Kao further invests in Shanghai market

By Michelle Yeomans contact

- Last updated on GMT

Kao further invests in Shanghai market

Related tags: China, Kao

Kao has invested in its' third facility in China with a ¥5bn plant in Shanghai which will focus on producing key ingredients for shampoo and other cosmetics.

The 83,000sqm plant will play a key role in product development to meet the growing needs of the Chinese market, particularly with the demand for eco-friendly products.

The facility brings Kao's production base for chemical products in China to a total of three plants with Kao Chemical Corporation Shanghai (located in Minhang District, Shanghai, completed in May 1997) and Huludao Jinxing Casting Materials (located in Huludao, Liaoning Province, completed in December 2012).

The initial investment amounts to approximately five billion yen. 

"Produced at the new plant are surfactants, which are key materials for daily-use products including shampoo and laundry detergent, and highly functional chemical products for industrial use, developed with Kao's proprietary technology, for rapidly growing industries in China."

Kao's plant will cater to these markets from this month, aiming to achieve profitable growth globally. The portfolio includes Bioré, Jergens, John Frieda and Molton Brown.

Could Kao be expanding its hair care portfolio?

The Japanese manufacturer's portfolio already includes global brands in hair care like John Frieda, premium salon brand Goldwell and 'Asience' in East Asia's markets.

In recent years, Tokyo-headquartered Kao has heavily invested in researching hair colouring technology and developed its first ever foam-type applicator and with Procter & Gamble reportedly publishing sale documents for its’ Wella hair care brand, the Japanese giant is among those tipped to be a potential buyer.

CosmeticsDesign-Asia.com spoke to Mitsue Konishi, senior innovation analyst at Datamonitor Consumer about where Kao stands as a potential buyer of Wella.

"Kao’s Asience is strong in East Asia, Japan, Taiwan, Hong Kong, Malaysia and Singapore, but its core products are shampoo and conditioner. Hair colourants and styling launches also have not been as global as other categories, like facial care," ​Konishi tells this publication.

The Datamonitor analyst says that if Kao was to acquire Wella, it would expand the brand's geographic and product range as it is strong in styling and retail colour, particularly in India, where Kao has yet to fully tap into. 

"It would be a positive move for Kao, however, the company is still suffering from subsidiary Kanebo’s skin-whitening issue and is expected to pay further compensation to victims (approx. 4000) and may be cautious about large acquisitions right now​," Konishi concludes.

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