---
title: "From P&G's 'Old Three Classes': Unveiling the Thrilling 'Entrepreneurial History' of P&G China"
description: "There is a friendship called 'P&G's Old Three Classes.' As a generation of foreign enterprise employees, we are unfamiliar with the concept of a 'work unit,' especially one from which you can retire. So you can imagine my surprise when I personally met the 'Old Three Classes' seniors who had retired from P&G. I had never thought that anyone would retire from a big foreign company like P&G, or that they would still gather weekly to chat and climb mountains, or that they would have such deep affection for a foreign company."
author: "麦青Mandy"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-10-11"
categories: "Management & Methods"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/FxxMqcVAY63WH_qQl1ueIQ"
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citation: "麦青Mandy. “From P&G's 'Old Three Classes': Unveiling the Thrilling 'Entrepreneurial History' of P&G China.” New Distribution, 2016-10-11. https://xinjignxiao.com/en/articles/from-p-g-s-old-three-classes-unveiling-the-thrilling-entrepreneurial-his-57739347/"
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---

# From P&G's 'Old Three Classes': Unveiling the Thrilling 'Entrepreneurial History' of P&G China

> There is a friendship called 'P&G's Old Three Classes.' As a generation of foreign enterprise employees, we are unfamiliar with the concept of a 'work unit,' especially one from which you can retire. So you can imagine my surprise when I personally met the 'Old Three Classes' seniors who had retired from P&G. I had never thought that anyone would retire from a big foreign company like P&G, or that they would still gather weekly to chat and climb mountains, or that they would have such deep affection for a foreign company.

