Marketenvironment（英文版）

1、- 1 -Roland Berger & Partners International Management ConsultantsBarcelona Beijing Berlin Brussels Bucharest Budapest Buenos Aires Detroit Dsseldorf Frankfurt Hamburg Kiev LisbonLondon Madrid Milan Moscow Munich New York Paris Prague Riga Rome So Paulo Shanghai Stuttgart Tokyo Vienna ZurichStra

2、tegic re-engineering of Geberit China Interim report Geberit International AGShanghai, Oct. 22nd, 2000- 2 -Content (1)PageManagement Summary5A.Market environment 12A1. Macro business environment in China13A2. Market analysis of sanitary system 36A3. Market analysis of piping system 67B.Strategy eval

3、uation and Sales & Marketing80B1. Strategy evaluation81B1.1 Corporate strategy analysis82B1.2 Product strategy evaluation89B2. Sales & Marketing91B2.1 Retail channel GSHA95B2.2 Project channel GSHA103B2.3 OEM channel GDAI107B2.4 Marketing110B2.5 Benchmarking: Kohler (China)112- 3 -Content (2

4、)PageC.Financial, organization and processes analysis122C1. Financial situation analysis123C1.1Geberit Shanghai124C1.2Geberit Daishan138C2. Organization and processes145C2.1Organization structure146C2.2Management structure151C2.3Key process analysis157D.Restructuring options164D1. General options an

5、d pre-selection165D2. In-depth evaluation176D2.1Equity buyout178D2.2Termination183D2.3Bankruptcy186D2.4Comparison of the alternatives190D3. Feasible scenarios 193- 4 -Back-upAcronym listBoDCCSCJVEJVFDIFICGDAIGSHAJVKTSVGMWFOEBoard of DirectorsCompetence Center ShanghaiCo-operative Joint VentureEquity

6、 Joint ventureForeign Direct InvestmentForeign Investment CommissionGeberit Flushing Technology (Daishan) Co. Ltd.Geberit Plumbing Technology (Shanghai) Co. Ltd.Joint VentureKohler Technical SpecialistVice General ManagerWholly Foreign Owned Enterprises- 5 -Management summary- 6 -China could be a ma

7、rket of strategic importance for Geberits international business(1)China is a promising market for Geberit. We have an achievable business target of RMB 200 million revenue by year 2005, from which, 130 million comes from sanitary products and 70 million is generated by piping business. Among all th

8、e product lines, tank fittings, Pluvia and concealed cistern are the top 3 product lines with the potential of RMB 140 million or 70% of the totalOverall Chinese macro economic development is undergoing a strong momentum. In the next 5 years, it is estimated that GDP will grow at 7% annually, the gr

9、owth of fixed asset investment will increase by 8%, and housing construction will also grow by 8% p.a.Chinese sanitary market is mostly a ceramic market, with an annual demand of 43 million units of sanitary ceramic products in China in 1999 which means the potential market of nearly 2 million sets

10、for tank fittings as well as 2 million units of medium to high end cisterns sold in the market. With the growth in the housing market, Chinese sanitary market will continue an annual growth of 68%. Furthermore, due to the rapid increase of bathroom decoration, the medium to high end segment of sanit

11、ary products will definitely lead the industry growth. By 2005, the share of medium to high end segment will rise from current 20% to 35%Market environment- 7 -China could be a market of strategic importance for Geberits international business(2)As the largest construction industry in the world, Chi

12、na presents an immense potential for Geberits piping products. Both HDPE and Mepla possess significant product advantages over the currently used Chinese products. However, the significant price gap could be a serious barrier for a deep market penetration. For Pluvia, the opportunities are very attr

13、active. Presently more than 15 roof projects, altogether 700,000 sqm are in different phases of the process of biddingBoth Geberits concealed cistern and Pluvia roof drainage system are mismatched with Chinese traditional industry habits, this can only be solved by a long-term commitment in the Chin

14、a market and effective marketing. Due to the Chinese consumers traditional mindset that plastic product are lower priced, Chantier doesnt have an optimistic market perspectiveRight now, for most of Geberits products, the competition is not so tough, which means a golden opportunity for Geberit to be

15、come a market leader in China. It also means time pressure for Geberit. Currently competitors (e.g. Grohe DAL, Caroma) are gearing up and will become aggressive very soonMarket environment- 8 -Overall, the strategy of Geberit in China has not been fully achieved and sales and marketing are particula

