Unilever Faces China Cliff

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Unilever has been luxuriating in unimpeded growth in sales of nutrition, hygiene and personal care products in China’s brick and mortar shops until now. Currently the multinational is having a standoff with online shopping stores that are taking Asian consumers by storm. It initially blamed the stuttering economy for the 20% downturn in sales of Dove Soap, Lux Shampoo and Comfort Fabric. Then it thought again and realised it was staring over an internet cliff and this was hurting its stock badly.

Unilever Not Alone in This

Nestlé SA has been experiencing the same difficulties, and has been resorting to burning instant coffee it can’t shift before sell by dates. Colgate-Palmolive and Beiersdorf AG are also apparently experiencing overstock problems too. Unilever’s CFO Jean-Marc Huët commented that consumer-goods companies in China were ‘too slow to react to the changes in the marketplace’ in April, although he refused to be drawn into whether his company was the worst victim.

He should have known better. The exodus from retail shopping is a worldwide phenomenon, although the move is most rapid in China which recently discovered smartphones, and fell in love with them.

Huge Numbers in Chinese Online Shopping

The sheer weight of China’s immense population size produces astounding statistics. There are already 461 million online consumers, and this is ten times the number in 2007 when online sales started taking off. The growth in the past four years has been 70%, 51%, 59% and 49% respectively and is reverberating across China.

Has Unilever Blotted Its Copybook

Unilever’s lost sales have gone elsewhere and that is onto the web. Its competitors have stolen a march and established new brands that will be competitively priced. Unilever is going to have come up with something innovative very quickly, or else it may have lost those consumers and its strong presence in China forever.

About Author

Social Brand Watch (SBW) is a collection of experts in digital, mobile and social media in China. SBW was created to complement Resonance's China Social Branding Report, a bi-weekly report focusing on modern marketing methods of the world's top brands in China.

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