Rules of the Road: Learning from China’s trade structure
Jack Ma, the founder of Alibaba once said, “You should learn from your competitor, but never copy. Copy and you die.” As the Chinese consumer healthcare market continues to rocket forward, what can we learn from them? For my dollar — or yuan — quite a bit.
In some ways, China is moving toward a U.S. trade structure although the emergence of traditional retail has been in the large shadow of e-commerce. Global powerhouses like Watson’s or Walmart have had different levels of success. Don’t underestimate some of the homegrown chains (Nepstar comes to mind) nor the uniqueness of the Chinese consumer. I am always amazed by the space allotted to traditional Chinese medicine vs. western brands. Chinese retail is deftly combining both. Their ability to readjust store space and globally source products is admirable. And who knew that Wisconsin produces some of the most prized ginseng? Ginseng-heads at a Green Bay Packers game doesn’t fit.
China also has forged a new world. Ma’s Alibaba is exhibit A with its two e-commerce divisions, TMall and Taobao, which we would recognize as Amazon and E-bay respectively. It’s a game-changer having these two under one roof. Having negotiated in setting up e-commerce consumer healthcare brand flagship stores (and not just TMall), I am struck by the interplay of pricing information between the two platforms. Taobao can and does feature branded product, bought on deal in the United States by aggressive small operators. The structured TMall trade promotion “requirements” coupled with the holiday price discounts is complicated. November 11, known as Double 11, is huge. The United States has nothing that matches the discounting depth. We could learn from this.
China’s Google is Baidu. (Or is it the United States' Baidu is Google?) Given restrictions placed on the Internet, Chinese consumer healthcare e-commerce content is critical as a trusted source of product information. TMall, JD, Koala and many other e-commerce platforms have developed excellent product content out of necessity; we can learn from that.
The frantic pace of parallel growth of traditional and e-commerce consumer health care has also spawned some fascinating hybrids and governmental creativity. Known by several names, cross-border trade has fostered industry/tax authority cooperation. Think of it as a special tax zone; instead of smuggling to avoid a standard 17% import duty a compromise of an 11.9% tax rate has aligned all parties. The government heavily punishes any smugglers attempting complete tax avoidance and the companies have a more even playing field while paying a lower tax rate. It also ensures that knockoffs don’t make it as all companies value consumer trust.
Perhaps more unique are the so-called Demonstration Stores found in the Cross-Border areas. Consumers can sample products and then immediately go to a computer and order online for home delivery. Traditional Retail meets E-commerce and both win. How would a market research firm classify that revenue?
What can US companies learn from China’s consumer healthcare trade structure? Here’s a partial list:
- Content delivery. China’s e-commerce platforms are quite good given their realities.
- Logistics of HUGE temporary price discounts. Understand Double 11.
- Hybrid structures where e-commerce and traditional blur.
Long before Jack Ma, the famous Chinese military philosopher Sun Tzu wrote, “Know the enemy and know yourself; in a hundred battles you will never be in peril.” The Chinese Trade isn’t an enemy, but we can learn from them.
Ed Rowland is a Drug Store News contributing editor covering global issues. As the principal of Rowland Global, he believes in the promise of global business and supports companies in their strategy, tactics and execution of international growth initiatives.
Gillette unveils line of disposable and refillable razors for men, women
Gillette is aiming to meet the grooming needs of both men and women by offering new, innovative bundles of products that hit a wide range of price points. The Procter & Gamble owned brand will feature the Gillette and Venus lines within this launch, which are to include disposable and refillable products available in January 2018.
These new bundles will include the Boston-based company’s first ever cooling technology for disposable razors, refillable razors for under $10, and facial hair removal device for women.
“For over a century, our goal has been to deliver the best, most reliable grooming experience possible for consumers,” Charlie Pierce, Group President, Global Grooming, P&G said. “With this launch, we are demonstrating that this commitment is true for every single product tier in our portfolio – and we are making Gillette’s technology even more accessible to men and women everywhere. We want consumers to know that whatever their need, we have a product that will deliver a superior experience and unbeatable value.”
New offerings of disposable and refillable razor technologies for men will include:
- Gillette Sensor3 Cool, disposable razors with Cooling Technology: Designed for the 10 million men who prefer the disposable razor form and are looking for a cooling and refreshing benefit will be available for the suggested retail price of $4.99 – $6.99;
- Gillette3 and Gillette5 razors: Targeted towards the male consumer searching for high-quality refillable razors, at a low price. These products deliver an ultra-close and comfortable shave, and are featured with a new Aqua Grip handle, providing a strong grip and total control even when wet. The Gillette5 also will feature Atomic Carbon and Telomer coatings that enhance blade durability after shaving. These three-and-five bladed razors can be purchased for the suggested retail price of $7.99 – $9.99; and
- Improved Gillette Fusion5 and Gillette MACH3 cartridges: Both products have been upgraded with Low Cutting Force blades, which are finer and thinner with a low-resistance coating. This enables the blades to cut easily through hair. The MCH3 can be purchased for the suggested retail price of $9.99 and the Fusion 4-pack of cartridges will be available for the suggested retail price of $14.99.
For women, Venus will be introducing several new refillable products to aid hair removal needs, which will include:
- Venus Face Perfection: This product is ideal for areas such as the upper lip, eyebrow, chin, and forehead. The device delivers longer lasting facial hair removal at home, according to the brand, catches hair up to four times shorter than waxing, and can be purchased for the suggested retail price of $34.99;
- Venus Bikini Precision: Looks to provide a convenient solution by enabling the consumer to confidently trim and shape the area. The product comes in a slim, pen-like design that’s easy for storage and can be purchased for the suggested retail price of $19.99; and
- Venus Platinum: A refillable razor with the brand’s first metal razor for women, and is part of the Venus Extra Smooth family. The razor contains a well-balanced metal handle, is to deliver a smooth, comfortable shave and can be purchased for the suggested retail price of $8.99 for the razor and cartridge.
Restance to promote Playboy condoms in Kenya as part of World AIDS Day
Sparks, Nev.-based Restance on Tuesday announced a contract to manufacture condoms with the Playboy brand name and bunny head logo for distribution in Kenya. The brand initiative is being made in support of World AIDS Day on Dec. 1.
Restance is participating in a campaign to contribute to the United Nations goal of ending the AIDS epidemic by making condoms available everywhere in Africa through the #DoIt4Africa buy-one-give-one campaign where an anticipated $20 million in condoms will be sold in North American and for every condom sold, a condom will be manufactured in Africa and given away in Africa.
Restance has executed an initial $500,000 contract to produce condoms for the campaign.