There are multiple factors that a foreign company must take into account before making a huge investment overseas: operational costs, market demographics, logistics and manpower, to name a few.

For Kimberly-Clark Corp, the world’s leading manufacturer of baby care and paper products, it was Korea’s futuristic market and customer trends that led it to set up the Global Innovation Center Asia in Yongin, Gyeonggi Province, in 2006. The company has some 60 regular foreign and local employees.

Best known for Huggies disposable diapers and Kleenex facial tissues, the American company is also a major producer of senior care products, including disposable undergarments “Depends” and “Poise.”

“In Korea, the market itself is very interesting; it is the laboratory of the future,” said Hari Nair, managing director of the research and development center, in a video interview with The Korea Herald last week. It was arranged by Invest KOREA of the state-run Korea Trade-Investment Promotion Agency.

Nair worked with Harvard Business School professor Clayton Christensen at a Boston-based consulting firm for 6 years, before joining Kimberly-Clark as managing director of the Kimberly-Clark Global Innovation Center. 

To the American managing director from Wisconsin, Korea is a test bed particularly for senior products, which will see ever-growing demand to keep up seniors’ unique needs. “They have requirements that are different from what they had in their younger days,” he added.

Senior care products are one of the fastest-growing segments in developed markets as low birthrates and high life expectancies lead to a rapidly aging population.

“It may not seem obvious to people unless they come and live in the market, but there are things that you see in Korea today that will be found in other parts of the world like in 2020, 2025,” he said.

As an indicator of Korea’s promising senior market, Nair pointed out that Korean elderly customers are steadfast about maintaining an active lifestyle. “They want to remain active, and engage in active physical activities, such as mountain climbing, whereas the lifestyle of seniors in other Asian countries typically becomes less active and more based in the home.”

Nair also showed appreciation for local pharmaceutical and health care manufacturer Yuhan Corp., which it has been in a partnership with for 42 years.

In 1970, Kimberly Clark launched Yuhan-Kimberly in Korea as a joint venture. The research and development facilities of Kimberly-Clark and Yuhan Kimberly were set up next to each other, and the two entities have conveyed multiple joint projects ever since.

Yuhan-Kimberly created a senior-targeted brand called “Golden Friends,” still in its pilot stage, which is developed and sold exclusively in Korea. The brand started with disposable undergarments but now has a larger portfolio of products, including comfort shoes and walking aids.

When asked about earnings from Golden Friends, Nair said it was too early to expect this unique brand to make significant mark on the company’s balance sheets. “Innovation comes with patience,” he said.

The managing director also mentioned the exponential spread of Korea’s online shopping culture.

“We sell products that are basically in packages that people go to the stores and buy. But in Korea, e-commerce is a very dominant habit, and they have our products bought disproportionately online, versus going to the store. That tells us what consumers really need, in terms of packing choices and much more.”

Currently Kimberly-Clark’s product packages are designed to look optimal at the store. But consumers here buy products with the click of a mouse, he said, so company is focusing on packaging designs that better suit the e-commerce.

“The advantage of having this innovation center here is that Korea is already in that world. If we had to do that in another market, then you’d have to wait for some more time, because it’s not quite there yet for e-commerce. That is only one of the examples we have,” he said.

Back in 2006, Cheryl Perkins, former chief innovation officer of Kimberly-Clark, had told press that the company considered building the Asian innovation center in India, but eventually chose Korea, highly recognizing the country’s futuristic market trends.

Nair repeatedly emphasized that interactive relationships with customers have been a crucial driver for the company.

“Customers drive our work. It is not that we invent a molecule and say, ‘hey, here is your molecule.’”

Yuhan-Kimberly was ranked No. 4 on a list of the “Most Admired Companies in Korea” by local business research firm Korea Management Association Consulting for the past 10 consecutive years, following Samsung Electronics, POSCO and Hyundai Motors.

By Chung Joo-won (joowonc@herladcorp.com)