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Embracing innovation and social responsibility
DISPOSABLE diapers and feminine care products are ubiquitous. Yet innovation underlies each seemingly ordinary product.
At Kimberly-Clark, innovation is a key part of its strategy to maintain its edge in the numerous markets it is in.
Chairman and chief executive Thomas Falk says the innovation challenge boils down to understanding what the consumer wants. "We do find a high level of consumer loyalty. We do consumer visits all over the world. When mum finds a solution that works for her family, she usually sticks with it. If she has a diaper that works to keep baby dry and his skin healthy, she'll stick with that.
"In feminine care, women find the solution that works for them. They tend to stay with that through most of their lives. That's a great opportunity. We tend to focus on the point of market entry. We want to do a good job even before baby is born."
For instance, the group has launched Scott Calorie Lite tissue, an oil-absorbent tissue that claims to reduce calorie intake by 25 per cent. This is available in Korea, Taiwan and Asean. It has also launched the first flushable moist wipes from Kleenex.
Some innovations are unique to Asia, such as herbal additives in feminine care products. In Korea, for instance, it was found that concern over babies' skin health was uppermost, so that was the focus for innovation in diaper products. "We're able to come up with meaningful innovation to make products work better to deliver better skin health, lower leakage rates, better softness and fit. Even things like diaper pants, there are new ideas that make babies look better, that fit better, and look more like real underwear. All that makes it easier for mum."
Kimberly-Clark generated US$3.5 billion in the Asia-Pacific in 2014. Its historical growth rate has been in the "mid to high single digit". Says Mr Falk: "By 2020, we think (revenue) has the potential to nearly double. There are a number of forces here - GDP per capita is still rising even though GDP growth rates have slowed a little. More consumers are entering middle class and they have the money to spend on products like ours. We're also going into new geographies."
In China, for example, the group is currently in 100 cities. This will rise to 115 by the end of the year.
"I'm still pretty bullish on China overall. China may slow a little, but it will still be growing faster than most of the rest of the world's economies."
Environmental sustainability is a key priority. Mr Falk says the group began to practise reforestation 140 years ago when it was a paper and forest products company. "When you cut down one tree, you have to plant two more to make sure you have an evergreen forest." Its operation in Korea, for instance, has run tree planting programmes - it has planted 50 million trees over 30 years.
Amid concern over the persistent and dense haze shrouding the region as forest areas in Indonesia are cleared by burning, Kimberly-Clark says it does not procure wood pulp from Indonesia. All its wood pulp comes from certified sustainable sources - that is, it adheres to one of five global certification standards. These include the Forest Stewardship Council and the Programme for the Endorsement of Forest Certification.
It also promotes responsible forestry through partnerships. Kleenex Cottonelle, for example, is the only partner of the WWF Australia's Love your Forests programme which educates consumers on responsible forestry. This year, the programme was extended to Borneo, in an effort called Keep the Heart of Borneo Beating.
The group has invested US$3 million in the past three years to support sustainable forestry practices.
Meanwhile, the group has a number of social and environmental efforts aimed at improving lives in a number of emerging markets. It co-founded the Toilet Board Coalition, a group which helps to identify entrepreneurs to support efforts to improve sanitation. It also runs its own programme, Toilets Change Lives.
"There are a number of people in the emerging markets who don't have access to sanitary toilet facilities. We're helping to fund entrepreneurs to come up with creative solutions . . . That often has a huge impact on society. It's not just hygiene; it reduces disease, improves access to fresh water. Even for young girls, it can improve their education. If a girl goes to a school that doesn't have satisfactory toilet facilities, when she reaches puberty, she often stops going to school. Making simple changes to provide basic essentials can make a big difference in a community."
The group has published annual sustainability reports in the past 12 years, which set out its progress on sustainability goals. "It really energises and engages our employees. Many consumers want to do business with a company that's doing the right thing."