Taipei Times: Why did Dr Jou Co Ltd (森田生醫) choose to go to Southeast Asia and Japan?
Jason Jou (周俊旭): It is important for us to extend our reach beyond Taiwan, which has become a saturated market for the company after its collaboration with 1,500 retail stores across the nation.
We have been putting a lot of effort into building the brand image in China and Hong Kong in the past few years, but we have not moved into other Asian markets until this year. We see rising facial-mask demand in markets such as Singapore, the Philippines, Malaysia and Indonesia.
Photo: Lauly Li, Taipei Times
Japan is an interesting market. Currently, only about 5 percent of consumers use facial masks, but the majority tend to apply facial creams and lotions.
However, consumer behavior is changing and we would like to enter the market. Dr Jou recently inked an agreement with Japan’s Rakuten Global Markets, which allows our facial masks to be sold in Japan from next month.
TT: Has the government’s “new southbound policy” been helpful to Dr Jou? If so, how?
Jou: In the past, it was hard to enter markets in Southeast Asia because we had to do everything on our own. However, under the government’s new policy, the Taiwan External Trade Development Council (TAITRA, 外貿協會) took 11 companies, including Dr Jou, to visit six Southeast Asian countries in July, arranging meetings for us to talk with local retailers and e-commerce operators.
We established subsidiaries in Singapore and the Philippines, and have partnered with local retail agencies there, in Malaysia and Indonesia following the visits.
TT: What are the challenges in Southeast Asian markets?
Jou: High tariffs are the main problem. As Taiwan does not have free-trade agreements with most nations in the region, we face tariffs as high as 30 percent in Thailand and Vietnam. The import tariffs for facial masks in Japan, Philippines, Malaysia and Indonesia are from 5 percent to 10 percent.
On the other hand, South Korean skincare companies, Dr Jou’s most significant global competitors, enjoy very low or even zero tariffs in those markets.
There are other trade obstacles such as the complicated and time-consuming processes for product license applications with local food and drug administrations.
What we can do is to increase the resources we allocate to research and development to improve Dr Jou’s competitiveness in global markets, in a bid to raise the added value of the products to offset the impact of tariffs.
Dr Jou has been collaborating with Da-Yeh University to develop facial masks using various materials. We have 11 patents concerning manufacturing processes and sheet materials. Another 15 patents are pending approval.
TT: Do you have production expansion plans? Would you consider setting up overseas plants to meet rising demand?
Jou: Our current production capacity is nearly 300 million facial masks with an estimated of NT$500 million (US$15.5 million) in revenues this year.
We are expanding our Changhua plant and building a new one at Yunlin County’s Douliu Township (斗六) in order to meet rising demand once we enter new overseas markets next year.
Building overseas plants is not an option, as we want our products to be made in Taiwan.
The expansion plans are expected to help increase production capacity by 50 percent to 450 million masks per year and might be completed by March next year. We foresee the revenue contributions from overseas markets exceeding 50 percent of total revenues for the first time next year.
TT: Does the company plan an initial public offering in Taiwan’s stock market?
Jou: No. Dr Jou is a family-run company and we intend to keep it that way. We want to ensure that the Jou family has complete control over the company’s management.
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