Unilever PLC bought a majority stake in Chinese
water-purification company Qinyuan Group Co., marking its first
acquisition in China in a decade and a strategic move into a market
with high demand for clean water.
The Anglo-Dutch consumer-goods giant known for household brands
such as Dove soap and Lipton tea declined to disclose financial
details of the deal, which was announced Sunday. The purchase will
enable Unilever to expand its existing purification brand Pureit
through Qinyuan's distribution across hundreds of cities in China,
said Unilever's Chief Executive Paul Polman.
Pureit's filtration systems, which range from $3 for a system
that can filter water for teeth-brushing to around $150 for an
in-home purifier, are already available in countries such as India,
Mr. Polman said, adding "The opportunities to expand are
broad."
The move doubles Unilever's water-purification business
globally, Mr. Polman said. And in China it positions Unilever's
growth into a booming segment that reaped an estimated 17 billion
yuan to 18 billion yuan (roughly $2.78 billion to $2.94 billion) in
sales last year, up 20% from a year earlier, according to estimates
from consultancy A.T. Kearney.
Analysts say the move puts Unilever in a position to compete
with local companies that have been successfully selling
water-filtration systems. China's consumers are grappling with
pollution in the country and have a strong desire for products they
feel will improve their health and the health of their children,
said Torsten Stocker, a Hong-Kong based partner at A.T.
Kearney.
Reports of water pollution have surfaced in the news in recent
years, with China's state-run Xinhua News Agency reporting that 55%
of the country's ground water is polluted and 60% of pipes in urban
areas are corroded, leading to secondary pollution.
"Consumers are worried about whether they can trust what comes
out their tap even for cooking or cleaning," Mr. Stocker said.
Unilever is looking for growth in China, where it faces fierce
competition from other global consumer products companies such as
Procter & Gamble Co. and L'Oréal SA.
When he became chief executive in 2009, Mr. Polman said he
wanted to double Unilver's sales to EUR80 billion ($110 billion) a
year, with most of the growth expected to come in emerging markets
like China and India.
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