Unilever expects its sales in China to rise 20 percent and reach 800 million euros ($1.2 billion) this year to push the proportion of its sales from fast growing developing and emerging markets (D&E) for the consumer goods giant close to 50 percent.
Unilever Plc/NV, the company behind Lux soap, Surf detergents and Cornetto ice creams, now expects a third year of strong sales growth in the world's most populous nation after making a slow and faltering start in the 1990s.
"We expect strong growth in China. It is Unilever's top priority in Asia," said Harish Manwani, President of Unilever's Asia/Africa region in an interview on November 16 after an investor seminar. "We have built a 800 million euro business," he added.
Strong growth from China and other Asian emerging markets now mean that Unilever's D&E markets around the world account for 44 percent of group turnover in the first 9 months of 2007 and these markets are growing at 10 percent compared to the overall group which grew underlying sales just 5.3 percent.
Although Unilever lags its bigger rivals Procter & Gamble and Nestle in China, this year's growth will come after 20 percent plus growth in 2005 and 2006 and the group is confident of more growth in this fast-moving economy.
Manwani says Asia has the highest potential for growth at Unilever as it has the 2 powerhouses of China and India and is helping the Anglo-Dutch group outpace market growth in D&E countries which he puts at 9 percent against Unilever's 10 percent.
He said that with such growth it is "inevitable" that D&E markets will provide Unilever with over half of its worldwide sales, put at 39.6 billion euros in 2006, in the next few years.
Furthermore, as Unilever sells businesses under its divestment programme with annual turnover of over 2 billion euros - assumed by analysts to be in the developed world - this will boost the D&E percentage of sales to 46 percent.
Some analysts say that with developed markets like Western Europe only growing at 1 percent in the first 9 months of 2007 then Unilever's D&E markets will hit 50 percent in 2008.
Unilever has a bigger proportion of sales from fast-growing D&E markets than its rivals helped by its historic links with India and Africa, but now they too are expanding fast to offset slow-growing markets in western Europe and North America.
SLOW START IN CHINA:
Unilever's slow start in China dates back to the 1990's when it started a number of joint ventures with Chinese partners, but found that some of the ventures competed between themselves and sometimes Unilever formed one with an eventual competitor.
It took until 2005 to wind up the last of the ventures and now all Unilever's operations in China are wholly owned, and despite a late start it believes it can compete with rivals as brand loyalty remains weak and the industry is consolidating.
Its success to date is patchy across categories, being market leader in fabric conditioners with Comfort, tea with Lipton and packaged soups with Knorr, but it is a challenger and trails others in toothpaste, shampoo and fabric cleaners.
Still, recent launches have pin-pointed growth markets such as its anti-dandruff shampoo Clear which targets the 70 percent of Chinese with dandruff "concerns", Lipton is doing well in the oldest tea market in the world and Knorr is growing in what is the world's biggest soup market.
Unilever's head of China Frank Braeken says the race in China is still open as the markets for Unilever products are conservatively estimated to grow by 7 percent a year in the future, while the market is still very fragmented with for example some 500 small haircare brands in China. After a big marketing push, China is now the biggest market in the world for its Cornetto ice creams, he told the seminar.
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