麦肯锡中国快速消费品市场进入策略

,CONFIDENTIAL,January10,2008,ChinaMarketEntry,1,TODAYSOBJECTIVES,OverviewofChinamacroeconomyUnderstandingChineseconsumersChinapersonalhygienemarketdevelopmentandtrendsWhatittakestowininChinaQuestionsandanswers,2,KEYMESSAGES,Chineseeconomyhasbeenthefastestgrowingeconomy(9.6%CAGR)intheworldforthepast15yearsandisnowthe4thlargestGDPisprojectedatcontinuedgrowthwithamediumterm“soft-landing”andurbanizationisoneofthedrivingforcesforcontinuedeconomicdevelopmentChinaconsumermarketisthe7thlargestintheworldandisexpectedtobethe4thby2015Chinaisnotahomogeneousmarket,butrathermultiplemarketsbytiersandregions,3,CHINASGDPHASBEENGROWINGRAPIDLYDURINGTHELAST26YEARSANDCHINAISNOWTHE4thLARGESTECONOMYINTHEWORLD,RealGDPgrowthPPPadjusted*USDbillions,ChinaCAGR=9.8%(1990-2006),InflectioninChinaGDP,US,Japan,Germany,France,China,UK,Italy,Canada,Spain,1,2,3,4,6,5,7,8,9,10,*Baseyear:2002Source:ChinaStatisticalyearbooks;GlobalInsight;BloombergandWorldbank,2006nominalGDPUSDbillions,*,*,*,*,*,*,*,*,*,*,India,802,4,OLDSHANGHAIPUDONG,5,NEWSHANGHAI-PUDONG,6,OLDSHENZHEN,7,NEWSHENZHEN,8,Note:AllfiguresareroundedtothenearestfirstdecimalSource:GlobalInsight;MGICAUmodelv2.5,GDPISPROJECTEDATCONTINUEDGROWTHWITHAMEDIUMTERM“SOFT-LANDING”,GrowthofrealGDP,Percent,History,Forecast,CAGR1985-200610.2%,CAGR2006-257.2%,9,ShareofrealGDP,RMB2000,trillions,percent,CONSUMPTIONSHAREOFGDPWILLRISEOVERTHELONGTERM,Source:NationalBureauofStatisticsofChina;MGICAUModelv.2.5,Consumption,*,*,11.9,*,*,*,29.8,*,*,*,60.7,*,Investment,NetTrade,*,Governmentconsumption,41,10,RealGDPbysector,THEINDUSTRIALSECTORWILLREMAINAKEYGROWTHDRIVER,BUTSERVICESWILLBECOMEMOREIMPORTANT,*,*,*,*,*,*,*,*,*,*,*,*,*,*,*,*,Source:NationalBureauofStatisticsofChina;MGICAUModelv.2.5,CAGRPercent,2005-15,2015-25,46,11,URBANIZATIONISONEOFTHEDRIVINGFORCESFORCONTINUEDECONOMICDEVELOPMENT,Source:Demographia;China-All-Citymodeloutput,McKinseyGlobalInstituteanalysis,Inthelast10yearsalmost50%ofChinasGDPgrowthcamefromurbanfixedinvestments,withanannualexpenditureofupto$900billion,Overthenext20years,Chinesecitieswilladdmorethan300millionpeople,thepopulationoftheentireUnitedStates,Therewillbemorethan200Chinesecitieswithmorethanamillioninhabitants,inEuropetodaythereareonly35citiesofthatsize,By2025,two-thirdsofChinascitizenswillliveincities,thatsnearly1billionpeople,5,12,FORCOMPANIES,THISMEANSMAJORMARKETOPPORTUNITIESWILLEXPANDFROMCURRENTCITIES,61,2006marketsizebycity,CONSUMERGOODSEXAMPLE,13,31,TOMANYMORECITIES,2015marketsizebycity,CONSUMERGOODSEXAMPLE,14,CAGR95-05Percent,6,060,*,*,*,*,*,*,*,*,*,*,8,700,2,600,1,700,1,000,900,650,600,500,490,1,200,1,400,CHINAWILLBECOMETHENO.4CONSUMERMARKETGLOBALLYBY2015,12,000,*,*,*,*,*,*,*,*,*,4,1,1,3,2,2,4,4,7,1995,3,2,1