> **There is a friendship called 'P&G's Old Three Classes'**
For our generation of foreign enterprise employees, the term 'work unit' is basically unfamiliar, especially a 'work unit' from which one can retire. Compared to the workplace predecessors of the 1980s and 1990s, we may not have a strong sense of belonging to a 'work unit,' nor do we have long-term plans or expectations.
So you can imagine how surprised I was when I personally saw the 'Old Three Classes' seniors who had retired from P&G!
To be honest, I had never thought that anyone would retire from a big foreign company like P&G, or that they would still gather every week to chat and climb mountains, or that they would have such deep feelings for a foreign company.
But this is the ordinary life of P&G's 'Old Three Classes.' What are the 'Old Three Classes'?
Actually, it's a collective term referring to the first few batches of employees when P&G first entered China. Many P&G people are unaware that during P&G's early days in China, there was not only the passion of struggle and the difficulty of pioneering, but also the same spirited youth, and even conflicts and integration among several factions...
**Among these 'Old Three Classes' were not only management trainees, but also employees from Guangzhou Soap Factory, cadres from Guangzhou Light Industry Bureau and Guangzhou Development Zone, employees from Hong Kong's Hutchison Whampoa, the first batch of foreigners sent to China to pioneer, and the first batch of promotion girls.**
> **A Troubled Entry into China**
Many people wonder why there were so many factions back then.
At that time, shortly after the reform and opening up, national policy did not allow wholly foreign-owned enterprises. Although P&G was already an established FMCG giant in the West, in China, a country waiting to be revitalized, it still had to comply with Chinese policies and had to find local partners.
Speaking of this, one has to admire P&G's foresight. Although China in the 1980s was still very poor and had little consumption power, the pioneering elites at P&G headquarters had already shifted their gaze from Europe and America to China, boldly predicting that the Eastern dragon was about to take off.
Therefore, **in 1985, P&G's US headquarters first sent a consulting team (Nielsen) to China, spending 5 million RMB and a full year conducting market research!**
Even today, this sounds incredible. Who would invest heavily before making any money, in a place with no consumption level, spending a whole year on consumer research?
Perhaps only P&G would. This is the secret to P&G's century-long development—daring to be first, bold and honest investment, and extremely professional business expansion.
After P&G entered China, Unilever, L'Oréal, and other giants followed, making one wonder—were they all waiting for P&G, the honest fool, to invest in market research, verify the market potential, and then hitch a ride into China?
After spending the entire year of 1985 on market research, in 1987, P&G's US headquarters sent another advance team to China to find partners.
At that time, five state-owned enterprises (which seemed to be the only type then) were on P&G's potential partner list, including Tianjin Oil Factory, Shanghai Jahwa, and Guangzhou Oil Factory, scattered across the country.
Among them, Shanghai Jahwa apparently didn't know what P&G did... so they proudly refused to cooperate. It's estimated that most enterprises at that time were similar, as they were all state-owned, with no clear boundary between enterprise and government, and enterprise leaders were also national cadres, so few had heard of the outside world.
Eventually, with the facilitation of the Guangzhou government, P&G chose Guangzhou Oil Factory and planned to negotiate in-depth cooperation. At that time, Guangzhou and Shenzhen were at the forefront of reform and opening up, with more open-minded governments and broader vision, able to see the value behind the Western giant P&G.
**However, the cooperation was not smooth—because of a 'product selection' problem.**
P&G's long-standing flagship product was laundry detergent, and even today, laundry detergent is its best-selling product globally. So naturally, P&G chose laundry detergent to lead the way, and Guangzhou Oil Factory happened to produce laundry detergent.
But at that time in China, laundry detergent was a state-controlled commodity, even more strictly controlled than petroleum today. It could only be produced by the state, not by any foreign enterprise or private entity. Even in a reform-frontier city like Guangzhou, even with government help in communication, it was ultimately difficult to implement.
After lengthy fruitless negotiations, the oil factory planned to withdraw...
P&G, helpless, also planned to withdraw...
The government, anxious, repeatedly stopped them and brought out a new partner: Guangzhou Soap Factory!
At that time, Guangzhou Soap Factory was still a small factory.
How to describe 'small'? Few workers, dilapidated workshops, and even the office building stairs were in disrepair, creaking and trembling as you walked.
**Alas, one was a small backup factory pushed to the forefront in a daze, and the other was a Western giant that couldn't show its prowess.**
Hey, unexpectedly, things took a turn, and they actually reached an agreement!
The first product produced by P&G and Guangzhou Soap Factory was: Head & Shoulders shampoo!
What was the price of Head & Shoulders shampoo then? Roughly half a month's salary of an ordinary worker. How did they sell it? More on that later.
> **Several Factions, Conquering the Market Together**
> **The initial shareholders of P&G China were as follows:**
>  ● P&G US—responsible for sending the first batch of foreign employees to expand territory, introducing production lines, supervising production, training employees, and comprehensively establishing P&G's market and sales systems.
>
>
>
>
>
> ● Guangzhou Soap Factory—responsible for production and sales.
>
> ● Guangzhou Light Industry Bureau—responsible for providing management personnel.
> ● Guangzhou Development Zone—responsible for providing land.
> ● Hong Kong Hutchison Whampoa—responsible for foreign exchange work.
> ● Management Trainees—recruited by the foreigners, they were the future management layer.
How could these factions coexist peacefully? At first thought, it seems extremely difficult. After all, their interests were not entirely aligned, they didn't necessarily trust each other, and their ways of thinking were vastly different.
