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Booming in China

(China Daily)
Updated: 2008-08-18 07:09

China, without doubt, presents enormous opportunity for most multinationals. However it is a formidable challenge for many, especially for the consumer brands, due to the country's geographic diversity.

Proctor & Gamble, since its entry into China in 1988, has long been a big winner. It's now one of the best-known brands in China, virtually in almost every corner from the metropolitan centers to the vast countryside.

In a recent interview with China Business Weekly, Christopher D. Hassall, vice-president of P&G China, shares his insight on the China market as well as the company's formula for success.

Q: What keeps a company like P&G increasing its investment in China?

A: One of the things I've found important is the partnership with the government. I think that the regulatory environment and the legal framework have been much developed here in China since 1978 when the country opened up.

The regulatory systems have been much more in sync with global systems for developed market economies. There's not only the regulatory and legal frameworks but also the can-do attitude and partnership with the government. I really do credit a lot to the local government and central government professionalism in making China an attractive and predictable place to invest.

Q: In the past, P&G products were a luxury for many Chinese. But now most can afford them. How has your market strategy changed, (especially for rural areas)?

A: When we started, we really focused on southern China around our headquarters location in Guangzhou. We've had a very disciplined expansion, first moving to all the other major cities, then moving into second and third-tier cities and towns, then moving into the countryside.

The way we've done that is not only through our own development but by developing business partnerships as well. We have a network of distributors around China, which means we now serve hundreds of millions of consumers and these are consumers all across China, every province, every municipality, every town, city, county, village, has access to P&G products now.

And the way we've done that is to work in partnership with these distributors, with the retailers, with suppliers, with our manufacturing and distribution systems, because almost every product we sell in China is made in China. We now have ten manufacturing plants around China, which means we can very efficiently get those products to consumers at a very good value that they can afford.

Q: A number of domestic and small producers have been washed out of the market due to fierce competition in the past two decades. How has P&G survived the competition and helped shape the competitive landscape of the industry?

A: In 1978, China was a State-driven economy. But now it is a market-driven economy. That's been a very rapid evolution over those thirty years. As part of that, consumers really are the winners, because they have more access to more products, more choices, and it also drives competition in that the company who provides the highest value products at the best price.

There are four key factors that help P&G stand out in the competition.

The first one is innovation: making brands that are not only functionally but also emotionally relevant to consumers.

The second is scale. We are the largest daily consumer products company in the world and we can mobilize resources internally and externally so that we can purchase our raw materials at competitive prices.

The third one is organization. In China we have 6,500 employees.

The fourth is the quality of our people. We recruit and develop the best talent in the industry so that we are run by the best in the industry.

(China Daily 08/18/2008 page6)