Page 21 - Sphere No.30 (Dec 2011)

Sphere 30
THE LATE CHINESE LEADER Deng Xiaoping once said it
does not matter if a cat is black or white so long as it catches
mice. Nothing could be further from the truth in the case of
Shanghai-based White Cat. The feline featured in the latest
rendering of the famous laundry brand’s logo is whiter than
ever, after a makeover by Hutchison Whampoa (China)
Limited (HWCL).
The new-look White Cat is primed to “catch” sophisticated
city homemakers from Mainland China’s “golden generation”
of 25-to-35 year olds. The veteran brand is also striving to
recapture the commanding heights it once occupied in the
Mainland’s household detergent market, which this year is
worth an estimated USD8.3 billion (HKD65 billion),
according to independent research company Datamonitor.
The manufacturers of White Cat pioneered the use of
concentrated laundry powder in the Mainland nearly
50 years ago. Later, the company was among the first to
produce liquid laundry detergent and the first to offer
dishwashing liquid. In 2006, HWCL acquired 80 per cent of
the state-owned enterprise behind White Cat, establishing the
Shanghai Hutchison Whitecat Company Ltd (SHWC).
The White Cat brand was extraordinarily well known,
with about 90 per cent recognition even in remote regions
of the Mainland. It had also received prestigious awards
over the years for branding and sales. But it had fallen
behind the times. “It had become a sleepy old cat while its
competitors were wide awake,” said SHWC’s General Manager
Thomas Tsiang.
By 2008, White Cat’s share of China’s market for
household detergent products – while still a business worth
RMB7.7 billion (then about USD0.87 billion) a year for the
enterprise – had declined to less than 15 per cent, according
to Datamonitor. “White Cat had almost lost its ‘voice’ in the
market,” Mr Tsiang commented. “Our first challenge was to
give the brand a facelift.”
The task involved far more than a cosmetic nip, tuck and
trimming of whiskers.
HWCL Managing Director Simon To, who is also
Chairman of the joint venture, recalls that his team had to
start from scratch after buying into White Cat. “We had to
revamp the whole product line, the whole management
organisation, the manufacturing side of the operation, the
research and development organisation and
the whole sales organisation.”
The trail that led HWCL to White Cat
started in 1988 when US consumer goods
giant Procter & Gamble sought Hutchison’s help to enter the
Mainland market. “Our partnership with them in China’s fast
moving consumer goods (FMCG) sector was so successful
that they became the largest consumer product company
there,” said Mr To.
In 2004, Procter & Gamble decided to buy back its entire
interest from Hutchison for HKD16 billion. “Having made so
much money from the FMCG business, I wanted to see if we
could buy a brand for ourselves in the Mainland and repeat
the success we’d had with Procter & Gamble,” Mr To said.
“The White Cat opportunity came along.”
When the Mainland opened its doors wider in the 1990s
to imports from multinational corporations, White Cat was
among many casualties from the state-owned sector. The
newcomers had huge advertising budgets for building brand
awareness while White Cat invested little in its own brand
profile and distribution. White Cat also suffered from the rise
of private Mainland entrepreneurs who aggressively entered
the market with laundry detergents of their own.
Revamping the enterprise that owned White Cat was
lengthy, costly and at times painful, according to Mr To. It
involved closure of inefficient plants and the retrenching of
some 4,000 employees, many of whom had been there for
decades. Moreover, there was no road map to follow as few –
if any – other overseas investors had successfully taken over
and transformed a Chinese state-owned enterprise.
“But this has always been the way Hutchison China has
been successful,” maintained Mr To. “We’re always a pioneer
or a trailblazer.” He added that he was fortunate to have a
strong team of loyal, committed executives who had been
with Hutchison China for 20 or 30 years. He rotated them in
and out of demanding stints at White Cat’s head office in
Shanghai. “They all have the same belief that if we work hard
at a challenge and treat it as if it were our own business, we
will solve the problem.”
HWCL also received strong financial support from
the Hutchison Group in Hong Kong as well as from the
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