KAO is losing market share in China

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KAO is losing market share in China


Recently, industry insiders revealed that Kao diapers’ sales in China in 2019 were less than 3 billion (including the total sales of imports from Japan and domestic factories), which was more than half the peak period. At the same time, the profit decline is very serious. In 2019, the profit of diapers in China was only more than 100 million, and the peak period of Kao diapers in China was 600 to 700 million. Although this year’s performance in the Chinese market has experienced some setbacks, from an industry perspective, Kao’s comprehensive strength is still strong. Exploring the growth dilemma it encountered in 2019 has implications for the entire industry.

Kao’s diaper sales in China are the result of many factors. From January 1, 2019, China began to implement the “E-commerce Law of the People’s Republic of China”. Overseas purchasing has significantly decreased. Chinese tourists visiting Japan in 2019 have also begun to decline. The new e-commerce law has imposed restrictions on overseas purchasing and fewer Chinese tourists have visited Japan. It has lowered the performance of some Japanese cosmetics and daily chemical companies since 2019, and has also affected the sales of Kao diapers in the Chinese market. Moreover, after the implementation of the new e-commerce law, many purchasing agents sold inventory at low prices, which also affected Kao’s cross-border business. In addition, in the face of changes in the Chinese consumer market, Kao lacks timely insights and innovative channel management strategies for emerging sales channels such as cross-border e-commerce, social e-commerce, vertical e-commerce for mothers and infants, and online celebrities KOL, as well as traditional mother-to-child channels Lack of marketing methods to reach more young consumers.

On the other hand, sharp price cuts also have an impact on revenue and profits. According to the Maternal and Infant Research Institute data, the average online price of Kao diapers continued to decrease in 2019, and prices began to pick up in November. The reporter found in the interview that Kao’s offline sales were not good in summer and relatively good in winter. Kao enjoys different discounts in different maternal and child supplies stores. Some stores enjoy a two pack reduction of 80 yuan or buy two packs to give the same brand wipes, some stores enjoy two pack reductions of 50 yuan, and some shops do not enjoy discounts. Sales staff said that Kao products are thick in texture, and many consumers choose thinner and lighter diapers in the summer in order to avoid discomfort such as baby allergies. It shows that it needs further innovation in product design and sales channels, and should not let similar brands fill the vacancy of Kao products in summer.

In recent years, the brand pattern of the Chinese diaper market has changed, and a large number of fast-growing mid-waist brands have also eroded some of Kao’s share in China. Thousands of brands compete on the same stage, and the industry has become fiercely competitive. Domestic brands have begun to seize market share. For complex and diversified new channels and the 3-6 line mother and baby sinking market, local brands have more flexible ways to respond Faster penetration, and local brands have gradually overtaken foreign brands in terms of overall quality. In fact, Kao and other foreign brands have also realized this challenge. Earlier, Kao’s president, Putian Daolong said, “In the past, if Japanese products were 100 points, most Chinese products were at 60 points. However, China 90 Products with more than 50 points are constantly emerging. ”

Kao has experienced the best era of high-speed growth of the Chinese diaper market. Kao, who became a “Internet celebrity”, was once sold out and restricted under the pursuit of consumers and buyers ’crazy purchases, but the time for merger and expansion has come. On the battlefield, head players have to share more shares. In 2020, it will be a more difficult year for the brand, channel and factory.

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