---
title: "How Hard Is the Daily Chemical Industry? Even the Man Behind P&G Can't Hold It Up"
description: "As Blue Moon products are removed from shelves and P&G streamlines its focus on daily chemicals, the industry faces a cold snap. The article reveals that Yihai Kerry, the man behind P&G, also failed in its own daily chemical brand, Qinjie, due to a lack of consumer experience and outdated strategies."
author: "纳兰醉天"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2015-06-26"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/D3RBY0sbcgHb8p19ZLrpeg"
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# How Hard Is the Daily Chemical Industry? Even the Man Behind P&G Can't Hold It Up

> As Blue Moon products are removed from shelves and P&G streamlines its focus on daily chemicals, the industry faces a cold snap. The article reveals that Yihai Kerry, the man behind P&G, also failed in its own daily chemical brand, Qinjie, due to a lack of consumer experience and outdated strategies.

Source: Nalan Zuijian (纳兰醉天)

With Blue Moon products being removed from shelves in recent days and P&G slimming down to focus more on the daily chemical industry, more and more people are paying attention to this sector, as if a cold snap is approaching. So how hard is the daily chemical industry? Old Na can only tell you that even the man behind P&G hasn't been able to hold up the banner of daily chemicals.

So who is the man behind P&G? This mysterious figure is the internationally renowned enterprise Yihai Kerry. Mentioning Yihai Kerry, some people might pause and wonder, what brand is this? It seems unfamiliar. Yihai Kerry is the most famous sugar company in Singapore. It is said that more than half of the world's sugar is controlled by Yihai Kerry. At the same time, Yihai Kerry's most well-known brand in China is Arawana (金龙鱼). Moreover, Yihai Kerry is also a shareholder of Luhua peanut oil and Fulinmen peanut oil, meaning one-third of China's oil is inextricably linked to Yihai Kerry.

Such a huge enterprise has very few employees in China. They take one yuan from the rebate given to distributors and let distributors build their own teams, and they ask distributors to hire professional managers. This makes distributors not just tools for payment, distribution, and delivery, but actual participants and operators of the enterprise. Distributors must build their own teams, which are directed by Yihai Kerry employees. Distributors must learn to conduct consumer activities, market analysis, media relations, government relations, etc. This truly leverages the power of distributors, or rather, it drives distributors forward. Because Yihai Kerry Group knows well that these distributors were once grain and oil clients of state-owned enterprises, who only sat and waited for customers to come to them. In the past, they prepared good oil and waited for people to bring their oil jugs. So Yihai Kerry mobilized these oil peddlers, and in doing so, it also controlled the movements of these distributors, preventing them from having too many of their own ideas. In leveraging distributor power, Yihai Kerry is worth learning from for every beverage company.

The reason Yihai Kerry is called the man behind P&G is that Yihai Kerry is the largest raw material supplier for top daily chemical companies like P&G and Unilever. Due to declining raw material profits, Yihai Kerry launched its own daily chemical brand in China, Qinjie (亲洁), with an operational approach similar to Evergrande Spring Water, using its own former employees and distributors to operate it. Of course, the result was similar to Evergrande's—it struggled terribly. (Let Evergrande take another hit; in the oil, rice, and flour industries, Evergrande is not just a few streets behind Yihai in terms of operations, channels, economic strength, or government relations.)

As the saying goes, you only see the thief eating meat, not the thief being beaten; you only see the prostitute making money, not the prostitute being ravaged. Previously, they were just a madam, but now they suddenly decide to enter the business themselves, thinking they still have some charm (good product quality) and some experience (watching how others operate). They find someone already in the business to introduce them to the ropes (having channels). So they close their eyes, steel their hearts, and think, "It might be painful, but for a higher sky, let's dive in." How has Qinjie fared in these years of diving? What about its STP and 4C?

The so-called STP refers to a theory recently introduced in marketing, which simply put is positioning theory. S stands for market segmentation, T for target market, and P for market positioning. **STP is more about considering products from the consumer's perspective: what consumers need, we produce, or we give our product a facelift to make it look like what most consumers like. This paragraph might be a bit obscure and hard for newcomers to FMCG to understand.** Market segmentation means that all consumers are individuals, each with their own unique aspects, but they also share common preferences, such as sweet in the south, salty in the north, spicy in the east, and sour in the west. This refers to the physiological characteristics of consumers in these regions. Based on these consumers with similar physiological traits, we make a decision: this group of consumers with shared preferences is our target market. Then, we extract the specific preferences of these target market consumers to form our market positioning—that is, extracting the subconscious desires of consumers. For example, Mencius said, "Food and sex are human nature," meaning eating and appreciating beauty are inherent human traits. Here, he treats all people as individuals, and these consumers share a love for food and beauty—these are human nature traits. This is market segmentation. Among those who love food, some are prone to getting heaty (上火). This group of consumers is the target market for beverages. Then, based on this target market, the manufacturer positions its product as "a beverage that can prevent heatiness." Then, based on this positioning, they create the advertising slogan "Fear heatiness? Drink JDB (加多宝)." That's it—this is the simplest STP model. As for how to convey your product positioning to consumers and how to let them know your product's features, that's what sales and promotion need to do.

