- Entry into the paper category including products such as sanitary napkins and diapers, which amounts to an overall market size of over 1tr won.

- Premium paper products with functional superiority including sanitary napkins and pull-on diapers holding the number one market share position in Japan.

- Major changes expected in the Korean paper products market.

▣ LG H&H will enter the paper products market, producing sanitary napkins and baby diapers through a joint venture with the largest paper products company in Japan, Unicharm Corporation.

▣ LG H&H will acquire the existing shares of Unicharm Korea, which will be renamed LG Unicharm, and then participate in a capital increase to hold a 49% stake. Suk Cha, the CEO of LG Household & Health Care, Ltd. will become the CEO of LG Unicharm.

▣ LG H&H will be the exclusive distributor of the products imported and manufactured by the joint venture, Unicharm Corporation will be responsible for technical support and R&D, and marketing will be handled by the joint venture.

LG Unicharm

▣ LG Unicharm, starting off with 30bn won in capital through participation in capital increase by both LG H&H and Unicharm Corporation, decided upon the following stategy: 1) leverage a global premium brand, 2) provide differentiated products and a unique value proposition to consumers, 3) create and develop a new premium market in Korea.

▣ LG Unicharm sees high growth potential in sanitary napkins, tampons and pull-on diapers made of cotton. The sanitary napkin market and diaper market are each 300bn won in size, which is larger than the shampoo or toothpaste market in which LG H&H already has a presence.

▣ In the initial stages of the business, LG Unicharm will expand through existing products and differentiated premium products, taking into consideration the current market situation and implementing its strategy.

▣ LG Unicharm will therefore focus on products that are functionally superior such as ‘Bodyfit,’ a sanitary napkin that better fits the woman’s shape, ‘Sofy Tampon,’ to address Korea’s growing tampon market, and Korea’s first pull-on diaper, ‘Mommypoko.’

▣ LG Unicharm plans to reach the number two position in the market and a market share of 30% by 2010, and work towards taking the number one position in the longer term.

Background & Significance of the Joint Venture

▣ LG H&H, which holds the number one position in the household products market, has been looking for new business opportunities to ensure future growth. Meanwhile, Unicharm Corporation, which is the strong number one in China and South East Asia, has been aggressively seeking ways to expand in Korea.

▣ LG H&H, with its strong distribution and marketing capabilities in Korea, and Unicharm Corporation, with world class technology in paper products, each had what their partner needed.

▣ General assessment in the market is that this is an ideal collaboration in which LG H&H’s distribution network, Unicharm’s superior product quality, and the marketing capabilities of both companies can create a synergy effect.

▣ Much attention is being placed on the future developments of LG Unicharm as it is expected to bring major changes to Korea’s paper products market that is currently dominated by Yuhan Kimberly.

About Unicharm Corporation

▣ Unicharm, a Japanese paper products company established in 1961, is not only the strong number one in the highly competitive Japanese market but also holds the number one market share position in other Asian markets such as China, Taiwan, Thailand and Indonesia.

▣ Unicharm is known to have the world’s best non-woven technology in producing sanitary napkins and is renowned for its ‘multipurpose paper cleaner technology’ which P&G is selling in North America and Europe under license from Unicharm.