How a Mongolian toilet paper manufacturer competes with the big brands

By Volker Ahlemeyer

Khugjil Trade is one of 450 businesses that have benefitted from the EBRD’s advisory services in Mongolia, funded by the European Union.

монгол хэл дээр

EBRD and EU help Khugjil Trade grow

Toilet roll and paper napkins are everyday items which are much in demand and offer great business opportunities for local firms. Yet well known international chains often dominate the market for them.

In Mongolia, Khugjil Trade took on the big brands and won.

“We make about 40 types of products in our plant here in Ulaanbaatar,” said Ms Urgamal Baatar, the company’s CEO. “We’ve been active since the early 1990s, but over time I noticed that we lagged behind in terms of productivity. So we needed to learn more about how to make our organisation and processes more efficient.”

This is when she turned to the EBRD for help. Its advisory programme, funded by the European Union in Mongolia, matches businesses like Khugjil Trade with experienced experts to help them grow.

Japanese efficiency

In this company’s case, the consultant applied the Japanese 5S methodology (named after the Japanese terms for “sort”, “set in order”, “shine”, “standardise” and “sustain”). It follows various principles of orderly production and standardising processes. First developed for the manufacturing industry, it has been adopted fully or in part by many large Western companies across all sectors.

“It was a very positive experience for us,” said Ms Urgamal. “It helped us to see just how important it is to monitor and manage our inventory, as we may otherwise waste some of our materials.

“Moreover, we conducted training courses for our staff, so that we have more motivated employees who know our objectives and what they are expected to do to achieve them.”

Khugjil Trade introduced several new products, such as wet tissues, pocket napkins and four-piece toilet paper, thanks to the insights it gained from the project. It also opened a plant in Umnugobi province, which provided new job opportunities for the local population in southern Mongolia.

The numbers speak for themselves: the company increased its turnover by 84 per cent after the project. Also labour productivity went up by over 40 per cent and the company managed to reduce its operating costs.

“The advice we received came at the right time,” explained Ms Urgamal. “We’re a growing company of currently 60 employees – 18 of them were hired since we finished the consulting project. We realised that there are plenty of opportunities for us to expand. We have a clear direction for this now, so we’re ready to start the next chapter.”

Building a diverse economy

The manufacturer is one of 450 businesses that have benefitted from the EBRD’s advisory services in Mongolia, funded by the EU. Beneficiaries include almost all industries and sectors – from wool producers in the country’s northern regions, to tour operators in the west or bakery shops or auto repair providers in the capital city.

Together with the EU, the EBRD supports businesses in their ambition to grow in various ways in Mongolia, including advisory services, but also through direct investments and indirect finance through partner banks. Through these activities, we help to build a strong, diverse and sustainable economy in the country.