021, the president of Unicharm, Takaharu Takahara, stated that they would gradually reduce their reliance on the largest market, China. It was also revealed by insiders in the same year that the company was shifting its focus away from diaper business in China and was no longer actively investing in Chinese baby products.
In addition to well-known brands, many upstream Japanese suppliers in the diaper industry are gradually disengaging from the Chinese market. In March this year, Japan's leading superabsorbent resin supplier, San-Ai Corporation, announced the transfer of all shares of its subsidiary in Nantong. In 2021, Mitsubishi Chemical also sold its subsidiary in China that produces and sells non-woven fabrics for diapers to a Chinese company.
From the once unparalleled glory when numerous Japanese diaper brands first entered China to the current collective low-key withdrawal, what exactly happened behind such a stark contrast? And who has taken away the market share of Japanese diaper brands?
According to the "2023 Insight Report on the Maternal and Child Industry," domestic maternal and child brands are actively encroaching upon the market share of foreign-funded brands. As of October 2023, compared to the previous year, the market share of domestic diaper brands in offline channels nationwide has increased from 78.8% to 82.9%.
Therefore, the rise of domestic diaper brands is not surprising. In recent years, changes in maternal and child consumption demand and scenarios have provided excellent opportunities for domestic brands to stand out. On the one hand, domestic brands deeply understand consumer preferences and ideas, continuously cultivate the upstream industry chain, and are not inferior to foreign-funded brands in terms of high quality and innovative material technology applications. On the other hand, the emergence of emerging platforms such as Tiktok, Kuaishou, and Xiaohongshu has enabled many domestic brands that are good at seizing channel changes to rise rapidly. Under the new wave of consumption, a large number of brands with both quality and innovation, have emerged in the domestic diaper market. Whether in product innovation direction or brand value shaping, they obviously understand better how to cater to the aesthetic and needs of young consumers compared to traditional foreign brands.