Daio Paper Corporation has completed the partial transfer of fixed assets from its Chinese subsidiary, Elleair International China (Nantong) Co., Ltd., to Hangzhou Haoyue Industrial Co., Ltd., a Hangzhou, China-based maker of baby diapers and feminine hygiene products. This transfer is not expected to significantly impact the company’s consolidated financial results for the fiscal year ending March 31, 2026.

The Japanese maker of paper and absorbent hygiene products announced in March, following a meeting of its board of directors, its plan to sell its Nantong subsidiary, including two facilities dedicated to the production of baby diapers and feminine care products, to Haoyue. The production of baby diapers will be outsourced, and sales will continue, allowing the companies to more easily respond to the needs of local consumers. In addition, the production and sales of sanitary products, which have been growing steadily, will continue at the Nantong East (Second Factory) with the aim of building a new business model. 

The exit of Daio from the Chinese market comes amidst increased competition in the local market due to declining birthrate and the emergence of local Chinese manufacturers. With the aim of strengthening its operating cash flow generation abilities as outlined in its fifth medium-term business plan, Daio has been restructuring its H&PC overseas business. In June, Daio exited the Turkish market through the sale of its subsidiary there to Evyap Holdings. 

In China, Daio’s GOO.N diaper brand is well-known. The transfer of this brand to Haoyue, which makes raw materials for hygiene products in addition to its end-product business, will allow the business to be more cost-competitive.

The deal was valued at $38 million.