Fit for the future: an energising visit to China and SEA

Although it was a few weeks ago now, I still feel very much energised about my recent visit to the China and South East Asia (SEA) region, home to nearly 2 billion of the world’s citizens and currently accounting for around 15% of Unilever's global business. The potential is enormous and we are planning to add about €10 billion incremental turnover by 2020. To put it in perspective, that's 25% of our current global business.

China, with 1.4 billion people, is the second largest global economy and we just passed the magic €2 billion turnover mark on our way to becoming a €5 billion business. It has all the potential to be our biggest market one day. During my visit we were pleased to conclude the purchase of a majority stake in Qinyuan, the leading water purifying business. With over 70% of water use in the home related to our products, it is vital that we play in this segment. This acquisition doubles our water business and I envision this to be the next new €1 billion business for the company. With Pureit now in 13 countries, we have made a good start. We welcome the founder Mr Ye and his great team to the Unilever family.

While there we also reviewed the company’s digital strategy, another area where China is starting to leapfrog the rest of the world, with many people quickly embracing the online lifestyle. ‘Wechat’ from Tencent, Weibo and YHD in e-commerce are amongst the leaders in their field, setting new standards. E-commerce is already a significant part of the company’s sales and Dorcas and her team in China are leading the efforts, which I am sure will benefit us globally over time.

SEA is an equally exciting region and one of the fastest growing in the company, despite already being clear leaders in 75% of our core businesses. They have set an objective to double the business by 2020 and with the current momentum and new opportunities like Myanmar and Indonesia’s outer islands, this is certainly within reach.

There’s too much to include everything in one blog, but let me just share three big observations from my visit.

1. It's all about talent and people make the difference

Both Malaysia and Australia have turned around their businesses after several years of decline due to strong leadership from respectively Rakesh, Clive and their respective teams.

Everywhere I go it is clear that our people are making the difference and with preferred employer status in most countries across the region it is key that we maintain our passion for people development. I was fortunate during the visit to participate in two excellent programmes at Four Acres East, our new state of the art training facility in Singapore:

The Future Leaders League, made up of students from all over the world, was a great success. The energy and the buzz stayed throughout the event, which achieved advocacy scores of 96% among the students. All of them said they were excited about a career in FMCG and were inspired by Unilever in particular. We gained an additional 300,000 fans. Such a programme is unmatched at the moment in scale and reputation and we intend to build it into a real differentiator.

The UL2020 programme, which was run concurrently. Here our most senior leaders are working to crack some of the biggest business challenges. It is focussed on developing the leadership skills we need for 2020 and beyond in what is an increasingly VUCA world. Adaptability, resilience, systemic thinking, authenticity and results orientation are some of the areas highlighted. Again, exciting feedback. It follows on from the Unilever Leadership Development Programme (ULDP) and again sets the standards for the industry.

Last but not least, I was also fortunate enough to take part in the events planned to mark International Women’s Day. We are blessed with some amazing role models and the panel discussions made quite an impact. While the region has good representation we must to continue to focus on mid-career attrition and increase the presence of women in senior management.

2. The only limit to growth is our mindset

Although we have high shares across the region, we continue to grow well ahead of the respective country growth rates. 

Indonesia, under Maurits' leadership, has more than doubled its business over the past 5 years with a principle always to grow at double the GDP rate. The main growth driver is market development, which is a real competitive advantage, as well as the many white space opportunities that are still available. Execution and focus are equally important. 

The Thai focus on 5 priority channels and 6 key priorities is a great example. So is Unilever International, a near €500 million business, capably lead by Umesh Shah.  With less than 2% indirects, the unit has shown a cumulative growth rate of nearly 20% over the past three years by unlocking opportunities around ethnic and heritage brands, travel retail and niche channels, uncovered geographies and special markets. An excellent example of a growth mindset. It requires ruthless discipline and, first and foremost, a focus on the core.
Rakesh and his team in Malaysia have turned around the business by cutting 60% - yes, 60% - of SKUs and drastically optimising promotions and processes. Profits have seen the biggest step-change ever as well. 

Clive in Australia has equally reignited growth by focusing on operational excellence, making the harder right rather than easier wrong choices by drastically restructuring our operations to become cost competitive again and investing the savings back into the business for growth. The work that Jiah Falke and team have done at the Minto factory is especially impressive and, by the way, customer service is at 98%. No compromise and, yes, execution is strategy.

Finally, the work Zaw and team are doing in Myanmar to establish our business is truly amazing. With nearly 60 million people the potential is enormous and could be as successful as our business in Vietnam. Opening our second factory in the country was an especial honour and it makes me proud to see the energy, enthusiasm and dedication of all the Unilever people there. They are writing history.

3) Our business model is a winning model and more needed than ever

This was driven home to me especially during my visit to the Philippines. Hurricane Haiyan's destructive path was still visible everywhere. Over 6,000 innocent people lost their lives in a storm so strong that and a new Category 6 storm had to be created. Unsurprisingly our people, under Rohit's leadership, were among the first ones to help. In fact, Unilever employees raised over €100.000 in the aftermath. Not surprisingly, President Beningo Aquino was very appreciative of Unilever's efforts during our visit and would like to see us with an even bigger presence in his country. He considers Unilever a Filipino company, which was the biggest complement he could pay. During an energising lunch with our key strategic Unilever Foundation partners, I again heard the power of our feeding and handwashing programmes to improve people's lives.

The same was clear in Myanmar where my visit coincided with World Oral Health day. Working closely with the Ministry of Health as exclusive partners, we agreed to reach all 8 million children to improve their oral health. President Thein Sein suggested during our visit to extend this to nutritional and handwashing programmes in all schools. What better way to build our brands and improve the health and well-being of so many. Aung San Suu Kyi, the Burmese opposition leader, was equally complementary about the work we had started with smallholder farmers in her district to produce palm sugar for our soy brand Banga in Indonesia.

We also see our team in China increasingly delivering against our Unilever Sustainable Living Plan objectives and this will be further enhanced I believe with the acquisition of Qinyuan. Mr Ye’s combination of entrepreneurial drive and passion to make a difference fits perfectly with our USLP vision to bring safe drinking water to China and the world.

All these efforts not only enhance the image of Unilever in the region but more importantly directly drive our overall business results. Embracing the USLP fully is paying off.

But I cannot help but be even more convinced about what we are doing when visiting our consumers in their homes. I was particularly touched in the Philippines when visiting a lower LSM household. The daughter’s main goal was to give her parents a few days off from their street vending business for the first time in their lives. "It's with products like yours that I feel confident to work in a call centre and return money to my family,” she told me. Thank you is all I could hear when we were still leaving.

Thanks to all of you.