The 20 largest FMCG and consumer goods companies of China

02 August 2018 Consultancy.asia

The 20 largest Chinese fast-moving consumer goods companies have been revealed in a recent analysis report, with the top three firms accounting for close to half of the growth in the sector.

A recent market analysis of the biggest players in the Chinese fast-moving consumer goods (FMCG) sector has revealed the 20 largest local operators, combining for revenues in excess of a 720 billion yuan (>US$100 billion). Of this sum, the privately owned meat and food processing company WH Group was well out ahead in the top spot, contributing ~144 billion yuan alone.

Joining the WH Group were the market’s other clear giants in the oil and grain company China Agri-Industries Holdings Food and Beverage (~68.65 billion yuan in revenues) and the state-owned Inner Mongolian dairy producers Yili Group Food and Beverage (67.48 billion yuan) – the three outfits together accounting for nearly half of the sector’s recent revenue growth.

Despite the growth, however, which for China Agri-Industries and Yili Group were recorded at a respective 16 and 13 percent, the report points to an overall industry slowdown, with strong competition and a continuing focus on shifting traditional markets variously constricting growth – the saturation of the traditional beer market given as an example, as local consumers turn to artisanal beverages.*The 20 largest FMCG and consumer goods companies of China

Still, the remaining companies outside of the three leading players (WH Group revenues grew by 5%) achieved an average growth rate of 8.6 percent, with the sixth biggest company, Chinese liquor producer Kweichow Moutai, registering a staggering 53 percent hike in revenues. The jump, according to the report released by Ouyi Analysis Consulting, can be put down to international expansion, strengthening both the domestic brand and capturing new customers.

According to separate data from OC&C Strategy Consultants, the two largest Chinese FMCG companies in 2017 were WH Group – the largest pork producer on the planet – and instant noodle producer Tingyi (which placed 5th in the recent Ouyi report), with both among the top 50 FMCG players in the world – WH Group as the 17th largest globally and Tingyi moving to 48th.

Meanwhile, Kweichow Moutai has been ranked as the seventh most valuable Chinese brand of any sector according to market research analysts Kantar, rising 43 percent year-on-year to a value of over $23 billion – with the firm now estimated to have an overall value of more than $145 billion, making it the most valuable liquor producer in the world.

* Recently, the global strategy and management firm Bain & Company outlined the two-speed growth trajectory in the FMCG market of China, with health and lifestyle-conscious consumers turning to new premium offerings – findings backed by a global FMCG survey conducted by fellow management firm McKinsey, which found that 20 percent of Chinese consumers had ‘traded up’ to upscale consumer packaged goods brands over the past year.

Excessive technology can be counter-productive in new retail, says S.POINT

05 April 2019 Consultancy.asia

Technological advancements have in recent years opened the door to ‘new retail’ – but an overreliance on technology can be counter-productive for retailers, argues Steven Jiang, Managing Partner of Shanghai-based innovation consultancy S.POINT.

Moving beyond just a buzz-word, the ‘new retail’ business model has outright boomed in recent years, most notably driven by Chinese e-commerce giant Alibaba. Striving for the seamless integration of offline and online shopping channels, together with a mesh of big data, logistics, marketing and distribution, the emergence of new retail has been undoubtedly enabled by rapidly evolving intelligent technologies.

But, as Steven Jiang, Managing Partner and Vice President of Shanghai-based product innovation consultancy S.POINT notes, not all enterprises have the strong technological genes of Alibaba. Jiang contends as such that enterprises in the new retail space can have a tendency to over-rely on technology, with its excessive application and misapprehension of the space producing effects counter to intentions.

“Developers with a misunderstanding of new retail are over-dependent on technology and believe that technology changes and solves everything, which is an extreme obsession with technology,” states Jiang. Rather, new retailers should as a starting point consider scenarios across the shopping and buying life-cycle and the combination of human and technological elements to create a seamless customer experience.Excessive technology can be counter-productive in new retail, says S.Point“New retail should pay particular attention to the sense of balance to connect technology with customers to create a better experience – as the application of excessive technology leaves no room for the development of the relationship with customers,” says Jiang. “The key lies in the insight into customer scenarios, and only by understanding and extending scenarios for their consumers can organisations have the chance of winning new retail opportunities.”

An MBA graduate from the MIT Sloan School of Management and former consumer and industrial goods consultant with Booz & Company, Jiang was a founding member of the China Industrial Design Institute and now serves as Managing Director for S.Point, a 1997-founded Chinese consultancy and Cordence Worldwide member with offerings in consumer research, product definition & design, product delivery, go-to-market strategy, and innovation capacity building among other provisions.

With respect to his contentions on new retail, Jiang points to the modern self-serving vending machines that have emerged in the past few years, which are very advanced in terms of technology but haven’t been entirely successful – separated as they are from consumer scenarios. “Consumers will not approach technology proactively,” he says. “Only when technology is made close to customers’ needs can it find its market.”

Noting that the center of shopping has shifted from the merchandise in traditional retail to customers in new retail, Jiang concludes: “Enterprises hoping to grasp new retail should understand traditional retail from the heart – i.e. consumers see the product first, then recognise the brand, and compare prices in the end. If consumers cannot see the product or understand the product it will be very difficult to push sales . . . the key to new retail lies in creating new and more scenarios to increase the value of the merchandise.”