Centennial Japan Corporation Eyes Borderless Market and Value Creation to Grapple with Retail Gloom

Kao, a brand that has entered Hong Kong market for more than 50 years, has been popular among the locals. During the pandemic, its household cleaning products were swept clean from the shelves, driving sales surge. However, rising northbound consumption soon after return to normalcy has greatly undermined the recovery of the retail and consumer goods.

Mr. Miyashita Kazuya, President of Kao (Hong Kong), acknowledges the northbound trend brings novelty and much enjoyment to the locals, and believes the cross-border movement will continue to reshape consumption pattern, based on his keen understanding of the markets from various leadership roles in Kao Japan and Shanghai. Heeding to a “borderless” market strategy, he eyes Hong Kong as part of South China or even Greater China market and is committed to making life clean and beautiful for the communities.

New Products Surveyed to Fit for Market

Kao currently supplies more than 600 items across 20 different categories of products in Hong Kong, covering skin care and hair care, health care and household cleaning. The extensive portfolio of products grows to become one of the most exhaustive product ranges in the Asia Pacific markets, offering Hongkongers loads of choices that take care of their daily personal and household needs.

“Consumers used to focus on the efficacy of disinfectant in our products during COVID, which now shift to prioritise the cleaning and deodorizing power, obviously because Hong Kong living space tends to be small and humid. For that we launched laundry detergents with new formula that are suitable for drying clothes indoor. To meet the needs of markets with the most suitable products, we have market research team here to study the local needs, and the results would be sent to the R&D and production unit in the headquarters for development.”

In the first half of 2024, Kao launched more than 20 new products providing new functions and improved features for consumers. The company has just launched a new mosquito repellent product with Japan’s patented technology that can form a natural mosquito shield on human skin, to prevent mosquitoes from adhering to the skin.  Mosquito Block is a product based on a completely different concept from conventional products that directly apply extremely powerful insecticidal ingredients; it can be used safely and also suitable for kids with delicate skin.

Technologies must Support Companies Inside Out

Endowed with over 130 years of reputation, Kao has been pursuing innovation and staying in the frontline along the years. The company had joined the major retailers in Hong Kong to automate supply chain operations with the use of barcode since GS1 HK’s inception 35 years ago. It also adopted ezTRADE, a B2B e-commerce community platform, to digitalise trade processes with business partners every day, which now grows to processing about 1,800 purchasing orders and invoices monthly on average.

Mr. Miyashita insists that technology must be human-centric, “From barcode to ezTRADE, and to the latest AI technologies, they should be built around the purposes to either lessen the burden of employees in office, or add value to customers.”

“The barcode and platforms by GS1 HK have not only helped us reduce the document processing time, but also ensure on-shelf availability that offers customers abundant choices as they need it. We see GS1 HK as our valuable partner.”

A more recent example of technology adoption, Kao’s brand, Liese, launched an augmented reality (AR)-based simulation camera online, called “Virtual Try On”. It enables users to conveniently preview hair coloring options, attracting large number of consumers to try out.

Driving Sustainability with “Kirei” Vision

Besides innovation, Kao is committed to engaging consumers to pursue “Kirei Lifestyle”. Kirei is a Japanese term describing something that is clean, well-ordered and beautiful . For Kao, this concept of Kirei not only describes appearance, but also attitude – to seek to create beauty for oneself, and also for other people and for the nature.

Built on the success of the plastic bottle recycling programme with PNS, PARKnSHOP eCommerce platform last year, Kao reactivates the scheme this year. The 2 unique features of the scheme are: 1) Consumers can recycle their plastic bottles without leaving homes, because the deliveryman with online order can take those to recycle; 2) The bottles collected are upcycled and transformed into flower pot or other useful items, truly give new life to old plastic bottles.

Special programme aside, Mr. Miyashita emphasised that Kao rinse-off products are made free of microbeads and have been striving to substitute environmental unfriendly chemicals with sustainable materials.

“Kao launched refill packs in Japan in the 90s, since then, 70-80% of our household products are refill packs in-store. Hong Kong has started refill business development late but we will strive harder to promote refill usage in future. I expect that with the government's active promotion and the continuous improvement of consumers' environmental awareness, this will help reduce the use of plastic at the source.”

Mr. Miyashita advises local enterprises to broaden their market horizons, leverage their own strengths and stick to their core values. Kao deeply understands the needs of consumers, and through innovation and imagination, will continue to add value to consumers and create a more beautiful life.