How to respond to the giants' acquisition

Daily giants Procter & Gamble, Unilever, L'Oreal have reported news of acquisitions. The increasingly monopolistic pattern has caused local Japanese chemical companies to feel the chill of the early winter. Why is the local brand always weak? Are the giants weak? How do local companies achieve strong alliances and complementary advantages?

Recently, the global daily chemical giants P & G, Unilever and L'Oréal have successively received news of the acquisition. Among them, P&G intends to acquire Germany's Beiersdorf, while Unilever will acquire Ya Tao, the US hair care product manufacturer, and L'Oreal may acquire Avon. The news of frequent acquisitions is just like another wave of shock in the daily chemical industry. Faced with such heavy news, the local daily chemical companies in which they are living should feel the chill of the early winter.

In September 2010, Procter & Gamble's CEO Mai Ruibo stated that he intends to acquire Germany's Beiersdorf, and Beiersdorf said that he does not know Procter & Gamble's intention to purchase. The news promotes Beiersdorf’s large stocks listed on the mainland. Increased by more than 10%. Baiersdorf’s best-known product is Nivea, which is also considered to be P & G's hope to acquire the company's Sibao Company. Almost at the same time, Unilever has agreed to spend US$3.7 billion to acquire Ya Tao and its VO5. And Nexxus two hair care hair care brands. If successful, Unilever will become the world's largest manufacturer of hair and hair products. Another media reported on October 13 that L'Oreal may offer more than $ 44 per share to buy Avon.

International cosmetic giant “three legs”

If these acquisitions are reached, the monopoly structure of P&G, Unilever and L'Oréal in the daily chemical industry will be further exacerbated, and the impact on local Chinese companies will be even stronger.

Currently, Procter & Gamble ranks first in China's daily chemical market, accounting for more than half of the market share in the washing and dressing market. The share of Procter & Gamble shampoo products in the Chinese market is about 55%, and Unilever is 11% to 13%. Unilever's newly launched Qingyang shampoo brand has already grabbed 5% to 6% of market share. L'Oreal has also occupied 11.7% of the skin care market in China at the end of 2009. The monopoly pattern will cause the expansion of the expansion of the three companies.

Procter & Gamble continuously leans toward higher-end, profitable markets in the skin care sector, but it has been clamoring for the low-end mass market. In the Chinese market, after the Procter & Gamble SK-II brand has returned to the market, it still focuses on high-end products. The Olay brand guards the mid-range market, but it still has little to do with the mass market. If Baiersdorf is successfully acquired, the Nivea brand will fill this gap. Beiersdorf's Sibao Company has Shulei, Meitao, Fengying and Shunshuang brands, which can further strengthen P&G's absolute leading position in the field of hair care.

Unilever’s acquisition of Ya Tao shows its determination to expand in the field of shampoo and hair care products, which is also an important direction for the company’s future development. If the acquisition is reached, Unilever is expected to become the global leader in hair care products, second in the shampoo market and third in the market for molded products. This will certainly strengthen its strong position in the field of shampoo and hair care products.

L'Oreal's existing high-end brands in China, Lancome, Helena, mid-range brands Vichy, La Roche-Posay, and low-end brands such as L'Oreal, Garnier, Yue-Sai, nurses, etc., formed a clear overall layout of the echelon. The introduction of L'Oreal shampoo last year showed that it began to expand from the traditional strong skin care products to the direction of washing, shampoo is a relatively weak link in L'Oreal. If "take down" Avon, not only enrich its product line, but also means that L'Oreal in the daily chemical industry has added a strong franchise store sales channels, which is P & G, Unilever does not, perhaps L'Oreal want to get in the flanks More powerful competitiveness.

In the Chinese market, Procter & Gamble, Unilever, and L'Oreal, the three major oligarchs of daily use, continued to seize the territory, and they were growing. There was hardly any adversary, and the trend of "three pillars" was already in the offensive. form.

The domestic day-to-day distressed acquisition is not the same as a monopoly, but when the acquisition is carried out to a certain scale, it will result in a monopoly. Giants or snow-collected brands are let go of their natural end, or use them to drag down competitors, or take the opportunity to complement the existing brand product structure.

In the face of this wave of globalized Japanese purchases, local Chinese daily chemical companies must not be able to make a stance, and market competition is fiercer. Local brands have to face more and more powerful international opponents, which means their own situation is even more dangerous.

