Core Viewpoint - The essence of business is to serve "living individuals" rather than just "consumers," reflecting Kao's 138-year philosophy of understanding people in their specific life contexts [2][3]. Group 1: Kao's Business Philosophy - Kao emphasizes the importance of understanding the desires and needs of individuals in their daily lives, focusing on how products integrate into and enhance their routines [3]. - The concept of "living individuals" shifts the focus from mere product usage to the overall experience and emotional connection with the brand [8]. Group 2: Innovation and Local Adaptation - At the China International Import Expo, Kao launched the VIC (Value Innovation Center) showcasing its commitment to innovation and quality, highlighting the integration of global innovation with local needs [5][6]. - The VIC area presents Kao's historical achievements and its consumer co-creation approach, emphasizing the transformation of user pain points into innovative solutions [6][10]. Group 3: Financial Performance - In the first three quarters of the year, Kao's cosmetics division achieved sales of 181.2 billion yen (approximately 84.1 billion RMB), with a year-on-year growth of 4.9%, and an operating profit of 30 billion yen (approximately 1.4 billion RMB) [10]. - The third quarter saw a significant sales increase of 10.6%, indicating a strong recovery trend in the cosmetics business [10]. Group 4: Localization Strategy - The establishment of the global headquarters for Freeplus in Shanghai marks a strategic shift towards localization, allowing for "China-defined" global R&D [12][20]. - Kao's localized approach has led to faster product development cycles, with new products being launched in China at a pace more than double that of Japan [14][20]. Group 5: ESG Commitment - Kao has integrated sustainability into its product development and supply chain management, achieving significant milestones in environmental responsibility [22][24]. - The company has been recognized for its green supply chain practices, ranking first in the IPE green supply chain for 11 consecutive years [24]. Group 6: Future Outlook - Kao aims to deepen collaboration with local academic institutions and industry partners to create an innovative ecosystem addressing environmental and health challenges [10][26]. - The company's long-term vision includes expanding its localized products to the Asia-Pacific market, reinforcing the importance of "Made in China" in the global value chain [20][26].

Core Insights - Kao Group showcased a more ambitious and localized strategy at the 8th China International Import Expo, emphasizing a blend of global innovation and local implementation [1][12] - The company is focusing on a "long-termism" approach, adapting its research and development to meet the unique demands of Chinese consumers [4][9] Product Development and Localization - Kao has significantly localized its product development, with most new products being produced domestically to better address the needs of Chinese consumers [5][6] - The company has transformed its product development cycle from a traditional model to a more agile "local research and local sales" approach, allowing for quicker market responses [9][12] - The introduction of the new Amino Acid Cleansing Oil and the Curel series exemplifies Kao's strategy of rapid product adaptation based on local consumer insights [6][7] Research and Innovation Strategy - Kao's research strategy is characterized by a collaborative approach across disciplines, enhancing innovation efficiency while ensuring safety [8][12] - The establishment of a Central Research Institute allows for focused investment in cutting-edge fields such as skin science and analytical chemistry, avoiding redundant research efforts [8] - Kao's commitment to safety is paramount, with rigorous testing protocols in place for new products, ensuring they meet diverse consumer needs [12] Market Positioning and Future Plans - Kao's localization strategy is evolving from "China supplying China" to "China supplying globally," with plans to export locally developed products to the Asia-Pacific region and even Japan [12] - The company aims to shift from merely manufacturing in China to creating value through innovation that originates in China, addressing the changing landscape for foreign enterprises in the market [12]