16、rly weak(1)Strategy and sales & marketingAlthough GSHA developed a strategy when founded, the strategic objectives to penetrate into the Chinese market havent been achieved-current strategy is unfocusedThe vision of GSHA is not communicated within the organization, nor is it implementedIn compar

17、ison, GDAIs strategy is going in the right direction and is in the process of being implemented, They still have problems to solve, such as slow market responsiveness, poor customer understanding etc.The core competence of Geberit Europe stands for advanced technology, premium quality and brand, exc

18、ellent pre-and-after sales services. This has not all been transferred to Geberit ChinaCurrent product portfolio of selling Chantier, Duofix and public products is unbalanced. Strategic focus should be on concealed cistern, tank fittings and Pluvia and HDPEAs to sales and marketing operations, GSHA

19、has no clear strategy in developing distribution network- 9 -Overall, the strategy of Geberit in China has not been fully achieved and sales and marketing are particularly weak(2)Strategy and sales & marketingGeberits products are sold through 3 channels: retail sales and project sales through d

20、istributors, and OEMGeberit lacks clear planning of retail network development and has neither intention nor leverage to monitor distributors network operationsProject sales performance has been affected mainly by both poor customer services and incompatibility with current Chinese installation and

21、application habitsThere are a number of setbacks that need to be overcome to improve OEM sales: unsatisfactory product development and customization, slow market responsiveness and high pricingExcept for a very few marketing related activities such as seminars and attending exhibitions, essentially

22、marketing department doesnt perform marketing functions such as building up brand etc. Kohler has done far better compared to Geberit in the area of sales and marketing, such as raise brand awareness, influence customers and design institute- 10 -Financials, organization and processesThe GM of GSHA

23、lacks leadership. His management style is self-centered. It is widely perceived that he does not trust the local staff. His personality is not accepted by employees. As a result, there is no motivating corporate culture, no trust between management team and staff, no motivation and commitment among

24、the staff and high staff turnover. ( e.g. CCS ) The official organizational structure, which is changed frequently, is not implemented. Departments function is not clearly defined. Some functions ( e.g. HR ) are overlapping and some are not implemented. ( e.g. Marketing)The current operation process

25、 is production - oriented instead of market-oriented, leading to ignorance of market demands. The control of the whole process is only on paper and is not followed in reality. Although there is no open conflicts between them, the JV partners pursue their own (personal) interests. It is particularly

26、obvious when recruitment, promotion and lay-off are concerned.GSHA is on the brim of bankruptcy. More than 70% of products sold have negative gross profit margin, resulting in an increase of operating losses in line with increase of sales. The company cannot survive without a continuous cash injecti

27、on from the parent company. Although the operating losses of GDAI have been reduced as a result of improved gross profit margins and increased sales, the financial situation is still criticalThere is no leadership at GSHA. GSHA is close to bankruptcy. GDAI shows positive development trend- 11 -Geber

28、it should aim for equity buyout and consider termination or bankruptcy as fall-back positionRestructuring options To separate from the Chinese partner is a premise to secure success of restructuring Some key problems particularly affecting to HRM are related to the Chinese partner In addition, Lidas

29、 products are contributing to the huge loss due to their -7% gross profit margin and the sharp decline in sales volume due to shrinkage of low end market Therefore, only equity buyout, termination and bankruptcy are feasible Considering cost, time, risk and the potential impact on future integration

30、 and consolidation, equity buyout should be deemed as the first choice, and termination or bankruptcy as fall-back position The buyout and termination options depend to a large extend on the willingness of the Chinese partner and can take a long time. Therefore, Geberit should start preparations and

31、 negotiations quickly- 12 -A. Market environment- 13 -A1. Macro business environment in China- 14 -Overall the business environment is positive for Geberits investment in ChinaMacro business environment in China8% annual growth forecasted for construction industryStrong momentum for real estate mark

32、et growthSteady growth for high end real estate market7% annual GDP growth estimated in the next five yearsAnother boom for FDI1) expectedAn estimated 8% annual growth for fixed asset investment by 2005Consistent economic policies towards reform and opening upDramatic Chinese household income growth

