Ever since Japan emerged as a manufacturing giant it has concentrated a great deal of sales efforts on exports, but in the past decade or so, as the country's population has begun to contract, foreign markets have become even more important to sustain corporate growth. And nowhere is this dynamic felt more acutely than in the disposable diaper business. Japanese are having fewer babies. In 2011 the domestic market for disposable baby diapers was about ¥140 billion, but according to one major manufacturer, Unicharm, that market is shrinking at a rate of about 2 percent a year. However, in many other Asian countries, population is increasing along with average living standards.
Whether it foresaw these changes or not, Unicharm entered the foreign market early and started selling diapers in Taiwan in 1984. It now has a presence in 80 countries and territories, in the form of factories or sales channels. This summer the company plans to open a plant in Egypt, its first on the African continent. Unicharm's strategy is to adjust quality and price for specific local markets. For instance, it offers three price grades of diapers in Thailand and Malaysia, each price targeted at a specific income group; while in Indonesia it sells diapers individually rather than in packs since that is the way most retail sales work in the country.
Japanese disposable diapers are generally considered to be of high quality, and many manufacturers, such as Kao, which makes Merries, the best-selling diaper in Japan, simply target parents in foreign countries who can afford to pay a little more for diapers. Merries is quite popular among middle class parents in China, where they are 20 to 30 percent more expensive than "regular" disposable diapers. Meanwhile, Daio Paper, which is also considered high quality and sells 40 percent of its disposable diapers outside of Japan, seems to be particularly popular among the well-to-do in Shanghai.