Unilever, the world's second-biggest consumer-goods company, plans to increase its business in China to as much as five times the current level, Asia chief Harish Manwani said.
"Our business has been growing steadily about 18 percent to 19 percent per annum," Manwani, president of Unilever's Asia, Africa, and Eastern and Central Europe operations, told Bloomberg TV in Jakarta at the World Economic Forum on East Asia. "Our commitment in China is to build a business four- or fivefold" what it is now, he said, without giving a timescale.
The maker of Dove soap and Magnum ice cream, which made 40 percent of its revenue last year in Asia and Africa, is looking to developing economies to drive growth as sales stagnate in Europe and the U.S. More than 55 percent of Unilever's business now comes from emerging markets, Manwani said. "Asia, emerging Asia, is a very important part of it," he said. "I'm very excited about business prospects in Asia."
China, the world's most populous nation, may show economic growth of 9.5 percent this year, according to Bloomberg data. That's triple the pace of the U.S.
Unilever's Chinese expansion goal is realistic, according to Shaun Rein, managing director of China Market Research Group, a Shanghai-based consumer consulting company. Premium brands in the fast-moving consumer-goods industry are growing about 20 percent annually in the country, he said in a phone interview.
Eoin Treacy's view China's large cap A-Share indices have been underperforming for the last 18 months and have yet to show conclusive evidence that demand is returning to dominance; although they have steadied in the region of the January lows. This has resulted in a period of reflection for many investors as to the efficacy of China's long-term growth potential. However, the stock market's performance needs to be viewed in the context of the tightening which has been going on.
Reserve requirements for large banks were hiked again today to 21.5%. Deposits of up to 60% are required to buy second homes. The 1yr Lending Rate has risen from 5.25% to 6.31%. The Household Savings Deposit rate has risen from a low of 2.25% to 3.35% - both since October. CPI inflation at 5.5% is now primarily food, energy and wage led since tightening measures to date have succeeded in cooling the ascent of property prices. This suggests that tightening measures are likely to remain in place a while longer but also demonstrates a resilience in the economy many assumed was not possible.
Per capita consumption of just about everything is rising globally fuelled by increased demand from the hundreds of millions of people who have been raised out of poverty particularly in Asia. The adoption of capitalism, export oriented economic policy and intensive infrastructure investment has helped transform the lives of huge numbers of people. Companies with global franchises, leveraged to the rising spending power of this cohort continue to outperform.
Companies qualify for the S&P Europe 350 Dividend Aristocrats Index when they have increased dividends for 10 consecutive years. Unilever dropped out of the Index probably because it paid a special dividend and the payout fell back to trend subsequently. (Also see Comment of the Day on May 31st). However, the share continues to have an admirable record of dividend payments and currently yields 3.78%. It has paused in the region of the 2008 peak below 2000p since early 2010 and encountered resistance at that level again in May. A sustained move above it would confirm a return to medium-term demand dominance and reassert the medium-term uptrend.