Colgate fills production gap in China

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Last updated at: (Beijing Time) Friday, October 10, 2003

Colgate fills production gap in China

Shenzhen-based giant Colgate-Palmolive Co. will expand its production bases in China to cement its position as the largest toothpaste supplier in China.

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Shenzhen-based giant Colgate-Palmolive Co. will expand its production bases in China to cement its position as the largest toothpaste supplier in China.

"Our target is to take 40 per cent of the market stake in China in the near future," said Chester Fong, vice-president and general manger in charge of the firm's China business.

The firm wants to make China one of its largest markets in Asia and outside its home market of the United States, which currently generate about 30 per cent of its total revenues.

By selling a total of 700 million units of toothpaste, the company took about a 20 per cent share in China's toothpaste market in 2002.

"Our sales are expected to hit 2 billion yuan (US$240 million) this year," said Fong. He added the number could jump to 3 billion yuan (US$360 million) when the Hong Kong market is included.

Colgate-Palmolive, which debuted in China in late 1992, established a joint venture in South China's Guangdong Province. It has invested a total of US$110 million in China. And it has been the largest toothpaste supplier in China since 1999, when its revenue hit 1 billion yuan (US$120 million).

"Following the completion of our production base in Guangzhou, we are going to further diversify our product lines in the Chinese market, from toothpaste products to more personal products," said Fong. In overseas markets, the company's major product lines are oral care, personal care, household care, fabric care and pet nutrition.

By the end of next year, the company's total investment in China is expected to reach US$150 million --- much higher than the current US$100 million.

The firm's growth blueprint also includes merger and acquisition (M&A) plans with Chinese players to accelerate its expansion in China.

"With the completion of our new production facilities, we are going to seek more opportunities for additional investments in M&A activities in the Chinese market," said Fong, in a recent interview with China Daily.

"But the deal is still being negotiated and it is not the right time to unveil the details," said Fong. He said Colgate-Palmolive could target companies in northern and western China, where it has no production bases.

The company acquired the Sanxiao Company --- a large domestic oral care products supplier in East China's Jiangsu Province --- in 2000 to turn it into a major production base for middle and low income customers.

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