The company head said they had made a massive error in not realising Chinese consumers would be willing to spend on premium offerings, and called P&G’s performance in the country to date “unacceptable”.
“We looked at China too much like a developing market, as opposed to the most discerning market in the world,” Taylor said, speaking following the company’s recent acknowledgement that, in the last quarter, sales in China fell by “high single digits”.
“We know we haven’t been delivering lately and we need to bring our standards up,” Taylor said. The CEO was speaking at the Consumer Analyst Group of New York conference in Boca Raton, Florida.
Turning it around
The company, which owns such brands as SK-II, Olay and Old Spice, is keen now to mobilise and meet the potential of Chinese consumers’ growing incomes.
In order to make amends, Taylor says the multinational will now invest in expanding his high-end offering in China, including the launch of Oral B Gum Care, a new premium toothpaste range.
It will work towards ambitious the target of doubling cost reductions, taking the company’s USD $10 billion cost-cutting plan already implemented in 2012 up to $20 billion. The company will also be investing heavily in marketing and advertising in the country, according to a report in Fortune.com.
The business news outlet reported, though, that industry commentators have voiced skepticism in response to Taylor’s words, with a JPMorgan analyst, John Faucher, saying that competitors have already forged ahead of P&G online.
“It will take a few years to stem share losses. They do have an uphill battle there, in our view, as their competitors have made more progress online,” Faucher said in a recent research note.