33、 during the past 15 yearsMacro economic trendHousing supply marketGovernment policiesSocial factorsGovernments preparation for WTO entry Central governments effort to develop western regionThe emergence of top consumers group with strong purchasing powerSignificantly increased bathroom decoration st

34、andard and spending1): Foreign direct investment- 15 -China is one of the fastest developing countries in Asia and the globe4.1%2.0%5.6%5.5%3.2%6.2%5.3%0.6%7.5%-0.7%Annual GDP growth in China %GDP growth in Asia, 1998/1999China1) EstimateJapanMalaysiaIndonesia IndiaPhilippinesTaiwanSingaporeHong Kon

35、gThailandGermany1.4%USA4.1%Source: OECD, Roland Berger & Partners analysis14.213.512.61992199319941995199619971998199920041)- 16 -The key indicators of the first half of 2000 show a strong confidence in the Chinese macro economic trendFixed asset investment hit RMB 754 billion

36、 in the first half of 2000, up 12.1% compared with the period of last year, among these, the investment of real estate was RMB 201 billion, up 24.1%Sales volume of the retail market reached RMB 1625 billion, up 10.1%, and the disposable income per urban resident increased by 7.7%Foreign trade volume

37、 achieved a significant growth of 37%, amounted at USD 217 billion, among these, export was USD 115 billion, up 38%, import was USD 102 billion, up 36%Key indicators in the first half of 20008.2% GDP growth achieved in the first half of 2000Source: County Information Centerfirst half of 1999first ha

38、lf of 200036503950+8.2%Billion RMB- 17 -In the next 5 years, macro economic development will be optimistic in ChinaWTO accession will bring 1.75% more foreign investment, USD 100 billion incremental FDI per year, will boost economy growth by 1% annuallyThe fixed asset investment is estimated to grow

39、 at 8% per yearChina plans to accelerate the urbanization process by 2% per yearReal estate market will grow at 7-8% p.a. in the next five yearsThe trend of Chinas macro-economy7% annual GDP growth1) in the next five years1978 = 1001): excluding the inflation factor 2): EstimationSource: China Infob

40、ank, Asian monitor, RB&P analysis10117214892831941161980198519901995200020052)+10.8% p.a.+7.8% p.a.+11.6% p.a.+8.1% p.a.+7% p.a.- 18 -A boom for foreign investment can be expected in China in the next 510 yearsFDI growthGrowth of European Union investmentBillion USDBillion USD45.245.440.33.541.7

41、37.5199019951996199719981999200460.9%p.a.4.173.994.480.152.742.131990199519961997199819994.2%5.7%6.6%9.2%8.8%11.1%The weighted share of European companies investment in total FDI is increasing70.11.5% p.a.12% p.a.1)1) Estimation based on the assumption of WTO entrySource: Sate Statistics Bureau, RB&

42、amp;P analysis70% p.a.15.8% p.a.- 19 -WFOE (wholly foreign owned enterprise) is becoming a more and more widely-accepted approach for foreign investmentComposition of FDI in ChinaLegal formation of foreign investmentSource: State Statistics BureauBack-up18.5%7.0%8.1%8.3%7.8%50.3%154.856.9European Un

43、ionJapanUSATaiwanHongkongOthers23.925.624.921.5Billion USDBillion USDThe accumulation of actual foreign investment to the end of 1999Actual foreign investment of Jan. July 20001%15%34%50%9.93.0EJVWFOECJV6.8EJV: Equity Joint Venture CJV: Cooperative Joint VentureOthersTotal: 307.6Total: 19.9- 20 -The

44、 fixed asset investment is estimated to grow at 8% annually in the next 5 years, and more than 60% will be invested in construction projectThe growth of fixed asset investmentComposition of the fixed asset investment in 1999Source: China Statistic Yearbook 2000, RB&P analysisBillion RMB2840.6298

45、5.34386.02001.92494.12297.419951996199719981999200414.8%8.8%13.9%5.1%8%p.a.Billion RMB14%24%62%1879.3400.6Purchase of machinery equipmentConstruction and installationOthers705.3Total: 2985.3- 21 -Construction industry will grow steadily at an estimated 8% annual rateGross output value of constructio

46、n industry2226.01515.11374.11246.21157.9950.5199519961997199819992004Billion RMBGrowth of government infrastructure investmentGrowth of residential housing supplyGrowth of real estate marketGrowth of renovation market21.8%7.6%10.3%10.3%8%Source: China Statistic Yearbook 2000, National Planning Commi

