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Japan's Unicharm makes greatest success in emerging markets

TOKYO -- Japanese sanitary goods maker Unicharm is faring very well in emerging markets thanks to sales of infant disposable diapers.

Unicharm-brand baby disposable diapers are gaining popularity in China.

     The company credits much of this success to in-depth market research.

     "I spend nearly a third of a year outside Japan, mainly in emerging markets," said Takahisa Takahara, Unicharm's president and CEO. Since taking his current position in 2001, Takahara has visited 19 countries and regions outside of Japan where the company has production and marketing bases.

     These are not ceremonial visits, such as ribbon-cutting events for new factories. Takahara has made a professional habit of visiting local stores to see how Unicharm products are marketed.

     "It may be annoying to have the top person visiting the front line so frequently, but I need to see with my own eyes how our products are performing in local markets," he said. Takahara's marketing approach is to match the needs of local lifestyles, and to do this before rivals can by studying local consumers and tweaking products based on their needs.

Changing styles

Unicharm first ventured outside Japan in the 1980s, when it entered the Taiwanese market. It set up a joint venture in Indonesia in 1997 and launched an Indian subsidiary in 2008. Though it is actively pursuing overseas expansion, Unicharm's presence in emerging markets is still dwarfed by rivals Procter & Gamble and Kimberly-Clark. This makes it all the more important for Unicharm to figure out local needs.

     In 2010, Unicharm began marketing in Thailand thinner disposable diapers with enhanced breathability and flexibility that are intended for regular, daily use. Disposable diapers are often used in Thailand only for outings, not for daily use. However, Unicharm's idea proved a hit. The usage rate of disposable diapers used to be 20%. In three years of release of Unicharm's thin diaper, this was up to 50%. The company now controls 60% of the disposable diaper market in Thailand.

     In India, Unicharm has recently risen to second place in the country's disposable diaper market, overtaking Kimberly-Clark. Disposable diapers come in two varieties: pants-style diapers and those sealed with adhesive side tape. Last autumn, Unicharm pitched pants-style offerings for infants in India by taking a hint from the widespread use of pants-style cloth diapers among local mothers. 

     This month, it will roll out production and sales of baby disposable diapers in Brazil, a diaper market estimated to be worth 95 billion yen ($925 million) in annual sales. This market is projected to grow 7% a year. According to a study made by Unicharm, Brazilian mothers use about 170 diapers a month compared with 140 by Japanese mothers.

     Unicharm plans to introduce its pants-style diapers in Brazil to attract consumers who traditionally opt for tape-type diapers. It hopes to encourage local mothers to switch to pants-style diapers by touting less time they require to change.

Growing up

Takahara got off to a harsh start when he succeeded his father, Keiichiro Takahara, who founded the company. The younger Takahara was just 39, and many investors were doubtful that he was up to the job. When the company's stock tumbled, even the elder Takahara placed the blame on his son. This experience inspired the younger Takahara to shift the company's focus to cultivating overseas markets.

     He has since forged a strong leadership style and has grown Unicharm into an enterprise that earns about 60% of sales outside Japan. The company has about 1,300 employees on a parent-only basis, and a combined workforce within the group tops 12,000. There is a limit to what Takahara can do alone. To support the giant organization, it is urgent that local talent is groomed for leadership roles.

     Unicharm logged its seventh straight year of record group operating profit in fiscal 2013, and has a market capitalization of over 1.2 trillion yen. It targets sales of 1.6 trillion yen by 2020, nearly triple the current level. The younger Takahara, along with his father, has long sought to overtake Procter & Gamble and other global players and broaden the company's presence in emerging markets. He is now facing the true test of making this happen.

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