Troubled by the nuisance that is China, Unicharm – a personal care company, based in Japan is packing its bags from the communist country and moving to newer pastures with India and other African nations as the potential destination for setting up its anchors. According to an Asia Nikkei report, the move by Unicharm explains its growing disinterest in the Chinese market which has become saturated lately. Promising markets such as India, Ghana, and Nigeria appear a better bet and thus the company is looking to quickly wrap its Chinese business.
“We want to capture [at least] one-third of market share in emerging countries as soon as possible,” said Takahisa Takahara, Unicharm CEO, at a press conference on Monday.
The report states that the company will spend much of the 50 billion yen (USD 473 million) investment budget to ramp up production capacities of baby diapers in India and Africa this year to strengthen its foothold in these regions. In India, Unicharm already commands a market share of around 40 percent and competes with Procter & Gamble (P&G) which has a similar market share.
By setting up the production capabilities in the country, Unicharm will be able to muscle its way through in the segment and potentially edge the American competitor. Domain experts have observed that Unicharm will be able to “transfer relevant know-how in product development and marketing it has fostered in Southeast Asia” to a developing market like India which is growing at a ludicrously high speed.
In 2012, Unicharm had an 11 percent share in the Chinese market for diapers which then plummetted to 7 percent in 2019. As a result, Unicharm booked an asset impairment loss of 11.9 billion yen on its factory in China in 2019 after it failed to recover its investments due to weak sales of midpriced diapers under its MamyPoko brand. With India, Unicharm will be attempting to revitalize its fortunes that have taken a heavy beating, even more so after the COVID-19 pandemic.
The fact that a Japanese company is coming straightaway to India by ditching China is a testament to the friendship of Modi and Abe. The seeds of deeper Indo-Japanese co-operation had been sown during the last seven years with PM Narendra Modi sharing excellent personal chemistry with former Japanese PM Shinzo Abe, who unfortunately had to retire prematurely due to health issues. However, notwithstanding Abe’s retirement, the relations between the two Quad members have continued to soar ever since, with Unicharm being another feather in the cap.