Kao seeks to double Vietnam business as it boosts overseas sales

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Kao Corp., the largest maker of bath and shower products in Japan, is seeking to at least double the size of its Vietnamese business to ramp up overseas growth amid a shrinking population at home.

"I want to double and triple the business in Vietnam," President Michitaka Sawada said in an interview on Nov. 28. The company may build a new factory in Southeast Asia to strengthen the Vietnamese operations, he said, without specifying a timeframe or investment amount.

Kao, the owner of Molton Brown cosmetics, is ramping up its Vietnamese business as it plans to get much as 50 percent of its sales from overseas by 2020 compared with the current 27 percent. As the Japanese company pushes into the Southeast Asian nation, it will take on global competitors such as Unilever NV that already have a bigger share of the local market for bath and shower brands.

"Vietnam has a big population and many young people," Sawada said. "There is increasing room for growth in terms of our products, like cosmetics, diapers and sanitary products."

The market size for color cosmetics in Vietnam rose 22 percent to $37.7 million in 2011 and for hygiene products it climbed 19 percent to $242.1 million, according to researcher Euromonitor International. The size for bath and shower products gained 8.6 percent to $82.3 million.

Kao will invest about 10 billion yen ($121 million) to build its second factory in Indonesia to make detergent and sanitary products, it said in July. The company has also invested about 6 billion yen in a new plant in Anhui, China, to make baby diapers.

Next focus

Vietnam is one of Kao's next areas of focus after the main targets of China, Indonesia, and Thailand, the company said. Rival Shiseido Co. already gets about 44 percent of sales from overseas while Unicharm Corp. has about 52 percent, according to statements from the companies.

Kao entered Vietnam in 1996 when it first built a factory there, making products such as "Laurier" sanitary pads and "Biore" body soap. The Japanese consumer company had sales of 139 billion yen from Asia for the year ended March, or about 11 percent of total sales. Kao doesn't disclose Vietnam sales.

Kao had a 1.2 percent share in Vietnam's hygiene products market, while Kimberly-Clark tops the market with 37 percent, according to Euromonitor International. For bath and shower products, Kao had 0.7 percent share, while Unilever leads the market with 35 percent share.

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