P&G focus on Southeast Asia in hopes to boost performance

By Andrew MCDOUGALL contact

- Last updated on GMT

P&G focus on Southeast Asia in hopes to boost performance

Related tags: Asia pacific region, Southeast asia

Consumer goods giant Procter & Gamble has been targeting the Southeast Asia market in a bid to profit from the region’s growth, and balance stagnant sales in the West.

At the start of the year, the Old Spice brand owner signed a five-year partnership agreement with Singapore's Agency for Science, Technology and Research (A*STAR) which provides the potential for up to S$60 million in joint funding.

In a statement, A*STAR said the collaboration will pair P&G with more than 25 research institutes, hospitals and universities in Singapore, and is one of P&G's largest public-sector research collaborations.

The agreement covers a broader range of activities, compared to a similar agreement signed in 2010 between the two parties.

R&D

This comes off the back of P&G opening its largest R&D facility in Asia in the Biopolis district in Singapore as the company looks to expand its regional presence beyond China and India.

The plan is to develop technologies and ingredients for hair care products and cosmetics tailored to Asian consumers; and joins French cosmetics firm L'Oreal in the Singapore research hub, who opened a similar facility last year to conduct skin-related research.

P&G allocated 250 million Singapore dollars ($200 million) to build and equip the complex for formulating and evaluating ingredients and is the company's fourth R&D base in Asia, after sites in Kobe, Beijing and Bangalore.

The Japanese and Indian bases focus on consumer research and surveys, so the site in Singapore will take a different approach and employ approximately 500 R&D specialists.

Asia focus

The move to Asia has been a well-thought-out one and performance is reflecting this, as stale sales in developed markets were boosted by very strong growth in revenues from P&G's emerging markets​, which are headed up by the Asia Pacific region.

Sales for the emerging markets had risen by 8% during the last quarter, and much of this growth is continuing to be delivered in the Asia Pacific region, where between 2011 and 2012 total revenues for the region increased the total contribution to global sales from 16-18%.

For the current 2013 financial year, if growth continues to accelerate accordingly in the Asia Pacific region, total sales are likely to eclipse that for the Western European market for the first time.

Heading up

Back in 2012 the beauty division announced it would relocate from the global headquarters in Cincinnati to Singapore​, emphasizing the increasing importance global cosmetic and personal care players are placing on emerging markets.

With sales growth largely stagnating in the developed North American and European markets, higher growth in Latin America and the Asia Pacific region are proving a big draw.

This was announced alongside the appointment of Asian-born executive, Hatunson Kiriyama as head of the Asia Pacific operations.

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