L’Oréal is pulling its Garnier brand out of China. Good. Last week Revlon said it would leave the country altogether, incurring a $22m charge. Also good. And they are not the only consumer companies taking a more sceptical view of China.
Last year UK retailer Tesco put its Chinese business into a joint venture with a local partner rather than go it alone. And Germany’s Metro closed its Media Saturn electronics stores in the country.
For too long all China investment has been seen as good investment. There is a map doing the rounds on the internet with a circle drawn around India, China and southeast Asia: more people live inside the circle than outside. Companies that led the charge into these markets (such as Unilever) have seen their share prices rise. Those perceived as slow to enter (such as Procter & Gamble) have underperformed.
This has been more about perception than profits. The US’s Home Depot and the UK’s B&Q failed to create a DIY market in China, for example. Those that have managed revenues have seen profits squeezed by competition. According to Bernstein Research, China makes up 71 per cent of Asian beer volumes, but 17 per cent of profits.
That does not mean brewers should abandon China. A small margin on a big revenue number can still equal a big profit. But it does mean all consumer-facing companies, be they retailers or manufacturers, need to be more selective about what is in reality a collection of markets.
They also need to be more upfront with their investors about what China does and does not mean. Not one of Walmart, Unilever, Nestlé and P&G – to take four large consumer groups at random – details how much profit is made in China. There should be more coming out of China than sales growth numbers.
长久以来，进入中国市场的投资都被视为好投资。网上流传着一张地图，围绕印度、中国和东南亚画了一个圆圈：在圆圈里面生活的人多于外面。率先进军这些市场的公司（例如联合利华(Unilever)的股价一路上涨。而那些被认为进军步伐缓慢的公司（例如宝洁(Procter & Gamble)则股价表现不佳。
但这更多是一种感性认识，而非利润理性。例如，美国的家得宝(Home Depot)和英国的百安居(B&Q)都未能在中国缔造一个DIY市场。而那些成功获利的公司却发现其利润因为竞争而受到挤压。根据伯恩斯坦研究公司(Bernstein Research)的数据，中国占亚洲啤酒销量的71%，却仅占利润的17%。