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P&G ploughs $100 million into Chinese digital innovation investment

By Natasha Spencer , 11-Sep-2017
Last updated on 11-Sep-2017 at 16:18 GMT2017-09-11T16:18:43Z

P&G Chinese digital innovation investment

Leading personal care conglomerate, Procter & Gamble (P&G), plans to place $100 mn (€82.9 mn) investment into its China Digital Innovation Centre.

Based in the Guangzhou development district in China, P&G hopes to build upon the rise in online shopping to leverage its e-commerce presence to support offline sales, China news outlet, China Daily, reveals.

Big technology

With plans to phase the investment out over a period of three years, P&G is expected to merge its digital technology research and innovations in the areas of big data and digitalised supply chain to support its contemporary and transformative business model.

Once completed, the new centre will dedicate its capabilities to artificial intelligence research, smart supply chain development and digital marketing.

The latest news from P&G comes after the personal care giant’s Singapore digital innovation centre investment. In April 2017, P&G made its first inroad into the innovation investment in Asia. P&G launched its E-Centre in collaboration with Singapore Economic Development Board (EDB), injecting a total of $100 mn (€82.9 mn) over a period of five years.  

E-commerce transformation

The China-based production facility, located in Guangzhou Development District, was P&G’s first investment in China in 1988. Following the company’s entry into the e-commerce market in 2009, as of 2014, China represents P&G’s largest e-commerce market.

As the district supports the “innovation-driven transformation of companies”, P&G plans to focus on China’s new technological era of artificial intelligence and disruptive, forward-thinking marketing and technology strategies. 

Robotics versus customer experience

Global intelligence company, Mintel, revealed that in China: “There is a growing sense that anything is possible, an expectation of efficiency, a desire for customisation within boundaries, a rising acceptance of new technology, and robots are everywhere!”

While chatbots and technological developments will help to progress customer service, "beauty experts, influencers and health professionals will still play a strong role in helping consumers make that decision," stated Delon Wang, Manager of Trends APAC at Mintel in an exclusive interview with Cosmetics Design Asia.

The partnership between evolving technologies and traditional customer experience considerations is a core element of P&G’s progressive strategy as it plans to further O2O relationships and develop both its digital and physical sales.

Digital and Premium

“We plan to bring in the right tech that is useful and understandable — the tech that makes meaningful differences,” Michael Yates, General Manager Hong Kong & Taiwan, Procter & Gamble, said to Chinese news outlet, South China Morning Post.

On 7th September 2017, in a statement responding to a white paper released by Trian Fund Management, P&G emphasised that “contrary to Mr Peltz’s assertions about P&G’s digital advertising and e-commerce, we are investing wisely”, and has been concentrating heavily on its digital and e-commerce efforts.

P&G revealed that in the last fiscal year, the company has grown e-commerce sales at approximately 30% and grew share in 80% of its e-commerce categories, with sales of over $3 bn (€2.5 bn).

In addition to its focus on digital growth, the consumer conglomerate revealed earlier this year that it is also exploring premiumisation through the production and marketing of its products.

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