Posted on : November 8, 2016
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James Root, a partner with Bain’s Consumer Products practice, discusses the challenges that brand owners and retailers face in China, as well as the emerging digital platforms that could supplant distributors.
  • Consumer goods companies in China suffered a rude awakening in the past few years. Growth in fast-moving consumer goods (FMCG)—from beer and cigarettes to diapers and dish soap—plummeted to about 3.5% in 2015 from nearly 12% in 2012, according to the Bain-Kantar China Shopper Report.
  • The sharp drop is a result of the country’s slowing economy and shifting consumer behavior. China is now a two-speed market, with some categories continuing to prosper while others, such as instant noodles, are getting whacked with sales declines of more than 5%.
  • Lurking below the surface is another huge challenge: China’s antiquated, fragmented distribution system. It’s costly, inefficient and provides only a hazy line of sight to the consumer.