Core Insights - The article highlights the trend of product segmentation among exhibitors at the China International Import Expo, focusing on tailored cleaning solutions and consumer preferences in the Chinese market [2][3][4]. Group 1: Product Segmentation - The Portuguese cleaning brand Mootaa has introduced a green natural series of cleaning products tailored for specific household scenarios, expanding from 4 to 7 SKUs for the Chinese market [2]. - Mootaa's new products include specialized cleaners for kitchens, bathrooms, and laundry, with enhanced stain removal capabilities to meet local demands [2][3]. - Philips has launched new shavers targeting different consumer demographics, including high-net-worth individuals and young consumers, with products priced from around 100 to 3000 RMB [4]. Group 2: Market Adaptation - Mootaa has established a comprehensive online and offline sales network in China, partnering with major e-commerce platforms and supermarkets, achieving a retail scale of 400 million RMB with a compound annual growth rate of over 30% [3]. - Kao's brand freeplus has introduced a cleansing oil to complement its existing product line, reflecting a strategy to cater to local consumer needs and preferences [4][5]. - Kao's health care brand, Meishuli, has adapted its products for the Chinese market, including steam eye masks and foot-soaking products, which have shown promising sales performance [5].

Group 1 - The core viewpoint of the articles highlights Kao Group's participation in the 8th China International Import Expo, showcasing its commitment to innovation and local adaptation in the Chinese market [1] - Kao Group has established a VIC technology and quality exhibition area for the first time, demonstrating its quality system through tangible products and data, addressing user pain points with innovative solutions [1] - The exhibition features localized products such as upgraded cleansing oils and solutions targeting specific issues faced by Chinese consumers, indicating a strong focus on customization [1] Group 2 - Kao Group is extending its chemical technology into the agricultural sector, introducing products like flower preservation solutions that can extend the lifespan of cut flowers up to one month [2] - The company has developed soil conditioners that utilize surfactant technology to improve soil structure and address waterlogging issues in farmland [2] - The introduction of a specialized aerial application agent for drones significantly enhances the control of wheat scab disease, achieving a control rate of over 97% and increasing crop yield by more than 15% [2]

Core Viewpoint - The Chinese beauty market is increasingly focused on efficacy, with "global first" and "exclusive formulas" becoming key marketing strategies. However, some companies are choosing to invest in fundamental ingredients and systematic research to build competitive barriers, thereby injecting vitality into the industry through solid foundational research and technology transformation [3][6][34]. Group 1: Market Trends and Consumer Demand - The facial cleansing segment is recognized as a high-growth area in the mature beauty market, with total transaction value reaching 21.6 billion yuan from January to August this year, reflecting a 13% year-on-year growth and a 21% increase in transaction volume [6]. - Consumer demand is evolving from basic cleansing functions to multi-dimensional needs such as "sensitive skin-friendly, oil control, acne treatment, and environmental sustainability" [6][34]. Group 2: Kao's Research and Development - Kao Group has introduced three major amino acid cleansing technologies, emphasizing the concept of "skin-source amino acids" inspired by natural moisturizing factors (NMF) in the skin [6][12]. - The first technology, the coconut fatty acid glycine liquid crystal control technology, allows for stable, high-efficiency cleansing formulations without sacrificing skin gentleness and moisturizing properties [8][11]. - The second technology incorporates volcanic mud into the amino acid liquid crystal system, achieving effective oil absorption while maintaining low irritation [10][11]. - The third technology, amino acid cleansing oil micro-emulsification technology (AGCE), enables high-efficiency cleansing without friction, enhancing biodegradability and environmental friendliness [10][11]. Group 3: Kao's Market Position and Strategy - Kao's brand, Fuli Fangsi, has established itself as a leader in the facial cleansing category, ranking No. 1 in sales on major e-commerce platforms in 2024 [26]. - The company has localized its operations in China, enhancing its ability to respond to market changes and consumer needs, which has led to a 30% increase in development speed [26][28]. - Kao's focus on amino acids as a core ingredient reflects its commitment to deep research and the development of a comprehensive "amino acid skincare ecosystem" [22][30]. Group 4: Future Directions and Innovations - Kao plans to continue exploring the potential of amino acids, aiming to develop a family of products centered around "skin-source amino acids" [22][30]. - The company emphasizes the importance of understanding consumer needs and adapting its product offerings accordingly, as seen in the successful launch of products tailored to the preferences of younger consumers [30][32]. - Kao's approach to innovation is rooted in a commitment to scientific research and practical application, ensuring that its products deliver real benefits to consumers [33][34].