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Baby Goods' Quality Causes Concern

An incidence of poisonous milk powder in Fuyang, in East China's Anhui Province, which caused the death of 12 babies, has aroused nationwide attention about food quality and safety.

After the incident was exposed in April, the quality supervision departments at all government levels made a thorough inspection of the milk powder market.

Concerning the importance of product quality, Sinomonitor International, a Sino-Japanese independent market monitoring company established in 1997, recently released a report on China's baby goods market.

Researchers said the report is based on the research of the China Marketing and Media Study (CMMS), which, in 2003, has followed 3,247 families with children of up to 5 years in 30 major cities.

Following are the major findings of the research:

Huge market

The CMMS data shows there is a huge consumption market for baby products in the country's major cities.

Sixty-three percent of families among the surveyed had fed their children with milk powder or rice flour refined specially for babies.

Among them, 58 percent had bought baby milk powder, and 32 percent had purchased rice flour.

Meanwhile, 33 percent of parents had used paper nappies, and 74 percent used baby-use-only bathing and skincare products.

With such a huge number of consumers, the quality and safety of baby goods are the subject of great concern.

South and north

The CMMS data shows the consumption markets for baby goods in the northern and southern regions in China are very different.

In southern areas, except for Guangzhou and Shenzhen, baby milk powder enjoys a much bigger market than in northern cities.

More than 80 percent of children aged between 0 and 5 consume milk powder specially for babies in southern cities such as Xiamen, Kunming, Haikou and Wuhan.

While in Tianjin, Shenyang, Taiyuan, Dalian and other major northern cities, the figure was less than 45 percent.

For baby rice flour products, the market situation is similar.

However, the study found that most major domestic milk powder makers are located in northern China.

In a list of 30 qualified milk powder enterprises, which was released recently by the General Administration of Quality Supervision, Inspection and Quarantine, domestic dairy firms are all in northern cities, except Bright Dairy, which is in Shanghai.

In contrast, foreign brands, except Nestle, which has a dairy venture in Shuangcheng in Northeast China's Heilongjiang Province, are gathered in southern cities such as Shanghai and Guangzhou.

Thus, for Chinese dairy makers, one big problem is how to market across the regions, to take a bigger share in the already huge southern market.

The regional feature is not unique to the baby milk powder market.

Paper nappies are also more popular in the south.

In Hangzhou, in East China's Zhejiang Province, the market penetration rate of paper nappies is as high as 62.8 percent.

For most of big cities in the north, including Beijing, Tianjin, Xi'an, Taiyuan, Shenyang, and Qingdao, the figure is under 30 percent.

Among the top 15 cities with the highest market penetration for paper nappies, there is only one northern city Jinan.

Foreign domination

The CMMS data also reflects that high quality foreign-branded baby products, though more expensive than domestic products, are leaders in the market.

On China's baby milk powder market, at present, products can be divided into three groups: multinational giants, represented by Nestle, Mead Johnson, and Intel (with the brand name Dumex), big domestic dairies such as Yili, Sanlu, Wondersun and Bright Dairy, and a large number of small local manufacturers.

The CMMS data shows, in the 30 major cities, foreign brands are superior to their domestic counterparts, in terms of market penetration and brand loyalty.

In terms of market penetration, Swiss dairy giant Nestle is No 1, with 34.3 percent of the surveyed using its products.

The figure is much higher than other brands Dumex (23 percent), Yili (17.6 percent), Mead Johnson (16.4 percent), Sanlu (14.2 percent), Wyeth (12.6 percent), Wondersun (11.6 percent), and Bright Dairy (6.2 percent).

In brand loyalty, domestic brands are also lagging far behind their foreign rivals.

The top three brands are Dumex, with 77.7 percent customers loyal to it, Nestle (70.5 percent), and Mead Johnson (69.4 percent).

Wondersun, the No 1 brand among domestic products in terms of loyalty (56.3 percent), is 20 percent lower than Dumex.

The statistics indicate that price is not the key factor determining which product customers will choose, as domestic milk powder products are much cheaper than foreign ones.

Quality, safety and nutrition are much more important on the baby product market.

For other baby products, similar phenomena exist.

Some 59 percent and 31 percent of parents had bought Pampers and An'erle paper nappies respectively. Domestic brands enjoy much lower market penetration.

For baby bathing and skincare products, Johnson & Johnson is the No 1 brand. It had been used by 52.3 percent of the surveyed parents.

The figure for domestic brands Haiermian and Liushen are only 16.1 percent and 13.1 percent respectively.

The dominance of foreign brands on the baby products market is closely related to the Chinese tradition of love for their children.

Today, with improving Chinese living standards, people are paying more and more attention to product quality.

Quality is especially important for baby products, as the country's one-child policy has made children the focus of every Chinese family.

Therefore, parents prefer to pay more for high quality, safer and healthier goods for their children.

The market facts show all baby product makers that price is unlikely to become the leading factor in dominating the market, especially in big cities.

Domestic firms should be aware that high quality, safety and brand image should be the focus of their development.

And engaging in price wars is not an effective long-term strategy.

(China Daily June 11, 2004)

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