American multinational consumer goods retailer Procter & Gamble (P&G) has announced its decision to move its product supply chain from the current base in Europe to the Chinese province of Guangdong, according to Xu Min, CEO of P&G Greater China on 28 January.
The announcement was made at the High-Quality Development Conference held by the Guangdong government on the first working day after the Lunar New Year break, which was joined by over 500 companies with tens of thousands of industry attendees.
The relocated supply chain centre is set to cover import and export businesses outlined in the Regional Comprehensive Economic Partnership (RCEP), which is the first trade agreement amongst some of the world’s major economies in Asia-Pacific, such as Australia, China, Japan, South Korea, and Singapore. Meanwhile, it also serves markets along the Belt and Road initiatives.
Speaking at the conference in the capital city Guangzhou, Xu expressed “the company is confident in the Chinese market”, which has become the second-largest regional market for P&G since the company’s entry in 1988. While serving as P&G’s headquarters in China, Guangdong also houses its largest production base.
The China boss also unveiled the brand’s ambitions in digitalisation and promised a minimum of 100 new product releases annually, facilitated by its research and development arm and further driving the upgrade in consumption. Alongside the move, the brand is also determined to double down efforts in diversifying sales channels while ramping up its building of live stream commerce.
Prior to P&G, its British peer Unilever had also set its sights on the Cantonese-speaking region, bringing its first full-line production and marketing base to the city of Guangzhou in August 2022. The “largest investment project” the British label has ever had in China in recent years, which is worth a total of 1.6 billion RMB (235.83 million USD). It is expected to generate approximately 10 billion RMB (1.47 billion USD) annual output value once production lines for personal care products, food, and ice cream come into operation which is scheduled for 2023, 2024, and 2025 respectively.
The latest move by P&G proves the strategic significance of China’s largest manufacturing hub for global retailers. The coastal province of Southeast China has played a crucial role in driving the country’s economic growth, contributing to the highest provincial GDP in 2022 at 12 trillion RMB (1.7 trillion USD), as per the latest statistics from China’s National Bureau of Statistics.
Bordering Hong Kong and Macau, which is at the heart of the Greater Bay Area (an integrated economic area consisting of nine cities in the Guangdong province and the two Special Administrative Regions), the migrated centre is also expected to be an engine, speeding up P&G’s further growth in the target region while also facilitating its development in Europe.
