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Customers choose soap in a supermarket in Shanghai. So far, about 80 percent of China's chemical consumer products are produced by overseas companies. [China Daily] |
The landscape of China's daily-use chemical goods industry has changed dramatically since the nation joined the World Trade Organization (WTO) 10 years ago. The advance of international enterprises into the market has threatened the business of local brands.
China's chemical consumer goods industry saw a 23.8 percent year-on-year growth starting from 2000 and the sale volume for 2010 exceeded 210 billion yuan ($33 billion), the Nanjing-based Xinhua Daily reported.
Multinational conglomerates such as Uniliver PLC, Procter & Gamble Co (P&G) and German pharmaceutical company Bayer Group, are annexing Chinese companies in a bid to get a larger share of the market.
"China's chemical consumer goods market is very attractive to overseas manufacturers after China joined the WTO," chinanews.com quoted Liu Jing'an, former secretary-general of Beijing Daily Chemical Association, as saying. "The most efficient way to enter the market is emerging local companies."
Indigenous brands have lost control over the market, according to Liu. About 80 percent of the products were produced by foreign companies.
The wave of takeovers was triggered in late 2003 after the French cosmetics and beauty company L'Oreal Group announced its purchase of the Mininurse skin-care brand based in Shenzhen.
In July 2008, the US pharmaceutical and consumer goods maker Johnson & Johnson Services Inc merged Beijing Dabao Cosmetics Co Ltd, whose Dabao SOD Milk once took more than 15 percent of market share in China.
The latest acquisition was completed by Paris-based perfume maker Coty Inc when the company acquired Chinese skincare company TJoy Holdings Ltd in December 2010 at a cost of $400 million.
"Most Chinese brands faded away after the acquisition," said Liu, adding that overseas giants left little room for the indigenous brands to survive.
But "little room" is sufficient enough for some local brands to play big. Shanghai Jahwa United Co Ltd is one of the most outstanding players with a 100 percent Chinese background.
The company posted total revenue of 2.87 billion yuan in the first three quarters of 2011, up by 18 percent compared with the same period in 2010, according to a company statement.
In November, Ping An Insurance (Group) Co of China Ltd said it will fully acquire Jahwa for 5.1 billion yuan. Analysts believe the buyout may help the cosmetics maker boost sales.
Chen Gang, chief investment officer at Ping An Trust, told the 21st Century Business Herald in November that Ping An is likely to inject 7 billion yuan into Jahwa over the next five years to help the company increase sales to 16 billion yuan by 2015.
The Shanghai-based company also plans to team up with KAO Corp, Japan's largest daily-use chemicals maker, to explore third- and fourth-tier city markets.
"The partnership will help both companies to boost competitive strength and sales performance in the Chinese market," said Ge Wenyao, chairman of Jahwa.
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