NEW HORIZONS FOR BEIERSDORF

       Nivea maker sees huge potential in Asia, where men in particular are looking for products beyond mere soap and water. By Umesh Pandey
       "Although the Asian market is very competitive these days, we never would have thought that it would rise to this level in such a short time span PETER KLEINSCHMIDT Executive board member, Beiersdorf

       Asia's rising economic strength is giving rise to a market for products that were relatively uncommon in the region in the past and Beiersdorf, one of the world's largest skin and beautycare marketers, says it is ready to tap this rising demand.
       "Products catering to men have now become a big market in many countries in Asia, be it Thailand, Vietnam or India,"said Peter Kleinschmidt, an executive board member of Beiersdorf, the maker of Nivea products, in a recent interview.
       Earlier, he says, men were used to using bar soap and that was all that mattered in their personal-care routine.
       "Nivea was the first to tap this segment in China and today we have a market share of about 25% and have gradually changed men's habits away from purely bar soap and water," said Mr Kleinschmidt, who was based in Bangkok from 1991-96 in charge of Thailand operations.
       Despite the widespread feeling that the men's segment is well served, he says this is just the beginning and markets such as Vietnam and India are far behind in terms of the variety available.
       "Beiersdorf sees this as the initial stage of development and it will gradually introduce various products in the market,be it cleansing, moisturising or others in the near future, although all this would be done step-by-step," he said.
       Asia is growing by more than 20% for Beiersdorf against a mere 1% growth seen in the rest of the world such as the more mature markets of Europe and United States.
       "To us Asia is the single most important market and that is why we are so active in this region," he said.
       With operations in India, Thailand,Indonesia, China and other countries,Mr Kleinschmidt says the company is looking to consolidate some operations to lower costs.
       The Thai plant, for example, doubled its capacity last month as Beiersdorf wants to tap the strengths of Thailand's skilled and reliable workforce and freetrade agreements with Asean and Australia.
       "We have used part of land available with us for expansion and there is more room to grow," he said adding that the added capacity would mean nearly 80%of the products from the Thai operations would be exported from about 60%earlier.
       The 500-million-baht expansion would also mean that key export markets such as Vietnam, Malaysia, the Philippines, India and Australia, would see more products, while Beiersdorf looks to use the Thai operations for other markets as well.
       Apart from this, the company also has a plant in Indonesia catering to the domestic market.
       "There are two countries of choice for us for using as an export base and they are China and Thailand," he said adding that despite the slightly higher costs, the location of Thailand and its free trade agreements have helped Beiersdorf make the decision easier.
       In India, where the company has had operations through its joint-venture partner for nearly six decades, Beiersdorf just set up a new plant and is gradually looking to expand it.
       "The best thing we have is our brand name and the awareness among the people of the quality products we offer,"he says, explaining how the brand helped the company penetrate tough markets such as Vietnam and India where local competition was strong.
       Asia, he says, has huge demand for whitening and hydration/moisturising products and with the young population the market is far more vibrant. In the US and Europe, in contrast, anti-aging products are more popular.
       But anti-aging is one line that is gradually picking up among older people in the region.
       "Although the Asian market is very competitive these days, we never would have thought that it would rise to this level in such a short time span," Mr Kleinschmidt said, recalling his days in Bangkok more than a decade ago.
       Beiersdorf's step-by-step approach, as in Vietnam where the company has been gradually introducing one product after another, is a key.He says that bombarding a market with many products is not the Beiersdorf style, as it could confuse consumers.
       "Take Vietnam as an example. We are present in three out of the five major categories there, which is deodorant, body lotion and men's care,"he said.
       In China, where local brands, traditional remedies and herbal products dominate the cosmetic segment,Beiersdorf has managed to gain acceptance by having a clear-cut strategy.
       Asian and European skin types are slightly different and a research and development team for Asia is based in Hamburg, Germany.
       The company is also looking to enter other products in Asia, which is why Beiersdorf acquired Slek, a dominant shampoo maker in China recently.
       "What we want to do is synchronise the R&D of Slek and Beiersdorf in order to create a hair-care product that would meet the needs of the region as hair is one thing that is very different from one region to the other," Mr Kleinschmidt says.
       Beiersdorf, which already has shampoo in Europe, has not introduced it in Asia yet.
       While Nivea is the most famous brand, Beiersdorf's other brands such as Eucerin (a dermatological product)continue to remain strong, although it is not for the mass market.
       Another product that Beiersdorf is looking to increase is its very highend LaPrairie line, which continues to see strong demand in Asia despite the dramatic slowdown in traditional markets.
       "There are various market in which this product is doing well such as China, Thailand, South Korea, and Japan and there are potential of this product being able to penetrate other markets where we are not present in this segment," he said.