Wahaha, Danone, Robust Who's fault?

Company News

Wahaha, Danone, Robust Who's fault?

It is hard to say that it’s all the domestic brands’ fault and carelessness on the issues of the Danone and Wahaha disputes and the decline of Robust. Danone should not escape the blame, and it is time for Danone to reflect its strategies in China

I. the local brands: "been frozen" or delay to use?
When many employees in Robust talked about the decline of Robust, they would often attributed it to ‘Danone is not willing to turn Robust big’, and even freezing Robust. For example Robust’s milk and yoghurt products have been weakened by the high level executives intentionally or unintentionally. In Danone’s big family, the main focus on the yoghurt area in Guang Ming and Meng Niu. Another example is that the new product ‘Mai Dong’, the consumers could not even see the relationship between the product and Robust. The brand name Robust is at the top right hand corner of the packaging bottles, and not prominent.

We could not be quite sure whether Danone intentionally freeze Robust, but in fact, when the multinational companies entered the Chinese market through M&A, the domestic companies would not only bring to the foreign capital the sales channels, but also the good reputation of the brand. The multinational companies have no reason to ‘freeze’ the domestic brand, on the contrary, they would cherish a lot about the good image of the brand, improving the reputation and brand image in China.

There are two major drawbacks for Danone to freeze Robust: firstly, it hurt the feelings of the local consumers. As after years of operations, Robust has established good relationship with the local consumers. If Danone hurts Robust, it will hurt the consumers’ feeling as well, thereby, affecting multinational companies’ images. Secondly, if multinational corporations take their own brands as "home brand"(such as ‘Danone’) and local brands as "sub-brand" (such as ‘Robust’) when entering the market, it will not hurt Robust and the original consumers. The good images of the well-capitalized multinational companies would increase the customers’ trust to the brand, and a "1 +1> 2" effect.

II. The strategy decision: statistics or feeling?

In the relatively mature Western markets, the marketing people tend to guide their marketing decisions based on the massive market research and data analysis. When the multinational companies enter the immature market, such practices are often not easy to change. Robust launched v Biao, Qing Lan, Dong Dong Tea, Nutrition Cool, Ze Xin Tang and other new products, however, they usually withdrawal from the market after three to four months. Their basis is all data analysis.

According to the frontline sales’ judgment, the actual data analysis deviated from the actual situation. They believe that some products will soon be accepted by the market if sticking a certain period of time. In fact, many local Chinese entrepreneurs do not believe the West market research data, they are more likely to decide with their own "feel", and it is often successful.

Zong Qinghou is of this type, he called himself the "feeling" type. He has full confidence on his market feeling. About the Danone-Wahaha conflict on the marketing ideas, Mr. Zong Qinghou once said that: at that time, we have two bottled water production lines, I wanted to add 7 lines, Danone said adding 2 lines at most. I did not follow their suggestion, and I brought 7 lines by myself. At that time, one such production line costs 7-8 million USD. The time we launch in the market, we reached the success the same year. The second example would be that when we decided to launch ‘Future Cola’, they did not agree, we insist our decision in spite of their disagreement, and finally we succeed. The concepts in the west are different from us, and they do not know about the Chinese market…..’

"Marketing is science and also art." The Chinese market is big, complex, and immature. If we fully adopted the Western mature marketing methods, it will not work here. It should be complemented by the artful marketing decision-making. It is perfect in China for the combination of the multinational companies’ scientific marketing methods and local entrepreneurs’ artful marketing feeling

III. The company’s integration: "shock therapy" or a "soft landing"?

The old staff of the local enterprises is the wealth of the joint venture companies. Because they have been in the industry for many years, and they know much better about the industry characteristics and consumer demand, and also the operation of the market. If the multinational companies want to succeed in China, they must stabilize this part of the staff, for which they need to maintain a certain continuity in the management, and change the management approach to "soft landing."

However, some multinational corporations including Danone did right the opposite. After they get the holding and the management, they rush to the "shock therapy" in an attempt to copy the parent company's "advanced" management system and method overnight. This will inevitably cause the war-weariness and eventually led to the loss of talent.

An old staff from Robust once commented on the culture conflict in management: In fact, people of Hong Kong (Note: the Hong Kong employees Danone appointed to Robust) are doing things very seriously and professional. Their decisions are made more on results but not process. this may be emotionally unacceptable to the old staff from Robust, and ultimately bacame the main reason for communication difficulties.

Of course, changes will inevitably bring pains. It is not to say that all employees should be satisfied.But we should guarantee the management changes under the stability of the enterprises to maximize the efficiency of enterprises. If not, the culture conflict would bring fierce conflict and the inevitable emerging problems (The author Yang Yi)