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Japan’s Kao embarks upon Thai, Indonesian expansion

Posted by pakin On August - 7 - 2014

Factory upgrades to meet AEC demand

Kao Corporation, a Tokyo-based consumer products conglomerate, has announced a 40-billion-yen (12.6 billion baht) factory expansion in Thailand and Indonesia from 2015-18.

The move is aimed at meeting anticipated growth in demand after the launch of the Asean Economic Community (AEC) late next year.

Kozo Saito, president for consumer products in Asia, the Americas, Europe, the Middle East and Africa, said the amount would be divided equally between the two countries to boost production capacity of Kao fabric and home care products, sanitary napkins and baby goods.

The additional Thai production capacity will serve domestic consumption and exports to neighbouring countries, particularly Laos, Myanmar and Cambodia.

Kao’s factory in Chon Buri’s Amata Nakorn Industrial Estate has been tapped for the expansion, with at least some of the extra output earmarked for the Middle East and South Asian markets.

Kao now has three Asean production bases for its consumer products — Thailand, Indonesia and Vietnam.

Product categories in the Thai factory that are marked for export to other Asean members include hair and skin care, household products, sanitary napkins and baby diapers.

Indonesia produces skincare products, sanitary napkins and detergents for domestic consumption, while Vietnam’s skincare production is consumed locally and exported to Japan. Baby products will also be produced in Vietnam soon.

“Kao continues to invest in Thailand whether the economy is good or bad, because it is an important production base in Asean and a management centre for this region,” Mr Saito said.

With the AEC fast approaching, Kao will accelerate its business expansion in other countries near Thailand, Indonesia and Vietnam to ensure continued double-digit growth in Asean.

Apart from this major expansion, the Japanese consumer giant is also making its three-year business plan for Asean, with the aim of raising regional sales to 10% of the global total by 2018.

Hiroyuki Kumazawa, the new president of Kao Industrial (Thailand) and Kao Commercial (Thailand), said sales had been stagnant here since last October due to the political turmoil, as people tended to spend less during such times.

However, the market has become more active since the May 22 coup, and consumers are starting to shop more, a good sign for the consumer products business, he said.

Sales of Kao products made in Thailand totalled 13 billion baht last year for a net profit of 902 million.

Of these sales, 70% were consumer products sold domestically and 30% domestic chemical sales and exports to Asean members, Australia and India.

The company expects sales growth of 6-7% for Thai-made products this year.

“There are several good indicators in the market so far. And we see a bright potential to grow our business, particularly upcountry due to better living standards,” Mr Kumazawa said.

Thailand is the core country in Asean, so the company will bring more resources of Kao Group to Thailand, especially Japanese technology and investment, he added.

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