Business / Companies

Thinking big and caring big in FMCG market

By Wu Yiyao in Shanghai (China Daily) Updated: 2014-04-17 08:46

"A creative leader must have broad vision, to think with a broad perspective and care about big issues. He or she must have an open mind and be interested in new things. It is important to have passion because during the process of innovation there must be many failures, more than there are successes. You need the passion to carry on," said Polman.

In China - a market experiencing increasingly tough competition - Polman insists that fast growth is his target amid the fast progress of China's urbanization and the surging purchasing power of the expanding middle class.

"We are maintaining double-digit growth. We see no reason for not maintaining a positive prospect given the huge potential of the China market," said Polman.

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It is the same situation for Unilever's competitors in China. In 2013 Nestle's sales increased by 2.7 percent to 92.2 billion Swiss francs ($104.6 billion). Meanwhile, its sales growth in China was 27.6 percent, much lower than the 91.4 percent it managed in 2012.P&G's sales in China surged more than 50 percent in the past three years to exceed $7 billion last year.

Now about 57 percent of Unilever's revenue is generated from emerging markets, among which China plays a significant role.

Macroeconomic conditions may affect the FMCG market with some more significantly affected than others. But as a multinational company with a long history and ample experience of dealing with such issues, Unilever will overcome the hard times, said Polman.

However the target growth is no walk in the park. Unilever plans to increase its business size from 2 billion euros ($2.77 billion) in 2014 to 50 billion euros in 2020, which means annual growth of 14 percent must be met to reach the goal within seven years.

"So long as the population continues to grow, demands for FMCG will grow," said Polman. The rising middle class demands quality products. From a global perspective, people's demand for FMCG increases 3 percent to 5 percent every year. Most growth for Unilever is generated from emerging markets, said Polman.

The CEO believes even the increasing cost of labor, which is disliked by many multinational companies in China, may become an opportunity for growth. "As labor costs grow, purchasing power grows. China has been making great efforts to boost its domestic demand, which is also good news for FMGC suppliers such as us. At the same time we have observed that China is improving its healthcare and social welfare services, which will also push demand for quality FMGC," said Polman.

In Polman's eyes, customers do not buy a fast-moving consumer good simply to satisfy a company's strategy. Instead, they buy it for what it does, its price, the packaging and many other reasons that emerge from the results of a company's activity - for example, how it applied its research and development, the manufacturing and marketing process and after-sales service and customer feedback.

In China, Polman sees one of the keys to growth is bringing customers the best Unilever can deliver. "Many years ago people might ask me if Unilever brings the best products to China, or is it true that products sold in China are not as good as those in the European market. Now no one asks this question. China's market is so important for Unilever - and, in fact, many new products in China are better than those elsewhere," said Polman.

Wang Zhuoqiong contributed to the story.