The company is aiming to expand its consumer business division in the country, which is focused on beauty and personal care, and has until now been overshadowed by the size of the company’s adhesives business in the country.
“Beauty care is where we are expanding,” Rorsted said of his company's ambitions in the country, at the World Economic Forum in Dalian, China, last week.
Currently the company’s adhesives business is estimated to account for approximately 80 per cent of the total business in the country, which is very different to the business share in its main North America and European markets, where the business is equally divided between adhesives and consumer.
Building on position with Fa and Schwarzkopf brands
Rorsted says his plan is to build on its current position in the country with brands such as Fa deodorant and Schwarzkopf hair care to eventually see the consumer business account for approximately 30 per cent of its revenues there.
Ultimately Henkel says it is aiming to increase its global group revenues, region from the current figure of €16.5bn, to reach €20bn by 2016. Currently sales from emerging markets account for 45 per cent, which the company wants to raise to 50 per cent by 2016.
Later speaking in a televised interview with Bloomberg on the sidelines of the Forum, Rorsted also pointed out the China market is currently the company’s third largest market in the world and is still continuing to return double digit growth rates.
The China Premier Li Keqiang spoke at the forum to convey his belief that the long-term future of the China economy remains strong, comments that Rorsted said he endorsed and have also encouraged the company to eye further expansion.
China as the primary growth market
“We see China as our primary growth market in the future. We have 17 plants in China and 55 percent of all our people in the emerging markets are here,” said Rorsted in the Bloomberg interview.
The CEO also added that he currently visits the China every six weeks and says that the business is showing no signs of slowing down, despite certain areas of the economy reporting slower growth rates over the past year.
The company’s most recent quarterly results, ending July, showed that strong revenue and income growth had been largely driven by growth in emerging markets.
The company reported that organic earnings before interest and taxes rose 8.2 percent to €663.95m ($881m), above Bloomberg analysts’ predictions of €645.66m ($856.73m). Organic revenue also increased by 4 per cent.
The company recorded a total beauty revenue growth of 2.8 per cent, including a 2.3 per cent increase in volume and a 0.5 per cent increase in profits, outperforming the relevant markets throughout the quarter.