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-1-Nirma\interim-rptAchievingleadershipinChinadetergentmarket–Projectproposal–Henkel(China)InvestmentCo.Ltd.,RolandBerger&Partners–InternationalManagementConsultantsBarcelona–Beijing–Berlin–Brussels–Bucharest–Budapest–BuenosAires–Delhi–Detroit–Düsseldorf–Frankfurt–Hamburg–Kiev–KualaLumpur–LisbonLondon–Madrid–Milan–Moscow–Munich–NewYork–Paris–Prague–Riga–Rome–SãoPaulo–Shanghai–Stuttgart–Tokyo–Vienna–Zurich-2-Nirma\interim-rptContentsPageA.Fiercecompetitionfrominternationalanddomesticplayershasimposed3greatchallengeonHenkelB.Toachieveturnaround,Henkelshouldadoptanaggressiveexpansionstrategy10C.RolandBergerwillhelpdeveloptheappropriatestrategy:projectoutline12D.Projectorganizationandtimeframe22E.Valueoftheproject12F.RolandBergerisabestpartnerofHenkeltoexploitChinadetergentmarket:12selectedreferenceAnnexA:Casestudy-Qiqiang32AnnexB:Casestudy-P&G42-3-A.FiercecompetitionfrominternationalanddomesticplayershasimposedgreatchallengeonHenkel-4-Nirma\interim-rptAfterfastincreaseinearlier1990th,annualgrowthofChinadetergentmarkethassloweddownintheseyearsNationalmarketvolumeoflaundrydetergent[inMio.tons]199319941995199619972000**EstimationSource:ChineselightIndustryYearbook(1999),RolandBerger&Partners’analysis1.92.22.82.62.72.9~3.0+8.2%p.a.2~3%p.a.-5-Nirma\interim-rptGrossprofitabilityofWhitecatregularpowderOvercapcityindetergentindustryPricereductionofMajorbrand(RMB/Kg)Overcapacityindetergentindudstryleadstopricereductionandthusreducestheproductprofitability•Atpresent,thereareabout150manufacturesindetergentindustrywithcapacityof3.8milliontons,buttotalmarketvolumeisabout2.7milliontons,sotheutilizationrateofcapacityisabout70%•Marektentryofdetergentindustryisprettylowandthereliesalotofunregisteredfactories,Iftakingtheircapacityintoaccount,theutilizaitionratewillbefurthurreducedtoabout50%-60%11%1998年1999年3%TideOMO18.016.518.817.35.54.8Whitecat(regularpowder)1998年1999年Averagepricereductionofthewholeindustryis10%-6-Nirma\interim-rptAfterhavingestablishedprominentpositioninhighendmarket,P&GandUnileverbegintopenetratemiddleandlowendmarketMarketstructureofhighend(Price：10RMB/Kg)Marketstuctureofmiddleend(Price：7~10RMB/Kg)Marketstructureoflowend(Price：7RMB/Kg)Proportionofhighendmarketis11.9%Proportionofmiddleendmarketis31.8%Proportionoflowendmarketis56.3%20%9%2%69%13%9%3%75%6.0%5.6%88.4%P&GOthersBenckiserUnileverP&GBenckiserOthersHenkelHenkelUnileverOthersResource:ACNielsonretailingaudit1999-2000-7-Nirma\interim-rptBrandShareCompanyTide6.0%P&GAriel2.2%P&GOMO2.4%UnileverPower281.1%BenckiserPersil0.1%HenkelMarketshareofinternationalplayers’brandsindifferentsegmentBrandShareCompanyGFL2.2%P&GPanda1.9%P&GWIPP1.0%HenkelTianjin1.8%HenkelDosia1.0%BenckiserBack-upMarketstuctureofmiddleend(Price：7~10RMB/Kg)Marketstructureoflowend(Price：7RMB/Kg)BrandShareCompanyFangcao2.5%UnileverYunquan0.8%UnileverSunlight0.2%UnileverSeagull2.9%HenkelTiantian1.5%HenkelGuilin1.2%HenkelMarketstructureofhighend(Price：10RMB/Kg)Resource:ACNielsonretailingaudit1999-2000-8-Nirma\interim-rpt-9-Nirma\interim-rptAlthoughalatecomer,BenckiserhassuccessfulpenetratednorthmarketwithDosiathroughwell-designedentrystrategy•ThroughacquiringdistributorsfromP&G,DosiachoseLiaoningprovinceasitsinitialentryarea•InHeilongjiangandJilinprovince,competitorsarenotsostrongasthatinotherpartsofChina.localbrands,suchasTiantian,areindominantpositions,soDosiachosethesetwoprovinceassubsequentpenetrationareas•CompetitionisinchoasinShandong,anddistributionnetworkisnotwellregulatedwithlotsofsmalldistributors/wholesalerscompetingwitheachother,soitiseasyforDosiatopenetratethemarketandcultivateitsqualifieddisbitionchannel•Inordertoguaranteethesuccess,channelpenetrationisalsobackedupbystrongadvertisementchampaignMarektshareofDosiainnorthChinaMarketentrydesign5.5%7.3%8.3%9.6%9.4%9.4%11.7%Jan1999Mar1999May1999Jul1999Sep1999Nov1999Jan2000Resource:ACNielsonretailingaudit1999-2000-10-Nirma\interim-rptSomedomesticplayersarealsomakingeffortstoachievefastgrowthandnationalpresenceMarketshareofQiqiangMarketshareofLibai6.0%6.8%8.0%13.7%16.7%199519961997199819990.2%0.3%3.8%5.7%6.8%19951996199719981999Resource:ACNielsonretailingaudit1999-2000-11-Nirma\interim-rptFastgrowthsofdomesticplayersaresupportedbytheirruralfocusstrategy,nationwidemanufacturingnetworkanddirectsalesmodelMarketpenetrationstrategytakenbyfastgrowingdomesticplayersRuralfocusstrategyNationwidemanufacturingnetworkDirectsalesmodel•Ruralmarketislargebutisdominantedbyweakregionalbrands•Internationalplayershaveweakperformanceinruralarea•Logisticcostishighindetergentindustryaccoutingforover10%intotalvalue•LongdistancetransportationinChinaisnotoonvient•Foranewcomer,itisnoteasytogetqualifiedlocaldistirbutorsReasonMethodResult•Firstpenetrateruralmarketandtown•Afterachievingstrongperfromanceinruralarea,thenpenetratecityandlargecounty•Acquiringlocalplayersindifferentareas(Qiqiang)•SigningOEMcontractswithlocalplayersindifferentareas(GuangdongLibai)•Directlysellingproductstolowleveldealersorretailingoutlet•strongchannelpromotion•Avoidingcompetingwithstrong