In the past, in recent years, many well-known local brands have been captured in the pockets of international daily chemical giants. The brands with typical national colors such as Xiaoniao, Sibao, Yuexi, Zhonghua and Dabao have become the pockets of international giants. In the matter, the competitiveness of local brands is declining. In August 2010, it was reported again that "Ding Jiayi" would be acquired by the world's seventh-largest company, France COTY Coty Group. Cosmetics International Cosmetics giants have successively implemented plans to acquire local brands, and have achieved the goal of eliminating rivals or occupying rival brands and expanding market share by expanding channels, extending product lines, and increasing product promotions. We see that there are fewer local brands that have the ability to challenge the giants. The surviving local daily chemical brands do not rule out the danger of continued acquisition.

At present, annual sales of daily chemical products in China are approximately 200 billion yuan, and the annual growth rate is as high as 20% to 30%. The market development potential of daily chemical products is huge, and the products are profitable. Huge market space and high profits have attracted a large number of international daily chemical giants to enter the Chinese market. Daily tycoons such as Procter & Gamble, Unilever and L'Oreal have occupied a considerable market share in the Chinese market, and some have formed a monopoly on certain categories. The Chinese market is often an important growth point for these international giants. Therefore, all companies attach importance to the Chinese market and continue to increase investment and frequent acquisitions, not only to catch the immediate interests, but also to contemplate the future market.

Transnational corporations in China experienced three stages from joint ventures to sole proprietorships to large-scale acquisitions, so as to achieve the goal of possessing absolute advantages and forming monopolies. Although acquisitions are not the same as monopolies, when the acquisition is carried out to a certain scale, it will result in a monopoly. Acquisitions can reduce competitors while integrating internal resources and increasing market concentration, thus limiting or even eliminating effective competition. If a company's market share in the domestic market reaches more than 20%, it is a suspected monopoly. Using this criterion, some multinational companies in China have already formed a monopoly.

Multinational companies use cross-border acquisitions of local brands, in addition to possession and utilization of the resources of the acquired brands. Other methods may also be adopted. First, the brand name of the snow-covered company was not promoted and not promoted, and it naturally disappeared. Brands such as Seagull and Vitality 28 that were popular in the early years disappeared shortly after the acquisition, and the nurses were on the frontline market. It is also difficult to trace. Second, the use of acquired brands to drag down competitors, Procter & Gamble's acquisition of Icari is to take a look at the positioning of its natural plants, to fight against the local new generation of traditional Chinese medicine shampoo brand bully and so on. Third, to supplement and improve the existing brand product structure, this time Procter & Gamble's acquisition of Beiersdorf, is to see its Nivea brand, to supplement its low-end skin care products. Regardless of strategy, the ultimate goal of MNCs' acquisitions is to fight against all competitors, gain greater market territory, and maximize profits.

As a local company, there are significant differences between the brand, capital, and technology and multinational companies. However, if one-sided pursuit of selling a good price, and ignoring the healthy development of national enterprises, the revitalization of national economic ambitions, the result is a comprehensive suppression of brands, capital and technology, macro-speed up the formation of industry monopoly trend, will undermine the fair competition order, and ultimately Seriously harm the interests of consumers.

Where the strength of localized daily necessities lies, the enemies who have stronger strength have weaknesses. Attacking their weak points and avoiding weaknesses will bring more opportunities to local daily chemical companies. The reason why Herborist and Yunnan Baiyao took a road to innovation is to capture the weak links of transnational giants.

In the competition with multinational brands, local daily chemical companies still appear to be immature and fragile. The Chinese daily chemical market will also have more international giants to purchase, and how will we respond?

1. The government should introduce relevant policies and regulations

First, China should establish relevant laws as soon as possible to deal with "monopoly purchases." One of the important means is to issue the "Anti-Monopoly Law" as soon as possible. In the absence of an anti-monopoly law in the country, the resolution of certain specific issues may lack legal basis, and the issuance of the "Anti-Monopoly Law" is undoubtedly an important way to solve the monopoly problems caused by foreign capital mergers and acquisitions. Developed countries, such as the United States, Germany, and Japan, have already formulated corresponding laws and made strict rules on corporate acquisitions in order to limit the possible monopoly effect of acquisitions.

Solving "monopoly purchases" is a systemic issue. Not only must we constantly improve our legal system, but we must also improve fairness in industrial policy. In addition, it is necessary for Chinese daily chemical companies to express their wishes through industry associations and other organizations, and to promote government legislation to protect the development of domestic companies.

