DANONE IN CHINA: How Danone developed a strategy to settle on the Chinese market

Résumé du document

Danone is one of the leading international agro-alimentary companies in the world. The group wants to establish itself in the biggest market in the world: China. The problem confronting the group is to sort out the many cultural differences that prevent the group from developing its supply of dairy products. How will Danone succeed in adapting itself to the Chinese market? This and several other questions that come in the way of the group's initiative are discussed in this document.

Extraits

[...] The markets' threats The milk products consumption is different according to the regions: - in average 9,7kg/inhab/year - but 30kg/inhab/year in the mains towns whereas 1,2kg/inhab/year in the rural regions 2. The competition doesn't make the prices lower so the manufacturers prefer high values productions for answering to a demand in high quality products of the part of population with the higher incomes. Danone's strengths Danone in Asia: Danone's turnover for Asia-Pacific: 1,6 Milliards in 2001 of the group's turnover). [...]

[...] Presence in 9 countries. Asia-Pacific: of the group sales. China: 70% of the zone turnover. Turnover per segment: 51% for waters for biscuits for sauces and ready cooked meals for the dairy products. [...]

[...] 25/05/2005 CCM - Dominante MDI DANONE IN CHINA:How Danone developed a strategy to settle on the Chinese market. Introduction The failure of the first attempt The consumption of milk and dairy products in the 70's 80's The prejudices about milk Milk does not belong to the traditional cooking food Weakness of the milk consumption The way Danone tried to win Chinese market shares A difficult market The Chinese are not receptive Necessity to find a solution The prejudices about milk A luxurious product It is reserved to babies and old people Healthy and young people do not need milk Milk does not belong to the traditional cooking food The Chinese consume a lot of cereals They are used to cook with Soya milk The milk industry is quite inexistent The meals are very poor in calcium (the nutritive composition of meals is not rational at all) A difficult market There exists a lot of physical and material brakes: No use of spoon Width of the land Bigness of the distribution nets Intolerance of the population to lactose The Chinese are not receptive Danone failed in attempting to convert Chinese people with dairy products. [...]

[...] Growth of sales in 2004 = 14% : A turnover between 1.5 and 1.7 billion can be expected within 5 years Danone's position in China BISCUITS : 1er in China with Amoy and Soda Crackers but also in India, Malaysia, New-Zealand, Pakistan DRINKS : in China for waters and milk drinks with Wahaha and Health. SAUCES AND ASIATIC PRODUCTS : in Hong-Kong with Amoy. Danone's weaknesses Local and traditional distribution networks are very well developed. Conclusion Danone has finally succeeded in conquering the Chinese market, despite: - the cultural differences - the tough competition It has now a great prospective growth and is on the way to win new market shares. [...]