STP is the skeleton of an enterprise. Once you have a positioning, you need to maintain a figure that matches your positioning, i.e., your price. Since the entry barrier for FMCG is quite low, many companies can copy other companies' STP. For example, after JDB lost the "王老吉" brand, Guangzhou Pharmaceutical copied JDB's entire approach. Here, we should note that JDB has had no real competitors in the market for many years; most of its competitors were imaginary, like the two colas (Coca-Cola and Pepsi) and Master Kong and Uni-President. But there has been no direct conflict among them. Although they are all beverages, the two colas and Taiwanese companies didn't want to get involved in the segment JDB was in, or they didn't see potential in it, mainly because the two colas didn't understand it. However, Dali Group, by further segmenting the "fear heatiness" target group, launched bottled Heqizheng (和其正) for consumers who wanted convenience, opening up a part of the market. But later, they tried to speculate on functional beverages and lost the opportunity. Instead, Guangzhou Pharmaceutical, which copied JDB, grabbed some first-mover advantage. The battle between JDB and Guangzhou Pharmaceutical fully demonstrates a problem: a person's biggest enemy is himself. If a company learns your STP, uses your name, and produces cheaper products under your brand, how do you respond? How do you differentiate? This is where further positioning in STP comes in—being "authentic," because consumers all want to buy genuine products. But this is hard for consumers to accept. Now, Guangzhou Pharmaceutical's Wanglaoji is like a star who had a botched plastic surgery, but the name remains. For consumers who have never seen the real face, when they hear the former big star is coming to perform, some uninformed people still come to watch. As Guo Degang said about Chinese crosstalk performers, knowing one routine for a lifetime is enough; China is so big that you can cheat your way to a comfortable life anywhere.

However, looking at Yihai Kerry's Qinjie, it seems to follow the traditional 4P concept: product, promotion, price, and place. Product—everything P&G has, I have. Price—my quality is better than P&G's, so I'll be a bit more expensive. Place—use Arawana's channels, find Arawana's distributors, and most importantly, have the same guys who operate Arawana operate this. **Of course, their connection with P&G doesn't end there. P&G's unsuccessful Pringles chips were acquired by Kellogg's, and then Kellogg's formed a joint venture with Yihai Kerry, and Yihai Kerry's business team operates Pringles.** Old Na really wants to say: why would a sly old fox like P&G give up Pringles? It's not that P&G's channels are worse than Yihai Kerry's, but because P&G wants to focus on daily chemicals. Why does P&G need to focus and not stretch its battle lines? Because P&G's daily chemical business is currently not doing well and can't break through bottlenecks. Even bringing back former CEO A.G. Lafley ended in failure.

In doing daily chemicals and Pringles, I think Yihai Kerry did even worse than Evergrande. Evergrande is an outsider to FMCG; it trusts people from real estate more. So it sent real estate people to do beverages—why does Evergrande trust real estate people? Because they have a history in that industry and a set of selection criteria. But in the beverage industry, they know nothing, and they've heard there are many hidden rules in FMCG, so they don't trust FMCG people. They let real estate people oversee the FMCG folks. For the FMCG people they don't trust, their method is to pay high salaries and have them teach college graduates and real estate people. Once they have their own set of criteria for selecting FMCG people, these initial tools can either stay or leave. Although Evergrande is chaotic now, at least it has a group of FMCG people working on the product.

As for Yihai Kerry, it completely uses its own established approach to do this brand. Like all companies, **you are too good at using yesterday's successful experiences to decide the future market, but the market is not yours; it belongs to consumers.** When the post-80s generation becomes the economic mainstay, post-90s enter society, and the internet is highly developed, your advantages are no longer advantages but burdens.

Compared to consumers before the post-70s generation, they demanded more practical benefits and functions from products. For example, if you say it stops bleeding, if you say it sterilizes, if you say it's cheap—these are things I can see and feel, so I'm willing to believe. But for post-80s and post-90s consumers, they emphasize experience more, emphasizing novelty and fun, and price is not the primary consideration. However, for both P&G and Qinjie, there is no consumer experience at all. Look at Arawana's distributors—they've been in the grain and oil business for decades. So when Arawana rice entered the market, it quickly surpassed Fulinmen, which had been there earlier. This indeed shows the strength of your oil system; your channels are the boss, and your rice doesn't need experience. But who in your team has experience in daily chemicals? We talk about grain and oil integration, but we've never talked about chemical and oil integration (saying "daily oil" sounds a bit scary; that thing is also daily). Although we know you, sir, produce raw materials for P&G, Unilever, Liby, and other daily chemical brands, consumers don't know that. Just from the fact that Yihai Kerry named its brand "Qinjie," a knockoff of P&G's name, Old Na has to doubt its determination to do daily chemicals.

After discussing the distributor team, let's talk about channels. Whether it's daily chemicals or chips, people prefer to buy from larger supermarkets. Why? Because there are too many fakes in China. Also, big supermarkets make it easy to compare (same category, same price), easy to return or exchange, and easy to complain. But where do we buy oil? At vegetable markets and grain and oil wholesale points. These are people around consumers; they may have been selling oil and vegetables in the same place for generations. Buying from them makes consumers feel more at ease than buying from supermarkets. **Similarly, the flow of any product is from factory to distributor, distributor to second-tier wholesaler, second-tier to terminal, terminal to consumer, and consumer to consumer. This process is naturally reversible.** Products from our factory mostly need to reach the terminal. Old Na mentioned earlier that the terminals for oil and daily chemicals are different. Although they partially overlap, the differences outweigh the similarities. Arawana's terminals are more about vegetable market owners, and vegetable market owners have no reason to stock a bunch of soap, toothpaste, shampoo, chips, etc. So Arawana currently has a large number of loyal distributors (they have no choice; they don't want to give up the Arawana brand. **There must also be countless distributors complaining that they don't make money, that Fulinmen is cheaper, and so on.**) and tens of thousands of outlets, but what is the actual utilization rate of these outlets? Any channel's sales volume is **outlets (preferably active outlets) * outlet sales volume**. When your outlets can't be utilized and your brand has no advantage, what do you do? What STP are you targeting? What are they thinking? What appeals do you want to give them?

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