Monday, Oct. 21, our day began sooner than usual. We had to be ready to leave the hotel by 7 a.m. to drive to Tianjin, a large city with a population of more than 13 million, located north of Beijing. In addition to the Nestle company, which we visited today, a few other companies, such as Coca-Cola and Motorola, are present in Tianjin. In 2011, Tianjin had the highest GDP in China with $13,393, followed by Shanghai and Beijing.
The Nestlé factory welcomed us with so many delicious treats, like ice cream and wafers. Like most companies around the world, Nestle had some issues with profitability in 2009; however, almost every year since they have continued growing positively. Nestlé competes with many other small local companies. One of their strategies is to buy the local businesses and try to maintain the identity, culture, and value of the company for a better result of the acquisition. Nestlé also created different products and packages to fit their target market’s requests and tastes, such as Green Tea flavored wafers.
Because the cost of labor in China is going up 10% annually, Nestle’s future plan is to make their processes more automated to decrease the production costs.
After visiting the factory, we drove back to Beijing to visit the CEO and Chairman of the Greater China Region for Nestle, Roland Decorvet.
Roland is originally from Switzerland and has been working for Nestle for almost 20 years. Nestlé’s goal is to produce food for local people from local resources; therefore, most products are being purchased from local farmers, like milk. Nestle even built a university to teach local farmers how to be farm better and be more resourceful, all fully funded by Nestle.
Identity, culture, and value is important to the Nestle company. For instance, almost two years ago Nestle bought a local company in China named Yinulu, a company with $1.5 million annual revenue. This company creates products for Chinese tastes, like peanut milk, which is just one example of a company listening to its customers and making products that suit the target market.
Seventy percent of Nestle products doesn’t have Nestle’s brand on the packaging. Nestlé likes to keep the names and brands of the products the same after mergers and acquisitions, as consumers are familiar with those products. Currently, Nestle has 33 factories in China.
After our visit with Nestle, we drove back to our hotel to get ready for our group dinner at Roast Duck restaurant. Yum!