Fake sanitary pads: Massive margins driving rampant piracy
A typical sanitary pad customer will remain loyal to one brand for several decades, so a company with a strong brand and good distribution has a license to print money. And where there is money in China, there are pirates. Southern Metropolis Daily 南方都市报 last week reported that counterfeit sanitary pads worth over 150 million yuan were seized by police in a port city famous for its smugglers: Quanzhou in Fujian province.
The report explains that the reason why there are so many knock-off sanitary pads is the high gross profit of sanitary pad production, i.e. about 65%. The counterfeiters use cheap substandard materials, driving their margins sky-high. The report includes a number of interesting facts about the industry:
- Tampons do not have high use rates in China but sanitary pads are popular: there are currently about 400 million regular consumers of sanitary pads, a market that was worth 41.1 billion yuan (US$ 6.6 billion) in 2010
- The top ten brands (domestic and foreign) control 80% of the market with foreign brands at the high-end and domestic brands offering cheaper products
- The article says China exported US$ 327 million’s worth of sanitary pads and imported US$ 10.1 million’s worth in 2012
- The government has increased duty rebates on sanitary pads at what the article calls a ‘remarkable rate’ since 2009 in order to encourage exports
Notes on the chart
- Another of Proctor & Gamble’s (P&G) products called “Always” was also mentioned in the counterfeiting scandal despite not being marketed by the company in China.
- Followers * and Mentions*: Social media followers and mentions data from Sina Weibo; “Mentions” are for 2013 to date. Data collected by Danwei.
- The data in this posting is based a Southern Metropolis Daily 南方都市报 report published on 23 April 2013 which uses data from the following source: 2011-2015年中国卫生巾行业市场研究及发展规划调研报告 (2011-2015 China Sanitary Pads Industry Market Research and Development Report), published in July 2011 by China Market Research Reports. The market share data is for 2010.
The Danwei Bulletin
The posting above is an excerpt from The Danwei Bulletin (Issue 5, 1 May 2013), a weekly report produced by Danwei and published on the FT’s China Confidential website and sent to premium subscribers. The Danwei Bulletin is a briefing of company and market news collected from the Chinese news and social media. We focus on information that has not appeared in English language reporting or not yet been noted by the investment and business media and communities.
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The Danwei Bulletin: Stay ahead of the English news
The examples below illustrate how Danwei Bulletin readers get the scoop on business stories long before they hit the international media.
April 25 – Danwei Bulletin
Despite gold prices dropping in the last week, demand in China remains strong
Chinese social media websites were buzzing with reports of mainland Chinese visiting Hong Kong to buy gold. One photo that was widely shared shows a branch of the jeweler Chow Tai Fook with shelves completely empty after a visit by goldbug mainlanders.
May 3 – South China Morning Post
Chinese mothers beat Wall Street to force gold price rebound
Attempts by Wall Street funds to drive down bullion value through short selling thwarted by Asian mothers swooping in to buy for weddings.
May 9 – Bloomberg
At least 30 tons of gold were sold between April 29 and May 2 in Hong Kong, up more than 50 percent from last year, according to estimates by the city’s Chinese Gold & Silver Exchange Society.
Nongfu Bottled Water – major bottled water and beverage brand
April 3 – Danwei Bulletin
Bottled Water – Scandals continue
Wang Hai, a veteran Chinese anti-fraud activist, has suggested that there may be quality problems with Nongfu Spring tea beverages… Nongfu… has been on the defense recently, fending off charges that its water sources are polluted
May 3 – CCTV English – China Central Television News
Nongfu Spring, China’s leading bottled water, pulled from shelves in Beijing as it failed national standards.
May 4 – Shanghai Daily
Industry body seeking Beijing ban for Nongfu Spring water
The Bottled Water Sales Association of Beijing published a notice yesterday saying that Nongfu Spring water was not only in violation of national standards but also guilty of false advertising and misleading customers.