Wisdom comes with pain. US manufacturing giant 3M's business in China is developing very well. It is among the best in all US companies in terms of sales, growth, product diversification, brand value, market share and profit. .
It was only later that I realized that this was also due to my experience of filling my teeth. When I endured the pain with my eyes open, I saw that my dentist picked up a small tube of epoxy resin that was used to fill the cavity. "3M is also American, just like you, right?" She asked me in Chinese. “This is the best product on the market.â€
About 20 years ago, dentists were almost non-existent in China. But since then, the dentist's business has been growing at a supersonic speed. Today, Chinese dentists are about 60% more than the United States, with a specific number of 135,000 to 85,000; the number of Chinese dentists is growing by 15,000 per year. 3M helped China establish a dental market from scratch, and now its market penetration and trust in China exceeds its position in the United States.
Dental products are just one of a dozen and 3M companies in China that are large and profitable. The other one I know: the reflective tape used on the traffic signs and the reflective film on the clothing worn by the police and emergency personnel. 3M enjoys an advantage close to monopoly in this field; and few other countries have built so many new roads in such a short period of time, and they need to use such a large number of new road signs. I have a Chinese customer who tried to compete with 3M, but did not succeed. Despite having better government connections and being able to offer lower prices, the Chinese company was defeated by 3M.
In the field of industrial adhesives, photovoltaic modules, and of course the most common post-it notes, the situation is the same: 3M wins every Chinese competitor who attempts to attack it. 3M's strategy in China is as straightforward as its success: quality products, price and market share.
In 1984, 3M entered China, almost as long as the country welcomed foreign investors. During this time, 3M established a strong business in China silently, but so efficiently, with revenue growth of 16% last year to more than $3 billion. Sales growth in China is three times the overall revenue growth of 3M. 3M's Chinese CEO has predicted that the company's business revenue in China will overtake its US revenue ($9.5 billion in 2013) in the next decade.
This will be an unparalleled achievement, but I am confident that 3M will do it. It has the strongest growth platform among multinational companies I know in China. It sells hundreds of different products in more than 80 separate product categories in China. In a country where no company's intellectual property (patents and know-how) is strictly protected by copyright, 3M has successfully protected its trade secrets and easily opened up a large number of Chinese cottage goods and imitations. Counterfeiting is another problem and may be the biggest problem 3M has encountered in China.
Almost no other company like 3M has achieved considerable sales and good reputation both in the consumer market and in the B2B market. As the Chinese become more affluent, 3M's strategy looks smarter. Cheap, low-quality products are gradually being squeezed out of the market. The spending power of consumers, factories and government departments is increasing, which makes many low-end Chinese brands into very difficult and even dying situation - in a market that is increasingly insensitive to price, they can only Price competition. 3M is one of the most serious manufacturing companies in China – a company that can innovate and maintain a high product premium.
My dentists and handyman still have low-quality Chinese-made products for customers to choose from – this is something I have never encountered in the United States. Do you want to use good imported goods or cheap knockoffs? Prices are sometimes far behind. For fillings with fillings, using 3M products will cost about three times. Sticking the legs of the chair with 3M glue also pays double the price. However, both my dentist and the handyman said that almost no customers choose to use local brands.
The trust and admiration for the quality of 3M products is almost everywhere. In China, its reputation is almost flawless. When the SARS epidemic was the most rampant in 2003, wearing a 3M disposable mask was widely publicized by the Chinese media as the most effective way to prevent this deadly disease. Today, 3M disposable masks are widely used in China for another purpose, which is to block pollution and smoke surrounding northern cities such as Beijing, Jinan, and Shanghai.
Other US companies with large-scale operations in China have recently approached the difficult times in China. Both Procter & Gamble and the Coca-Cola Company have robbed local competitors of their market share. Both Yum! Brand and Mondelez have been reported in the media for unhealthy foods. From my point of view, their best days in China are likely to have passed.
At the same time, 3M has grown quietly and steadily. If any US company can increase their revenue in China by another $7 billion in the next decade, I believe 3M is the most likely.
3M not only brought its products to China, but also transplanted its quite unique Midwestern personality. According to Chinese standards, 3M China is a very modest and even boring company. It seldom advertises or simply reveals its identity as one of the largest American companies on the Chinese market. The company in Maplewood, Minnesota, barely mentioned its market in China in its 10-K report to the SEC in 2013. When you have beaten many competitors in the world's fastest growing major markets, and have achieved good results, what else is it to show off?
