It is fair to say that the Chinese coatings industry began a new chapter in 1992. That year marked a turning point as Nippon entered the Chinese market, followed by ICI, a subsidiary of Dulux, which also set up a branch in China. Over the next two decades, these two global giants gradually captured the majority of the Chinese paint market share.
Ten years later, Fenlin made its entry into the Chinese market. As a latecomer, it faced an already saturated and fiercely competitive environment, with Nippon and Dulux dominating the landscape. The challenge was not only about market presence but also about carving out a unique identity in a space dominated by established players.
"Both Nippon and Dulux are giants. I can't compete directly, so I'll hide," said Yan Ming, General Manager of Finland China, when proposing a strategy targeting the high-end retail market to the headquarters. This decision proved effective in the early stages. Even a well-known Finnish economic magazine analyzed Fenlin's approach in China, encouraging European companies to "avoid blindly adapting to China's price-driven market and instead start from the high end."
At the same time, the process of "localizing" was more challenging than expected. Fenlin had to modify product formulas and adjust business practices. Throughout this transformation, gaining a voice at the headquarters became crucial. Although Fenlin’s sales in China were not extremely high, its performance within the group showed significant growth over consecutive years. Additionally, the traditional sales model of this century-old European company was deeply rooted, making the Chinese market an ideal testing ground for new strategies. This allowed Yan Ming to gain more influence and authority at the headquarters.
However, the ceiling effect soon became apparent. While Fenlin's high-end retail strategy gave it a solid foundation, it still couldn’t meet the expectations of the headquarters. "I'm afraid I have to enter the low-end market," Yan Ming admitted. He understood that the lower part of the market pyramid represented a critical opportunity for Fenlin to break through its current limitations. Yet, maintaining a high-end positioning had been key to its success in China. If this strategy were abandoned, it would bring more uncertainty and challenges ahead.
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