Interview with Mr Ambrose Chan

With four decades of experience, five manufacturing sites and more than 1,500 employees, DSG International (DSGIL) is firmly established in Asia. A holding company for baby and adult diapers, DSGIL operates through its two major business entities in the region. Founded by the Chairman, Brandon Wang in 1973, the DSG Group serves the East Asia region, covering mainly Hong Kong and the mainland. DSGIL supports the Southeast Asia market through its publicly listed subsidiary, DSG International (Thailand) or DSGT. Owing to market fundamentals such as growing birth rate, aging population and increasing consumer affluence, DSGT further strengthens its presence throughout Asia while recognizing market segmentation. DSGT promotes brand consumption for existing products and creates more with value-added specifications. DSGT maintains brand equity for its disposable baby products, with trusted brands in Asia such as BabyLove in Thailand, PetPet in Malaysia and Fitti in Indonesia. For adult incontinence products, its Certainty brand has been a market leader in Thailand for many years. Achieving rapid growth since its inception in 1994, DSGT has doubled its revenue in three years, from Baht 3.4 billion (HK$850 million) in 2009 to Baht 6.8 billion in 2012.

Nowadays, the parents are willing to pay more for their babies for convenient, fashionable and hygienic disposable diapers. In Thailand, over 70% of disposable diapers used are in the form of pull-up pant diapers, a more premium product, replacing the tape-fastening disposable diapers. This trend is almost similar to all Asian markets, though difference in the pace of substitution. The latest trend of disposable diaper market is moving away from pure functionality to babywear fashion with cosmetic and skincare appeal.

In addition to the uncertainties associated with global economic cycles in commodity prices and FX fluctuations, small producers of disposable diapers will continue to encounter intense competition from international branded disposable baby diapers which build market share through continuous innovations to satisfy the more sophisticated customer needs. From the middle to long term, the SEA diaper market might be dominated by a few regional producers with innovation pipeline. The smaller players, whose past success solely rely on satisfying the basic needs of the consumers, might be marginalized over time due to lack of product differentiation.

The total market size of disposable adult diapers in South East Asia is estimated to be USD 150-200 million, growing rapidly with the aging population, economic affluence and improvement of social healthcare systems. Certainty brand is the overall adult diaper market leader in Thailand and is a key player in the South East Asian markets.

DSGT sells the disposable adult diapers through multiple channels, including modern trade, retail stalls and hospitals. Over half of DSGT’s sales come from Thailand, and about 40 per cent come from Malaysia, Singapore, Indonesia and export markets. The adult diaper market is expected to grow rapidly with the aging population, economic affluence and improvement of social healthcare systems. DSG is well positioned in this Sunrise Industry in both the baby and adult diaper category development in increasing affluent Asia.

DSGT applied GMP regulations in its manufacturing process, which strictly comply with the highest standard of quality assurance. Also, our manufacturing process is in the closed system, starting from raw materials through packing system, parallel with quality online inspection program to ensure our high quality & hygienic disposable adult diapers. All products are made under the strictest ISO 9001:2008 accreditation.

Disposable diapers business is highly complex from supply chain, manufacturing and commercial management. Historically, only few international players dominate the disposable diaper categories. To remain sustainable in the market, the emerging manufacturers should produce high quality products sold at reasonable pricing. Continuous product development in line with consumer trend, innovative marketing and efficient supply chain management are critical success factors.

Indonesia, India and China present enormous baby and adult disposable diaper business opportunities in the coming decades. Favorable demographics for newborns and ageing population, rapidly increasing economic affluence and improvement of the healthcare systems are key growth drivers.

The media play important roles in educating the parents and elderly care-takers about the importance of baby and adult hygienic through usage of disposable diapers. Different product systems such as tape or pant could cater for different consumer needs and occasions. For branded manufacturers, media could promote awareness of product news that could better serve the consumer needs.

Recognizing the need for responsible green practices, the Company has pledged to bolster its efforts to procure sustainably produced materials for the manufacturing process, as well as to incorporate the best practices in relevant environmental aspects such as in new building and site construction, training and health and safety issues.