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Fumakilla smokes rivals in Indonesia insect-repellent market

Fumakilla Indonesia President Director Shusaku Yamashita poses with Fumakilla's mainstay Vape mosquito coils.

JAKARTA -- Fumakilla Indonesia, a unit of Japanese insecticide producer Fumakilla, is thriving in Indonesia thanks to its tireless efforts to get its products in small shops throughout the country.

     President Director Shusaku Yamashita, who runs the company's Indonesian operation, says Fumakilla has the top share in the mosquito coil market. That is no small feat. Some 4 billion mosquito coils are sold annually in the tropical archipelago, more than 10 times as many as in Japan. Fumakilla Indonesia racked up 600 billion rupiah ($52.1 million) in sales in 2013, a quarter of the group's global total. It also reported a 50 billion rupiah profit.

Slow burn

Fumakilla Indonesia sells five-packs of the repellent coils for 3,000 rupiah. It also sells them individually for about 7 cents each.

     In April, Yamashita secretly began selling newly-developed black mosquito coils to retailers on the island of Java, a previously impenetrable regional market for Fumakilla Indonesia. His goal was to impress customers with the product, which the company says is less smoky and more effective than the green coils widely available in Indonesia. For the past decade, Fumakilla Indonesia's sales staff have visited about 50 stalls and wholesalers a day, endlessly pitching the company's products. Their efforts have borne fruit. On Kalimantan Island, it has a dominant 80% share. But the company has been unable to displace popular local products on Java.

     Previously Yamashita worked for Japanese feminine hygiene product maker Unicharm. In 1995, with 20 years marketing experience in Japan under his belt, he was sent to Indonesia to set up Unicharm's local subsidiary.

     "I never thought I would be assigned overseas," said Yamashita. He built a sales network and production system from scratch, and began operations in 1998. For the first six months, the company's focus on high-end products did not pay off, "I squabbled with headquarters to get them to prioritize cheaper products," Yamashita said.

     Yamashita believes people in local markets, rather than headquarters, should take the lead in marketing strategy. He made Unicharm's Indonesian subsidiary profitable and returned to Japan in 2002. Soon after, he was assigned to the Philippines to open a subsidiary there, but once again found himself at odds with the head office. He resigned.

Back to the islands

In 2003, Yamashita was 53 years old and jobless. "It was so frustrating to think that my business life would end up like this," he said. "I want to do business again in Indonesia." After spending the next three months wondering what to do, he met Toshiaki Oshimo, then president and now chairman of Fumakilla.

     At that time, Fumakilla was trying to dig itself out of a hole, having run up a string of losses in an earlier move into Indonesia from 1990 to 1996. Yamashita became managing director of the Fumakilla's Indonesian subsidiary in 2003, whereupon he turned his attention to Indonesian conglomerate Rodamas Group, which had handled 80% of the country's distribution for Fumakilla.

     Yamashita knew from his experience at Unicharm the importance of quickly developing regional wholesale and sales channels. He went to see the owner of Rodamas in person and asked him to dissolve the tie-up between the two companies.

     Rodamas was taken aback by the sudden request and called Oshimo in Japan, demanding an explanation. Oshimo replied, "I have entrusted our marketing strategy to Yamashita. If he says so, I am sorry, but do as he says."

    Oshimo's vote of confidence inspired Yamashita to do his utmost to see Fumakilla's Indonesian unit grow. He set up an R&D center in the country to deal with Indonesia's hardy mosquitos, which are five to 10 times more resistant to insecticides than those found in Japan.

     Yamashita also promoted in-person visits to more than 2 million mom-and-pop shops. These efforts have helped the subsidiary quadruple sales and raise profits 50-fold in a decade. "I want to work until we achieve sales of 1 trillion rupiah," Yamashita said.

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