【正文】 ve fast growth and national presence Market share of Qiqiang Market share of Libai 6 . 0 %6 . 8 %8 . 0 %1 3 . 7 %1 6 . 7 %1995 1996 1997 1998 19990 . 2 % 0 . 3 %3 . 8 %5 . 7 %6 . 8 %1995 1996 1997 1998 1999Resource: AC Nielson retailing audit 19992023 Nirma\interimrpt Fast growths of domestic players are supported by their rural focus strategy, nationwide manufacturing work and direct sales model Market peration strategy taken by fast growing domestic players Rural focus strategy Nationwide manufacturing work Direct sales model ? Rural market is large but is dominanted by weak regional brands ? International players have weak performance in rural area ? Logistic cost is high in detergent industry accouting for over 10% in total value ? Long distance transportation in China is not oonvient ? For a new er, it is not easy to get qualified local distirbutors Reason Method Result ? First perate rural market and town ? After achieving strong perfromance in rural area, then perate city and large county ? Acquiring local players in different areas (Qiqiang) ? Signing OEMcontracts with local players in different areas(Guangdong Libai) ? Directly selling products to low level dealers or retailing outlet ? strong channel promotion ? Avoiding peting with strongs players ? Gaining market share with paratively low marketing investment ? Avoiding peting with local players ? Reduction in logistic cost ? Fast market peration ? But the sales expense is high and the sales force should be very diligent Nirma\interimrpt In order to achieve turnaround, Henkel should adopt an aggressive expansion strategy Six regional brands with parative weak market performance Deterioration of market share for each brand, defeated by strong international or domestic brands one by one Aggressive expansion strategy No change Turnaround point Leadership in detergent market Nirma\interimrpt Strategy formulation should be based on full understanding of China detergent market and full consideration of three strategic issues Strategy formulation Choice of focus brand and strategic expansion route Establishing reliable and low cost logistic work Developing rural entry model Full understanding of China detergent market Nirma\interimrpt Per capita consumption gradually decreases from south to north and from east to west Consumption of laundry detergent in China [kg, per capita] Source: Roland Berger Partners’ interview 2~3 kg per capita ~2 kg per capita kg per capita ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 3 kg per capita 2 2 2 ? Much low area Nirma\interimrpt 2512(Shanghai) The high population density is located in the North China plain Source: Roland Berger Partners’ interview 146(Jilin) 343(Hebei) 586(Shandong) 578(Henan) 715(Jiangsu) 273(Fujian) 308(Hunan) 392(Guangdong) 108(Yuannan) 362(Chongqing) 471(Anhui) Back up Municipality population density (includeing suburb area) Shanghai 2512 Beijing 738 Tianjin 866 Chongqing 362 over 500 capita per square kilogram 276(Liaoning) 866(Tianjin) 738(Beijing) 209(Shanxi) 443(Zhejiang) 201(Guangxi) 326(Hubei) 188(Sanxi) 177(Sichuan) 400~500 capita per square kilogram 300~400 capita per square kilogram 200~300 capita per square kilogram 100~200 capita per square kilogram less 100 capita per square kilogram Nirma\interimrpt For different region, market segment structure is also different because of various ine level and consumption habit Segment structure by region Comments North West East South ? Low end market account for over 50% of total market and is especially large in the low developing North and West of China ? Middleend product take a higher share in East and South of China ? High end market is paratively higher in south market because of its high ine level and accptance of concentrate powder % % % % % % % % % % % % Total [,000t] 778 668 537 745 High (10RMB/kg) Middleend (7~10RMB/kg) Lowend (7RMB/kg) Resource: AC Nielson retailing audit 19992023 Nirma\interimrpt East China is in intense petition and major players are all national brands market volume by province [’000 ton] Brief analysis Jiangsu Henan Zhejiang Shanghai Anhui ? Jiangsu and Henan have the largest market volume in east China ? Jiamei, Whitecat, GiGE and Fangcao are traditional brands with strong regional market bases ? distribution work is paratively mature with some large distr