Nirmainterim-rpt,ContentsPage,A.Fierce competition from international and domestic players has imposed 3 great challenge on Henkel B. To achieve turnaround, Henkel should adopt an aggressive expansion strategy 10 C.Roland Berger will help develop the appropriate strategy: project outline12 D. Project organization and time frame 22 E. Value of the project 12 F. Roland Berger is a best partner of Henkel to exploit China detergent market:12 selected reference Annex A: Case study - Qiqiang32 Annex B: Case study - P&G42,A. Fierce competition from international and domestic players has imposed great challenge on Henkel,Nirmainterim-rpt,After fast increase in earlier 1990th, annual growth of China detergent market has slowed down in these years,National market volume of laundry detergentin Mio. tons,1993,1994,1995,1996,1997,2000*,* Estimation,Source: Chinese light Industry Yearbook(1999), Roland Berger & Partners analysis,1.9,2.2,2.8,2.6,2.7,2.93.0,+8.2% p.a.,23%p.a.,Nirmainterim-rpt,Overcapacity in detergent indudstry leads to price reduction and thus reduces the product profitability,At present, there are about 150 manufactures in detergent industry with capacity of 3.8 million tons, but total market volume is about 2.7 million tons, so the utilization rate of capacity is about 70% Marekt entry of detergent industry is pretty low and there lies a lot of unregistered factories, If taking their capacity into account, the utilizaition rate will be furthur reduced to about 50%-60%,11%,1998年,1999年,3%,Tide,OMO,18.0,16.5,18.8,Whitecat (regular powder),1998年,1999年,Average price reduction of the whole industry is 10%,Nirmainterim-rpt,After having established prominent position in high end market, P&G and Unilever begin to penetrate middle and low end market,Market structure of high end (Price：10RMB/Kg),Market stucture of middle end (Price：710RMB/Kg),Market structure of low end (Price：7RMB/Kg),Proportion of high end market is 11.9%,Proportion of middle end market is 31.8%,Proportion of low end market is 56.3%,P&G,Others,Benckiser,Unilever,P&G,Benckiser,Others,Henkel,Henkel,Unilever,Others,Resource: AC Nielson retailing audit 1999-2000,Nirmainterim-rpt,Brand Share Company Tide 6.0% P&G Ariel 2.2% P&G OMO 2.4% Unilever Power 28 1.1% Benckiser Persil 0.1% Henkel,Market share of international playersbrands in different segment,Brand Share Company GFL 2.2% P&G Panda 1.9% P&G WIPP 1.0% Henkel Tianjin 1.8% Henkel Dosia 1.0% Benckiser,Market stucture of middle end (Price：710RMB/Kg),Market structure of low end (Price：7RMB/Kg),Brand Share Company Fangcao 2.5% Unilever Yunquan 0.8% Unilever Sunlight 0.2% Unilever Seagull 2.9% Henkel Tiantian 1.5% Henkel Guilin 1.2% Henkel,Market structure of high end (Price：10RMB/Kg),Resource: AC Nielson retailing audit 1999-2000,Nirmainterim-rpt,Nirmainterim-rpt,Although a late comer, Benckiser has successful penetrated north market with Dosia through well-designed entry strategy,Through acquiring distributors from P&G, Dosia chose Liaoning province as its initial entry area In Heilongjiang and Jilin province, competitors are not so strong as that in other parts of China. local brands, such as Tiantian, are in dominant positions, so Dosia chose these two province as subsequent penetration areas Competition is in choas in Shandong, and distribution network is not well regulated with lots of small distributors/wholesalers competing with each other, so it is easy for Dosia to penetrate the market and cultivate its qualified disbition channel In order to guarantee the success, channel penetration is also backed up by strong advertisement champaign,Marekt share of Dosia in north China,Jan 1999,Mar 1999,May 1999,Jul 1999,Sep 1999,Nov 1999,Jan 2000,Resource: AC Nielson retailing audit 1999-2000,Nirmainterim-rpt,Some domestic players are also making efforts to achieve fast growth and national presence,Market share of Qiqiang,Market share of Libai,Resource: AC Nielson retailing audit 1999-2000,Nirmainterim-rpt,Fast growths of domestic players are supported by their rural focus strategy, nationwide manufacturing network and direct sales model,Market penetration strategy taken by fast growing domestic players,Rural focus strategy,Nationwide manufacturing network,Direct sales model,Rural market is large but is dominanted by weak regional brands International players have weak performance in rural area,Logistic cost is high in detergent industry accouting for over 10% in total value Long distance transportation in China is not oonvient,For a new comer, it is not easy to get qualified local distirbutors,Reason,Method,Result,First penetrate rural market and town After achieving strong perfromance in rural area, then penetrate city and large county,Acquiring local players in different areas (Qiqiang) Signing OEMcontracts with local players in different areas(Guangdong Libai),Directly selling produc