,3,2,2,3,3,4,8,CAGR05-15Percent,2005,2015E,Rank,Source:GlobalInsightNov.2006;MGI,1,2,3,4,5,6,7,8,9,10,U.S.,Japan,Germany,France,U.K.,Italy,Spain,China,Canada,U.S.,Japan,U.S.,Japan,Germany,Germany,U.K.,U.K.,France,France,Italy,Italy,China,China,Spain,Spain,Canada,Mexico,India,Privateconsumption,USDbillions,real2005,India,11,3,India,Mexico,6,7,Canada,800,15,ATTHESAMETIME,ITISIMPORTANTTOUNDERSTANDTHATCHINAISNOTAHOMOGENEOUSMARKET,Consumptionlevelsvarybyregion,HHconsumptionpercapitaUSD1000,HHconsumptionpercapitaUSD800-1000,HHconsumptionpercapita70%)andisexpectedtocontinuetogrowat9%annuallyinthenext5years,drivenbyincreasedpenetrationinlower-tiercities/ruralareasandconsumerstradinguptohigherqualityproductsBabydiaperscurrentpenetrationislowat12%butthemarketisexpectedtotakeoffinthenext5-10yearswithincreasedspendingpowerandchangingconsumerhabitsIncontinenceproductmarketisverysmallbutmayhaveattractivegrowthpotentialinlongertermThereareemergingleadersbothinthefemininehygieneandbabydiapermarkets,whohaveadopteddifferentstrategiesinChinaUnicharmbuiltitsinitialsuccessinthefemininehygienemarketwithinnovativeproductoffering(e.g.extralongpad)andcompetitivepricingHenganistheonlylocalleaderinthefemininehygienemarketwhosuccessfullycompetesinthemid/lowendsegmentsenabledbyitsstronganddeepRTMPinterviews;teamanalysis,2,834,226,14,3,074,2001,4364,854,35,5,253,*,6810,3642,78,10,530,*E,Femininehygieneproducts,*,*,CAGR2001-06Percent,CAGR2006-11Percent,9,11,30,20,9,15,34,17,RetailsalesUSDmillions,Growthdrivers,RapidadoptionofbasicpersonalhygieneproductsbyconsumerswithrisingdisposableincomeanddesireforbetterhygieneandconvenienceChangingconsumerpreferenceandbehaviorWomencontinuetotradeuptohigherqualityproducts,drivenbyenhancedhygieneawarenessGreateracceptanceofthecaringfunctionsandconvenienceofbabydiapers,especiallyduetoone-childpolicyIncreaseofawarenessofincontinenceproducts,ESTIMATE,67,31,PENETRATIONLEVELOFPERSONALHYGIENEPRODUCTSINCHINAISMUCHLOWERCOMPAREDTOMATUREMARKETS,Source:ChinaNationalHouseholdPaperIndustryAssociation;expertinterviews;teamanalysis,*,*,*,*,*,*,FeminineHygieneproducts,95,98,00,01,02,03,04,05,Femininehygiene,Babydiapers,Incontinence,Babydiapers,Product,Chinapersonalhygieneproductspenetrationlevel,1995-2006,Percent,Penetrationlevelbyproductcategory,2006,Percent,12,06,32,THEREISATTRACTIVEGROWTHPOTENTIALINFEMININEHYGIENEMARKET,ESPECIALLYFORSANITARYPADANDPANTYLINERPRODUCTS,Source:Interviews;literatureresearch,Productcategory,CategorysharePercent,Growthdrivers,Sanitarypad,85,15,Continuedpenetrationinlower-tiercitiesandruralareasPenetrationinTier1citiesarecloseto100%,while65currentlyaccount7.6%ofpopulationandexpectedtoreach13.6%in2025LivingstandardswillcontinuetoimproveandconsumerwillbelookingforcomfortandconveniencewithhigherdisposableincomeProductawarenessaremuchbroaderinnewgenerations,whicharethepotentialconsumersofincontinenceproductsinthefuture,Lowawarenessisthemajorreasonoflowpenetrationofurineleakagepad,Affordabilityisthekeyobstacleforadultdiaperadoption,38,MNCsARELEADERSOFFEMININEHYGIENEMARKET,*EstablishedasalocalprivateownedcompanySource:Euromonitor;ISI;literaturesearch,2005femininehygienemarketsharePercent,*,*,*,*,*,*,*,YearenteredChina,1995,1988,1985*,1994,1985,Brands,SofyCenter-inCharm,Whisper,ANLEANERLE,Comfortliteraturesearch;McKinseyanalysis,MaintainitsleadershipwithcompetitivepricinginpremiummarketConsidered“bestvalueformoney”inthepremiumsegmentConsistentlypricedslightlylowerthanotherleadingpremiumbrands,1.08,40,HENGANHASBUILTITSSUCCESSBASEDONSTRONGANDDEEPRTMANDLOWCOSTADVANTAGE,Firstmoverintothiscategoryby“copying”popularproductfromothermarketsObservedtheacceptanceofsanitarypadandpadwithwingsinSouthEastAsiamarketandfirsttolaunchedsanitarypadinChinain1985(Preducedpackagingcostby10%throughcostoptimizinginitiatives,Foundedin1985inFujianprovinceLargestlocalplayerinthepersonalhygienemarket2005revenue-USD389millionMajorbrandsAnleAnerleElderjoyHearttex,Hengan,Keysuccessfactors,Source:Interviews;literaturesearch;McKinseyanalysis,41,PISI;literaturesearch,7,42,Segmentedmarketinto4entrypoints(super-premium,premium,mid-tier,low-end)IdentifiedtriggersforconsumerbehaviorchangesPointofadoptionCategorybarriers,Decidedpointofentry(premium)basedonPliteraturesearch;teamanalysis,43,INCONTINENCEMARKETISVERYSMALLANDISNOTTHEFOCUSOFEXISTINGPLAYERS,2006incontinenceproductsmarketsharePercent,*,*,*,*,*,Source:Euromonitor;ISI;litsearch,*,*,*,Incontinenceproducts,*,528,Otherproducts,*,*,2006incontinenceproductsplayersrevenuebreakdownUSDmillions,percent,93,44,TODAYSOBJECTIVES,OverviewofChinamacroeconomyUnderstandingChineseconsumersChinapersonalhygienemarketdevelopmentandtrendsWhatittakestowininChinaQuestionsandanswers,45,Outcome,RejoiceisthebestsellingshampooinChinamarket,CHINAWINNINGIMPERATIVETAILORPRODUCTOFFERINGTOLOCALTASTE,Source:Interview;literaturesearch,EXAMPLE,Pliteraturesearch,EXAMPLE,Purcha-singdecisionfactors,Price,Flavor,Ingredients,Packaging,Mid-tiertolow-endmarketconsumerpreference,PPlanetRetail;CCFA;tradeinterviews;literaturesearch,RetailsalesbychannelUSDbillions,percent,*,*,572,*,*,*,*,*,*,*,*,*,*,*,*,*,*,CAGR2003-06Percent,ROUGHESTIMATES,13,33,15,21,13,21,7,8,16,13,13,16,9,-3,CAGR2006-10Percent,25,WinningimperativeChannelmanagement,48,BUTTRADITIONALTRADEWILLREMAINIMPORTANTINLOWERTIERANDRURALMARKETS,Source:Euromonitor;PlanetRetail;CCFA;tradeinterviews;literaturesearch,Traditionaltradeleadinginlowtierandruralmarketsin2006,*,*,