The Swedish manufacturer of hygiene products Svenska Cellulosa Aktiebolaget (SCA) has opened a new innovation center in Shanghai to expand its penetration in China’s fast-growing market for products for an aging population.
It is SCA’s first innovation center outside Sweden. The initial investment will total around 20 million yuan ($3 million) and the total investment figure may rise depending on the company’s performance in China.
SCA said it will increase its focus on China’s aging population because it is an emerging market with great potential.
Statistics show that the country is on a fast track to aging. Census data released in April showed that citizens aged over 60 years account for 13.26 percent of the total population. Meanwhile, the aging population will increase by 3.2 percent each year. SCA estimates that the overall sales revenues for incontinence-care products in China is about 100 million euros ($143 million) annually, and that the annual growth rate will be at least 18 percent in the coming years.
The center will become SCA’s core base for research and development in the Asia-Pacific region. The company will start with a focus on incontinence care and gradually expand its scope to other categories, said Stephan Dyckerhoff, president of SCA Hygiene North Asia.
Dyckerhoff said the center will allow SCA to achieve so-called “reverse innovation”. SCA will not only bring European-developed products to China but will also introduce Chinese-developed products to the global market. At present, 95 percent of the products SCA manufactures in China are sold in the country.
SCA entered the Chinese market in 1999, operating a packaging business in the south of the country. It is one of the world’s largest manufacturers of incontinence-care products, with a global market share of 25 percent. However, the company’s market penetration in China has not been high in the past decade.
The company’s Tena brand was introduced in the Chinese market in 2009, but despite being one of SCA’s best sellers, its market share remains low. SCA has not revealed exact figures for sales or market share in China.
However, starting from a relatively low base, company executives estimate that the company will report triple-digit growth in coming years.
The company is undeterred by those who say that it may have entered the Chinese market a little late, given that a number of international and domestic companies have already established a foothold.
“The Chinese government is starting to pay more attention to the aging population, so we think it is the right time for us to become involved,” said Ulf Soderstrom, president of SCA Asia Pacific.