James Bruce has been Unilever’s CFO for Greater China operations for the past three years, but his history with China goes back over a decade. Bruce joined the food, home and personal care product manufacturer straight out of university and was part of the team that established Unilever’s initial China investments in the early 1990s. He was then dispatched to Beijing in 1996 to set up the firm’s ice cream business, Wall’s China. Now Bruce shares the responsibility for the 20-plus brands that Unilever operates in mainland China, including household names like Lipton, Knorr, Dove and Pond’s. He spoke to CHINA ECONOMIC REVIEW about the firm’s China strategy, as well as some of the challenges involved with introducing new products to the market.
Q: What are some of Unilever’s most successful product lines in China?
A: We’re a unique company insofar as our products spread across home, personal care and food categories. In China we’re competing in laundry, oral care, hair care, skin care, face care, ice cream, tea-based beverages and culinary ingredients. We also have a large food solutions business, which provides food products to institutional users such as staff canteens or hospitals. This year we entered the deodorant category with the launch of our Rexona brand. Unilever is in many more categories globally, but these are the ones in which we have chosen to focus our China business. All of them have equal priorities for growth and all of them are broadly seeing equal performance, which is to say growing well above the market rate.
Q: What led Unilever to enter the deodorant market in China?
A: Unilever’s mission statement is to make brands that meets people’s everyday needs for nutrition, hygiene and personal care. Deodorants are a very powerful part of that story. If you are free of the worry of unsightly perspiration or odor then that helps your self-confidence and helps you to get more out of life. We believe that benefit is relevant to Chinese consumers in the same way that it’s relevant to American or European consumers. It’s a category that’s very new in China, so we have to explain to consumers why they should spend some of their money on deodorant. There are different words for body odor in Chinese, and there’s a fairly common perception that people do not suffer from body odor. Chinese people don’t tend to recognize this as a need. There’s a challenge ahead of us, but we are the global experts in this category and are very excited about the potential that lies ahead.
Q: Where does China fit in to Unilever’s global footprint?
A: We are a powerhouse business in developing nations like Brazil, Indonesia and India in particular. In India, we have a massive business, which is 51% owned by Unilever and is listed on the Indian stock exchange. In China, we are competing with all the other global players to win our fair share of the market. I personally think that China must be one of the most competitive markets in the world. Everyone is investing their best brands, their best communication, their best people in order to try to gain market share. Some of our global competitors have got a size advantage over us in certain categories, but we believe that our growth is outperforming theirs.
Q: What’s behind that growth? Is it simply rising consumer spending or is something changing in the culture?
A: One thing about China is that there’s no one statement that applies. The answer is, all of the above. From my office window in Shanghai, I can look in one direction and see a skyline that rivals Manhattan or Hong Kong. In the other direction I see what is basically a village. The needs and aspirations of consumers in these two places do of course differ and we try to address these different needs. Some of our brands may be more relevant to the affluent consumer who is looking for increased functionality, increased benefit and increased choice. Some of our other brands may talk better to consumers on a slightly earlier part of the consumer evolution curve.
Q: How did Unilever have to adjust its strategy for the China market?
A: All of our brands in China are global brands and they have the benefits that come with scale, starting with the R&D that goes into those brands, the functionality of those brands, and the understanding of consumer needs. After all, what the consumer looks for in a shampoo brand or a laundry brand is very similar across the world. What is different is the way that we execute locally, and in particular how we articulate those brands in China. For example, we launched a shampoo brand called Clear in China last year. The advertising campaign used two celebrities, one was [Taiwanese television personality] Xu Xidi, and the other was the South Korean pop star Rain. The campaign was developed specifically for the China market and spoke to Chinese consumers about dandruff in a way that we felt was particularly relevant to them.
Q: How do you articulate your deodorant brand in China?
A: The approach to consumers in China in very different to the approach in Europe, where consumers are familiar with the category and there is little, if any, negative connotation associated with it. In China, one still has to worry about whether people will feel comfortable having deodorants in their shopping baskets. In addition, every country has a different trade structure. In countries like the US or the UK it is predominantly modern trade with supermarkets and hypermarts. In other countries like India, the modern trade is still relatively small. In China, you have a very young but very large modern trade structure in which every company is competing against one another and they’re all trying to find their way forward.
Q: What are some of the challenges specific to your job as a CFO of a multinational in China?
A: Certainly the constant change, in all dimensions of our business, creates challenges. Our manufacturing footprint is continuously evolving as we cope with high levels of growth and our customers are also continually evolving their business models. As far as the regulatory environment is concerned, the authorities are developing a financial framework to cope with China’s vastly more complex economic environment and we will have to respond to those changes. In addition, Unilever is a large employer in Shanghai with a strong brand image, which allows us to attract some of the very best graduates and some of the very best people out of the whole labor force. Many of them stay with us for a very long time. But one can never be certain that they will be there six months from now because opportunities always arise for them to go to other employers.