Japanese consumer goods giant Kao is doubling down on China as a hub for innovation and product development, betting that the country's vast consumer market, increasingly sophisticated shoppers and dynamic innovation ecosystem will unlock fresh growth opportunities despite intensifying competition, a top executive said.
Masaru Takeyasu, chairperson of the board and president of Kao (China) Holding Co Ltd, said the company remains firmly committed to the Chinese market, with plans to deepen local research and development, and accelerate the rollout of products tailored to Chinese consumers.
"Over the long term, we remain very optimistic about the prospects of China's consumer goods market," Takeyasu said. "China not only has a vast consumer market, but also a vibrant innovation ecosystem."
His remarks come after the ninth China International Import Expo wrapped up in Shanghai this week.
For Kao, which has operated in China for more than three decades, the answer is to move beyond simply selling imported products, but rather also make China an increasingly important source of innovation.
"We will continue to uphold our 'In China, for China' strategy, deepen our understanding of Chinese consumers and translate these insights into product and service innovations more quickly," Takeyasu said.
He also highlighted China's continued push for high-standard opening-up, describing it as a long-term, stable and predictable policy direction rather than a short-term initiative.
The company's strategy is already taking shape.
Kao's skincare brand Freeplus has relocated its global headquarters to Shanghai, putting Chinese teams closer to decisions on product planning, R&D, manufacturing and marketing.
The shift marks a departure from the traditional model under which foreign beauty companies develop products overseas before introducing them to Chinese shoppers.
"China is not only an important market, but also an important arena for innovation and value creation. By rooting our research, product planning and marketing teams in China, we can better understand changing consumer needs and turn those insights into product and service innovations more rapidly," the chairperson said.
He said innovations inspired by Chinese consumers could eventually find applications in other markets, potentially allowing ideas developed in China to contribute to Kao's broader global business.
The localization push comes as China's skincare market grows increasingly fragmented, with demand shifting from one-size-fits-all products toward more targeted solutions.
Takeyasu pointed to the rapid expansion of sensitive-skin care, where consumer needs are extending beyond traditional dry and sensitive skin to include oily and sensitive skin.
Chinese consumers are also becoming more rational and demanding, placing greater emphasis on scientifically supported efficacy, product safety and user experience, he said.
"We are not seeking to compete in every market segment. Instead, we want to leverage our longstanding technological strengths and research capabilities to create value in areas where we have genuine expertise."
That strategy was on display at the CIIE, where Kao returned for a ninth consecutive year with products spanning skincare, personal care and household goods.
Its Freeplus brand showcased amino acid-based cleansing products, while Curel introduced skincare products designed to address the needs of consumers with oily, sensitive and redness-prone skin, alongside a new baby-care product.
Other brands, including Biore, Laurier, Liese and MegRhythm, presented innovations ranging from facial cleansers and sunscreens to feminine hygiene products, haircare and steam-based body-care products.
The exhibits reflected a broader transformation in Kao's China operations, from introducing products developed abroad to creating products based on local consumer insights.
For Takeyasu, the import expo has also evolved from a showcase for international products into a platform connecting foreign firms with Chinese consumers, business partners and supply chains.
"Today, the expo is much more than a stage for showcasing innovation. It has become an important opportunity for us to deepen our understanding of the Chinese market and turn innovation into practical applications," he said.
Sustainability is another pillar of Kao's long-term strategy.
The company plans to broaden the use of recycled and recyclable materials, reduce packaging waste, and further integrate environmental considerations into product development and supply chains.
Takeyasu said sustainability should not be treated as an initiative separate from business operations, but as an integral part of how companies create value for consumers, society and the environment.
Looking ahead, he said China's evolving consumer landscape would continue to present challenges as well as opportunities for foreign enterprises willing to adapt.
"Chinese consumer needs are becoming increasingly diverse and specialized, with rising expectations for quality, safety, scientific evidence and user experience. These changes bring challenges, but they also create enormous room for innovation."
chengyu@chinadaily.com.cn
