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Kimberly-Clark has its aims set on diaper sales in China

China's embrace of a two-child policy in 2015 has apparently started to bear fruit, leading consumer goods maker Kimberly-Clark ready to focus on boosting sales of diapers, or nappies as they are known outside of the U.S., using its Huggies brand as the flagship.

China abandoned a one-child policy in October of 2015 as a rapidly aging population threatens to skew the workforce and lead to a surge in retirees who will need care. The move was largely expected and some analysts said possibly too late to reverse the demographic trend rapidly, but in a billion-plus population, the numbers of babies that can be made is still staggering, a company executive said.

"We've got countries like China where you've got 16 million babies on average … Because of the loosening of the one-child policy, the number of babies went up to about 17.8 million. That's a pretty big jump of about 10 percent," Achal Agarwal, president of Kimberly-Clark Asia Pacific, tells CNBC's "Managing Asia."

"So as long as there are babies … it's going to be great. And this part of the world, certainly. It's where the babies are being born. So we go where babies are," he says.

A newborn baby is fed milk in a hospital in Huaibei, Anhui province, China.
Jie Zhao | Corbis | Getty Images
A newborn baby is fed milk in a hospital in Huaibei, Anhui province, China.

The company, which also makes Kleenex and sanitary napkins, said that despite increased competition in the consumer goods sector and an uncertain operating environment, it remains upbeat on Asia. "This region is obviously a growth region," Agarwal says.

China is a key market, with Agarwal identifying the country as the biggest growth market for the company. The country is also a manufacturing location for Kimberly-Clark, which also produces in other locations across the region such as Indonesia, Malaysia, Singapore and South Korea.

"China used to be very, very cheap at one point (but it) has got a little more expensive … (It) might surprise people but the products (made) in China are really premium to an extent. It has gone to a certain level here I don't think any other country in the world, other than Korea, is that premium," Agarwal says.

Another market that the company has its eye on is India. While sales in India cannot match up to China, for now, Agarwal is certain that this will soon change. "In the future, I think, maybe at the end of 2020, I think India will take off. India is relatively small right now but we will take off," he says.

While managing costs and prices remain core components of the consumer goods' company's strategy, catering to the specific needs of consumers in the diverse region through product innovation is just as important.

"I think the reality is that many people will sometimes talk of an Asian consumer. There's no such animal," Agarwal says, "Even within a country, there are different consumers ... What works in Indonesia may not work in Thailand and Malaysia so we actually tailor our products for the customers in that specific market."

As a result, the company doesn't use a one-size-fits-all method in its approach to catering to consumer preferences in the region.

"Some people want thick diapers, some want thin diapers. Some consumers are looking for comfort, (others) are looking for health benefits," Agarwal says.

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