47、ssion, RB&P analysis- 22 -The total floor space of housing supply has experienced an average annual growth of 6.5% in the past 5 years, more than 8% growth can be expected this yearGrowth of total housing supplyAverage annual growth of urban residential supply is 12.7%, which is leading the tota

48、l growth rate of 6.5%, and will continue to be the growth engineRural residential supply growth is limited due to slow farmers income growthWTO entry is expected to stimulate another high-growth period of office building supplyTrend of housing supply25%26%25%26%25%26%41%44%47%49%51%48%24%25%28%30%34

49、%26%199519961997199819982000Billion sqm+6.5% p.a.Urban residentialRural residentialNon-residential1.461.621.661.711.872.031)1): Projection based on the progress of the first half year of 2000Source: China Statistic Yearbook 2000, China Construction Industry Yearbook 1999, RB&P analysis+8.5%- 23

50、-Building construction can be divided into residential buildings and non-residential buildingsBack-upBuildings classificationTotal constructionResidential buildingsNon-residential buildingsUrban residentialRural residentialIndustrial buildingsCommercial buildingsOthers Manufacturing plant Hotel Reta

51、il store Restaurant Entertainment Others Public buildingse.g.: airport, exhibition center, stadium Institutional buildings Hospitals Schools OthersOthersOffice buildings- 24 -Total housing supply in 1999 reached 1.87 billion sqm in ChinaThe floor space completedNationalBeijingShanghaiJiangsuZhejiang

52、GuangdongResidential Urban Villas and good apartments (sold) RuralIndustrialCommercial Office Others (retailing, entertainment, catering )Others (public, institutional, hospitals, schools )Total13935594.36834111223119104147187419.6015.200.554.4017.274.116.811.914.9036.8717.3213.360.393.9615.263.955.

53、022.152.8732.58101.0428.490.3172.5639.697.7016.347.229.12138.0164.8120.810.3044.0024.257.0810.885.585.3089.6086.0442.380.8943.6639.1113.1115.528.606.92125.14Back-upHousing supply of nationwide and key areas 1999Million sqmSource: China Statistics Yearbook 2000, Provincial Statistics Yearbook 2000- 2

54、5 -The residential floor space supply accounts for 74.3% of the total housing supply in 1999Composition of housing supply (1999)Compositions of non-residential buildings (1999)Back-up29.8%44.5%25.7%481559Rural residential buildingsNon-residential buildingsUrban residential buildings834Million sqm30.

55、6%23.1%21.6%24.7%119147Industrial buildingsOffice buildingsOthers111Million sqmTotal: 1874Total: 481104Other commercial buildingsThe group of commercial buildings- 26 -Real estate market is showing a strong momentum in 2000, sales of square meters up 38% from Jan. to July vs. the same period in1999S

56、ource: State Statistic Bureau, China InfobankFloor space completedMillion sqm+19.1%Housing salesMarket indication of 2000. 1751.243.01999 (1-7)2000 (1-7)+38%1999 (1-7)2000 (1-7)72%84%28%16%The actual investment in real estate reached RMB 250.4 billion, up 28.6%32 million square meters of land was us

57、ed for real estate development, up 23.1%Market price slightly increased by 1.9%Top cities such as Shanghai, Beijing, Guangzhou, Shenzhen are leading the growth, e.g. the private consumption in Beijing was almost tripled to 2.3 million square meters compared with the period of the last yearPrivate bu

58、yerInstitutional buyerMillion sqm36.350.1- 27 -High end real estate is on track of steady growth during the past 5 yearsGrowth of sales of villas and high end apartments*Composition of high end real estate market (1999)*: The high end real estate market is defined by the selling price per sqm, in 19

59、99, the criteria is above 4500 RMB per sqm57%9%14%20%GuangdongOthersShanghaiBeijingMillion sqm2.482.502.543.454.3619951996199719981999+15%p.a.Million sqm2.520.890.550.3942%Total: 4.36- 28 -Chinese government is endeavoring to drive sustainable economic growth Open-upContinuously adopt the direction

60、market oriented economy development, the market will open furtherPrepare for WTO entry to gain more foreign investment and sell more abroadWestern region developmentTo narrow the gap of economic development between coastal area and western regionTo create extra domestic market demand by government direction settingSustainable economic gro