It was only later that I realized that this was also due to my experience of filling my teeth. When I endured the pain with my eyes open, I saw that my dentist picked up a small tube of epoxy resin that was used to fill the cavity. "3M is also American, just like you, right?" She asked me in Chinese. “This is the best product on the market.â€
About 20 years ago, dentists were almost non-existent in China. But since then, the dentist's business has been growing at a supersonic speed. Today, Chinese dentists are about 60% more than the United States, with a specific number of 135,000 to 85,000; the number of Chinese dentists is growing by 15,000 per year. 3M helped China establish a dental market from scratch, and now its market penetration and trust in China exceeds its position in the United States.
Dental products are just one of a dozen and 3M companies in China that are large and profitable. The other one I know: the reflective tape used on the traffic signs and the reflective film on the clothing worn by the police and emergency personnel. 3M enjoys an advantage close to monopoly in this field; and few other countries have built so many new roads in such a short period of time, and they need to use such a large number of new road signs. I have a Chinese customer who tried to compete with 3M, but did not succeed. Despite having better government connections and being able to offer lower prices, the Chinese company was defeated by 3M.
In the field of industrial adhesives, photovoltaic modules, and of course the most common post-it notes, the situation is the same: 3M wins every Chinese competitor who attempts to attack it. 3M's strategy in China is as straightforward as its success: quality products, price and market share.
In 1984, 3M entered China, almost as long as the country welcomed foreign investors. During this time, 3M established a strong business in China silently, but so efficiently, with revenue growth of 16% last year to more than $3 billion. Sales growth in China is three times the overall revenue growth of 3M. 3M's Chinese CEO has predicted that the company's business revenue in China will overtake its US revenue ($9.5 billion in 2013) in the next decade.
This will be an unparalleled achievement, but I am confident that 3M will do it. It has the strongest growth platform among multinational companies I know in China. It sells hundreds of different products in more than 80 separate product categories in China. In a country where no company's intellectual property (patents and know-how) is strictly protected by copyright, 3M has successfully protected its trade secrets and easily opened up a large number of Chinese cottage goods and imitations. Counterfeiting is another problem and may be the biggest problem 3M has encountered in China.
Almost no other company like 3M has achieved considerable sales and good reputation both in the consumer market and in the B2B market. As the Chinese become more affluent, 3M's strategy looks smarter. Cheap, low-quality products are gradually being squeezed out of the market. The spending power of consumers, factories and government departments is increasing, which makes many low-end Chinese brands into very difficult and even dying situation - in a market that is increasingly insensitive to price, they can only Price competition. 3M is one of the most serious manufacturing companies in China – a company that can innovate and maintain a high product premium.
My dentists and handyman still have low-quality Chinese-made products for customers to choose from – this is something I have never encountered in the United States. Do you want to use good imported goods or cheap knockoffs? Prices are sometimes far behind. For fillings with fillings, using 3M products will cost about three times. Sticking the legs of the chair with 3M glue also pays double the price. However, both my dentist and the handyman said that almost no customers choose to use local brands.
The trust and admiration for the quality of 3M products is almost everywhere. In China, its reputation is almost flawless. When the SARS epidemic was the most rampant in 2003, wearing a 3M disposable mask was widely publicized by the Chinese media as the most effective way to prevent this deadly disease. Today, 3M disposable masks are widely used in China for another purpose, which is to block pollution and smoke surrounding northern cities such as Beijing, Jinan, and Shanghai.
Other US companies with large-scale operations in China have recently approached the difficult times in China. Both Procter & Gamble and the Coca-Cola Company have robbed local competitors of their market share. Both Yum! Brand and Mondelez have been reported in the media for unhealthy foods. From my point of view, their best days in China are likely to have passed.
At the same time, 3M has grown quietly and steadily. If any US company can increase their revenue in China by another $7 billion in the next decade, I believe 3M is the most likely.
3M not only brought its products to China, but also transplanted its quite unique Midwestern personality. According to Chinese standards, 3M China is a very modest and even boring company. It seldom advertises or simply reveals its identity as one of the largest American companies on the Chinese market. The company in Maplewood, Minnesota, barely mentioned its market in China in its 10-K report to the SEC in 2013. When you have beaten many competitors in the world's fastest growing major markets, and have achieved good results, what else is it to show off?
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