Fortunately, they all had a common goal: to do business. Only if business was good would everyone's lives be better!
**Whenever there was a conflict, Chairman Ma would mediate—he was the first and most legendary boss in P&G China's history.**
At that time, after the Light Industry Bureau took on the P&G project, according to the agreement, the Bureau had to send a management cadre to serve as chairman. So the Bureau was worried: who should we send to handle things while minimizing risk?
After much deliberation, they finally sent a retired cadre, Chairman Ma (hereinafter referred to as Chairman Ma)—since he was retired, if he managed poorly, it wouldn't reflect badly on the Bureau; if he managed well, it would be a merit for the Bureau.
So, the organization's original intention in sending Chairman Ma was complex.
But unexpectedly, Chairman Ma, a retired old cadre, successfully completed the task assigned by the organization!
How did he do it? Through extraordinary emotional intelligence and management skills—commonly known as 'smoothing things over' (not in a derogatory sense).
Think about it: in such a complex situation back then, if any party had a problem, it would have an irreparable impact on the whole. Chairman Ma, with his superb 'smoothing' ability, balanced the relationships among the factions, protecting the Chinese, understanding the foreigners, and driving overall development.
Back then, everyone loved Chairman Ma! Even the foreigners, more than twenty years later, still call him every year from abroad to greet him.
> **The Mahjong-Loving Chairman and the Mao-Selected-Works-Reciting Foreign Director**
When Chairman Ma traveled on business, he had to bring mahjong. Once official matters were handled, he would take colleagues or clients to the hotel to play mahjong, mahjong!
Besides the mahjong-loving chairman, there was also a foreign director who loved reciting Mao's Selected Works—Andy Xie (is this comrade a brother of Nicolas Cage? They look so alike!)
Comrade Andy was the sales director at the time, a young and aggressive leader sent to China from US headquarters.
Speaking of which, how did the first batch of foreigners come to China back then?
At that time, P&G was already an established private company in Europe and America, with a huge structure, strict systems, and mature hierarchy. It was difficult for young managers to get promoted in a mature system, but if they volunteered to go abroad for three to five years, things would be different upon return.
So, **the first batch of people who came to China to pioneer all signed voluntary agreements—they were full of passion, had abundant energy to conquer the universe, were brave to explore, willing to endure hardship, and very down-to-earth. Back then, the foreigners ate and slept with the soap factory workers, showing great endurance.**
Most of the foreigners at that time were responsible for production and marketing, while Comrade Andy was the only sales department head. Before coming to China, he had been diligently practicing Chinese, and when he spoke, it was fluent 'Beijing dialect' with erhua!
Moreover, he had a unique skill that no one else had—he could recite 'Selected Works of Mao Zedong.'
**At a sales meeting that year, to encourage everyone to work hard to expand the market, Comrade Andy quoted Chairman Mao—Chairman Mao said, 'Be resolute, fear no sacrifice, surmount every difficulty to win victory.' Comrades, we must listen to Chairman Mao and work hard to expand the market!**
It's hard to imagine a tall, blond, blue-eyed, hairy foreigner suddenly speaking Mao's quotations with a serious face—scary, right? The clients were startled, then burst into laughter, giving thumbs up: Old Xie is reliable!
Well, this is probably the most classic example of 'when in Rome, do as the Romans do.'
> **Guessing Sales, Transporting 'White Powder' by Plane**
The most headache-inducing thing back then was how to predict sales. Because they had just entered China, no one had a clue, and without historical data, they couldn't establish a sales forecasting system.
So, how to arrange production? It all depended on guessing, patting chests, and slapping thighs.
Often, the sales head (i.e., Comrade Andy and his successors) and the supply chain head would sit together, 'gigi gigi gigi,' and come up with a number, then immediately arrange production.
One year, a large batch of Olay was produced but not sold on time. As a result, 3,000 excess bottles of Olay were destroyed.
**Another year, laundry detergent in a certain region sold out quickly, and production couldn't keep up. So P&G urgently airlifted laundry detergent from Chengdu to support, but at the airport, they were stopped and questioned repeatedly: 'This isn't really white powder, is it?'**
Despite many funny incidents, business was still growing rapidly. But the other side of growth was rampant counterfeiting—countless fake Head & Shoulders and Safeguard products appeared across the country. P&G China set up a special 'Anti-Counterfeiting Office' whose main business was fighting counterfeits. That year, P&G even brought in the FBI to investigate counterfeit goods!
Besides the stories of transporting 'white powder' and FBI investigations, there were many other little-known anecdotes. For those, you'll have to watch the video below.
These stories sound like a TV drama, but they truly laid the foundation for P&G's glorious early years in China. Indeed, history with flesh and blood is the real history.
> > This article was first published on WeChat public account [Mai Qing Za Wen Pu] (ID: mqzwp2015)—sharing the most authentic workplace management, marketing experience, and beauty truths, occasionally writing emotional essays on a whim. It has been republished with authorization. For reprinting, please contact 'Mai Qing Za Wen Pu' directly. Mai Qing Mandy, a talented woman from Peking University, is a senior brand marketing expert who has worked in Fortune 500 foreign companies and private enterprises, and is now a partner of SEED UNIED Internet Marketing Company.
-END-
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## Citation metadata

- Publisher: New Distribution
- Author: 麦青Mandy
- Published: 2016-10-11
- Canonical: https://xinjignxiao.com/en/articles/from-p-g-s-old-three-classes-unveiling-the-thrilling-entrepreneurial-his-57739347/
- Original source: https://mp.weixin.qq.com/s/FxxMqcVAY63WH_qQl1ueIQ

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