The year of 2020 marked the 35th anniversary of Vinda since its founding. That’s 35 years of devoting ourselves to the field, developing products with the spirit of innovation and craftmanship, and building Vinda brand based on integrity has ultimately made us one of the most respected enterprises in the industry. This year, we have had to deal with an unprecedented global pandemic, which has caused economies around the world to grind to a halt or even contract. On top of this, political relations between many countries remain tense, and both of these factors have made the business environment very challenging. However, the situation has also highlighted the importance of Vinda’s constant pursuit of innovation. Throughout the years, Vinda has successfully expanded its business from household paper business to personal care business by maintaining high quality standards, optimal positioning in the high-end market as well as continuous product enhancements. Geographical coverage of our business has also widened further, extending from mainland China to Southeast Asia and North Asia markets. Moreover, the Group has capitalised on business opportunities arising from e-commerce channels in today’s new retail era. Bolstered by our resilient business practices, the Group continued to sustain our market leading position and increase profitability amidst such a complex and ever-changing operating environment in this year.
During the year, the Group’s management staff and all employees were fully committed and united to actively respond to the pandemic. To this end, we ensured that our employees resumed their work and carrying production in a safe manner. During this pandemic outbreak, the good and long-standing relationships with suppliers, logistics providers and distributors, allowed the Group to quickly return to normal operations in order to satisfy the sudden surge in consumer demand for household paper items and other hygiene products. By guaranteeing a stable supply to the market, we successfully fulfilled our corporate social responsibility.
During this pandemic, consumer demand for wet wipes, kitchen towels and soft packs has remained strong due to increased public awareness of personal hygiene, and the on-going trend of upscaling of household paper consumption. Vinda always strives for innovation, focusing on the development and sale of high-quality premium products. This has resulted in an increase in the contribution of our premium product portfolio. The B2B tissue market faced greater pressure due to various COVID-19 lockdown measures implemented by a host of countries. However, now with the pandemic gradually coming under greater control, with heightened awareness of hygiene and epidemic prevention measures, it is expected that the B2B tissue market will return to growth once people assume their pre-pandemic lifestyles, and the Group is optimistic about the future development of the B2B tissue market.
In addition, our feminine business has a strong growing momentum in mainland China and the Group has responded by localizing our product production to better meet the needs of mainland female consumers, our products have been well received by the market, a testament to the fact that our strategies are beginning to bear fruit. The satisfactory development of our feminine hygiene business will not only help boost the Group’s overall gross margin, but will also serve as another important revenue stream in the future.
The market for incontinence care products across mainland China is still in the early stage of development in spite of the aggravating ageing population. The number of people in mainland China aged over 65 is expected to increase dramatically from 13% in 2019 to 28% by 2050. Therefore, the demand for incontinence care products is expected to increase rapidly, making mainland China a truly promising market. While the pandemic has continued, consumers have gained greater awareness about incontinence care products and these items are providing crucial assistance to frontline medical workers. Vinda believes that effective consumer and social education and active promotion will help our incontinence care business flourish and we are well prepared for a future dramatic expansion of the market.
Over the past decade, technology has been developing by leaps and bounds while sales channels have also undergone rapid changes due to increased internet penetration cross the globe. This has led to the widespread popularity and expansion of online purchases. In 2020, many countries adopted quarantine measures to help fight the pandemic, reducing consumers’ expenditures at brick and mortar outlets, which helped accelerate the development of e-commerce. During the pandemic, Vinda’s e-commerce business has benefitted from early adopter advantages in seizing new business opportunities brought about by e-commerce promotions at local festivals. For example, during the Double-11 Festival this year, Vinda’s online household paper sales ranked first for the eighth consecutive year while our feminine and incontinence care products recorded impressive growth. In fact, Vinda’s overall sales during the Double-11 Festival hit a record high.
With improved hygiene awareness among consumers during the pandemic, the demand for personal care products is expected to continue after the pandemic has passed. Apart from our production expansion plans in mainland China, Vinda has also established a new Southeast Asia regional headquarters in Malaysia, which will allow us to continue expanding our production and research capabilities for the personal care segment. This will satisfy consumers’ long-term demands for our products and will facilitate the Group’s future business growth.
While focusing on business development, the Group will always recognize the importance of upholding its social responsibility. In 2020, the Group donated multiple batches of household paper, wet wipes, feminine items as well as incontinence care products to frontline medical staff and their families to support them while they faced the hardships of pandemic prevention.
With regard to the capital markets, the Group’s outstanding business performance has led to our inclusion as a constituent stock on a host of leading bourses in 2020. These include the MSCI Global Standard Indexes, the MSCI China All Shares Index, Hang Seng Composite Index, and Hang Seng Stock Connect Greater Bay Area Composite Index. Our presence reflects the recognition we have received from international capital markets, which will also help to further expand our shareholder base and increase share liquidity.
As we head toward 2021, competition in the household paper market will remain. Despite facing a number of challenges, the Group will continue to grow, relying on its distinctive brand image and positioning, consistent and well-established product reputation, large production capacity, extensive sales network and well-developed e-commerce business. Moreover, we will integrate both online and offline sales channels to offer consumers a greater variety of high-quality products and services while also exploring the ever-expanding potential in the hygiene products market that will both create advantages and maximize value. 2021 will usher in the beginning of a new decade during which consumption patterns, technology application, hygiene awareness and lifestyle habits will see rapid enhancements. That’s why business like ours must seek innovation and embrace changes to ensure continuous development.
On behalf of the Board, I would like to thank our management team and staff members, whose professionalism and dedication are critical to our success during this past challenging year. The Board would also like to take this opportunity to express its gratitude to the former chief executive officer, Mr. Johann Christoph MICHALSKI for the valuable contributions he made to Vinda during his tenure in office. Ms. LI Jielin, who succeed him in the role of chief executive officer is uniquely poised and qualified to successfully move Vinda forward to seek greater innovation and prudent changes to meet the challenges of today’s market circumstances. Ultimately, leading the Group to meet the goals of the new five-year plan and move ever closer toward our vision of becoming the leading hygiene company across Asia.