P&G aims for China growth

16 January 2012

BEIJING: Procter & Gamble, the consumer goods giant, is focusing on expanding its distribution network, reaching rural customers and green innovation as it seeks to grow in China.

The company reported that seven out of ten Chinese shoppers currently utilise at least one of its products, equivalent to approximately 1bn people overall. It also believes further room for growth remains.

"Although China is already a mature market for P&G, it will be one of the biggest sources of our new customers in the future," Christopher Hassall, its global external relations officer, told the China Daily.

The owner of Tide and Pampers established a presence in China in 1998, and the Asian nation became its fifth largest market worldwide by 2004, and is now its second biggest outlet, behind the US.

"[Procter & Gamble's market share in] China has grown tremendously during the past 23 years. It is also a very mature business with operations all over China," Hassall said.

According to P&G's estimates, around 400m people are yet to buy its products. The Chinese countryside, in particular, provides a chance to connect with this target audience.

"There are many opportunities for P&G to drive its brands deeper into China's rural areas," Hassall said. "We've expanded our reach by working with the distributors and sub-distributors to widen distribution in rural and remote areas."

One of the main challenges in China is delivering the right balance of products. P&G thus mixes single-serve sachets of offerings like shampoo in the countryside with high-end lines like SK-II premium cosmetics in big cities.

"As China's economy continues to grow, people want more premium products," Hassall said. "We have to make sure that our products meet the needs of the very sophisticated, well-off urban consumers as well as the consumers in rural China who do not have much disposable income."

The company is also looking at green innovation, reflecting the Chinese government's targets to reduce energy usage and growing interest in this theme among shoppers.

"It's very important that a product uses less energy, less packaging, less material - which is sustainable - but the consumers do not end up with a decrease in the performance of the product," said Hassall.

Data sourced from China Daily; additional content by Warc staff