*,*,7,*,*,*,*,*,*,31,*,*,*,*,*,*,*,77,*,*,*,*,USDbillions,percent,anditwillremaindominantinruralmarketsin2010,USDbillions,percent,*,*,*,*,*,*,*,*,*,*,7,*,*,*,*,*,*,*,*,*,*,*,ROUGHESTIMATES,70,WinningimperativeChannelmanagement,49,WINNINGAPPROACHTOKEYACCOUNTMANAGEMENTLEVERAGESTHEDIFFERENCESBETWEEN“WESTERN”AND“TRADITIONALCHINESE”PLAYERS,Source:Expertinterviews,KAMbestpractices,Desiredimpact,Moderntradeplayers,LeverageglobalrelationshipstoensurefavorabletreatmentManagerelationshipthrough“multi-functions”teamsabletobringdeepexpertisetothetableIntroduceworldclassmanagementtechniquesBuildmulti-layerrelationshipsatChinaHQ,regioncenter,andstorelevelsStrengthenrelationshipsthroughjointcapabilitybuildings(e.g.,categorymanagement,shoppermarketing),Increasenegotiationpower(i.e.,getoutofcontinuouspricingpressurebyshowingadditionalvalueyoubringtothetable)Build/strengthenstrategicpartnership,Identifyhighpotentialplayerswhoaspiretochange/growHelpthemsucceedbyenhancingbasicbusinesscapability/operations(e.g.,inventorymanagementspace/categoryallocation,logistics,andIT)BuildseniorrelationshipatHQandstrongpersonalrelationshipswithkeymerchandisingmanagers,DeepenclientrelationshipsGain“businesspartner”statusGaintrustfromlocalregionalgovernmentSecurefavorabletreatment,Westernmoderntradeplayers(e.g.,Wal-Mart,Carrefour),Traditionalmoderntradeplayers(e.g.,CenturyMart,Nonggongshang),Movingretailerawayfromsimplepricingdiscussioncriticaltodecreasecomplexity(pricingdiscussionsgenerallyrequiredbothatHQandstorelevelgivendispersedbuying),WinningimperativeChannelmanagement,50,INDIRECTTRADEINCHINAISCOMPLEXBUTMANAGEABLE,Source:Tradeinterviews;expertinterviews;McKinseyanalysis;ACNielsen,*,*,*,Tier2and3,*,*,95,90,*,*,80-90,*,*,60-85,*,Multi-layeredfragmentednet-worksdrivelackofcontrolatPOS,resultingininconsistentbrand/packavailability,merchan-dising,andbrandpresenceDataavailabilityislimitedDistributorsarewillingto“give-up”marginandadd“extralay-ers”inbetweenthemselvesandretailersinordertolimittheirresponsibilitiesMulti-layersystemfavors“en-croachment”,furtherreducingcontroloverproductavailability,pricing,andPOSexecutionWholesalersaregenerallyun-sophisticated“boxmovers”and“pricearbitragers”IndirecttradeinTier1-2citiesisverydifferentfromindirecttradeinTier3citiesandruralareas,IndirecttradeinChinaiscomplex.,.however,marketwinnershavemanagedtoachievewidedistributioncoverage,Pepsi,Tingyi,Wahaha,ProctorInterviewwithHRmanagers,HRagencies;MGI,“ComparedtoHarvardorStanfordsgraduateswhoaregenerally90%readyforajob,TsinghuaandPekingsare60%readyforanygivenpositions”HRmanagers,“Talentisimpatientinahighpeerpressureenvironmentandisconstantlyapproachedbycompetitiveoffers”HRmanagers,*,Chinatop10Universitycities*,Geo