At the industrial level, domestic related industrial policies will play a positive role in guiding the development of the daily chemical industry. For enterprises, must not be short-sighted behavior, but must have a certain degree of responsibility, can not only pay attention to cross-border acquisition of the offer, but the ultimate price paid is the brand's demise, strict control of technology, sales channels and resources are fully occupied.

In addition, the government also needs to carry out management and control of the existing daily channels. One of the main channels of the daily chemical industry is the unfair treatment of domestic and foreign brands in the large-chain KA stores. Overlord clauses also appear frequently. This is also a limitation. The accomplice of the local daily chemical brand growth.

2. Local brands must strengthen cooperation and complement each other

Local brands are pressing harder and harder in the face of giants. Naes, Li Bai, Shanghai Jahwa, Nature Hall, Overlord, Longliqi, Lafang, and Blue Moon have only a handful of excellent companies with a certain reputation. It is really worrying who is the next lamb to be targeted.

The future daily chemical market is a resource-determined market. Local well-known daily chemical companies are able to resist through complementary advantages and strong alliances. This may be a way of seeking survival. Zhongshan United States and Japan reached a cooperative alliance with Aussie, which occupies a more obvious competitive advantage in the shower gel market and has the power to counter the strong brand of Olay, Shufujia, Lux and other brands. The purchase of Centennial Rune by Nass made it possible to return to the rivers and lakes, which also enabled Nass to develop from a single household cleaning product to a variety of categories such as hair care and hair care.

"Size effect" and "advantage complementarity" are the key to corporate restructuring of daily chemicals. What superimposes is strength and complements resources. In the face of multinational giants, local brands, especially large-scale enterprises, need to increase speed and layout as soon as possible, cooperate and reorganize, achieve rapid expansion of their brands, product lines, and channels, and further enhance “outside” resistance. .

3. Improve brand competitiveness

In mid-July, Hong Kong’s “Perak Weekly” exposed the tyrannical Chinese medicine “Doxane” as a cancer-causing suspicious product. Within two days, the stock market value of Bawang evaporated more than 3 billion yuan, and the sales dropped sharply; Yunnan Baiyao toothpaste suffered a “functionality door” and consumers would Yunnan Baiyao Group sued the court; in August, Zhang Guang101's Chinese herbal anti-off was trapped in the “Minoxidil Gate” in Singapore, causing many products to go offline... The crisis of the local daily chemical companies followed, and both the brand and the sales Caused a greater impact.

Why local brands are always weak? Oni, Sauvart, Yaqian, etc., after experiencing glory, the market has shrunk and disappeared. The crisis of trust of local companies also illustrates the lack of long-term virtuous development plans and the lack of a social monitoring system. It is particularly important to establish a sound public relations system that is resistant to risks and lasting development. Localized daily production needs to correctly understand the competitive advantages of Japan's chemical industry, and actively modify its own competitive strategy in order to strengthen its own market competitiveness and profitability, and avoid the risk of being acquired by international daily giants.

“Offensive is the best defense”, and even stronger enemies have weaknesses. Attacking their weaknesses and avoiding weaknesses will obviously bring opportunities to more enterprises. In recent years, the rapidly growing Herborist skin care products, Yunnan Baiyao toothpaste, and Overlord shampoo have all The curve took a bloody road and achieved initial success. Its products are all based on traditional Chinese herbal medicine for brand appeal, effectively market segmentation, this is what the transnational daily chemical companies lack, they have come out with a spirit of innovation, and gradually create a comprehensive competitiveness of the national daily road .

China has thousands of years of beauty makeup history. Along with the rapid development of China's economy, the modern daily chemical industry has also developed for decades. We have experienced the history of the 100-year-old Baique Ling, Chinese toothpaste and other old brands in the 1980s, and we have experienced 90 In the 21st century, we saw a splendid era of success. Today, China’s daily chemical market has become the “foreigner” world.

In any case, we can't sit still and we can't allow monopoly to spread in China's daily chemical industry. Every responsible daily chemical worker should shoulder the responsibility of revitalizing the national daily production, even if he writes a qualified product specification. Please stop unscrupulous counterfeiting. Please do not pack fake foreign devils. Please don't produce inferior products. Please take a short-sighted look. Please give up the idea of ​​earning quick money and settle down to make good products. Please look a little further and make a good brand. Don't let this booming Chaoyang industry be full of deception and impetuosity.

The situation is so severe, the road is still winding, and the acquisition of multinational companies continues. We do not want to act as a migrant worker in the international division of labor. To improve innovation, enhance competitiveness, and build strong independent brands, the development of China’s national economy is a long way to go.