China Daily Global Edition (USA)
Wisconsin brands target China’s middle class
Most Chinese have not been to Wisconsin or know where it is on a map, but many have a “piece’’ of the US state: a water heater, a toilet, beer or even a “hog’’.
Wisconsin consumer brands are targeting China’s growing middle class and their big appetite for high-end imported goods.
Ajita Rajendra, CEO of water-heater manufacturer A. O. Smith, goes to China four to five times a year. On his bookshelf sits a photo of him with Zhang Jindong, chairman of Suning Commerce Group, one of China’s largest appliance retailers.
“Everyone knows the A. O. Smith brand in China. It’s better known in China than in the US,” said Rajendra. “China is growing much faster than any other market that we have.”
The Milwaukee-based company entered China in 1996, and opened its first waterheater factory in Nanjing in 1998. The plant has expanded twice and employs more than 7,400.
In 2010, A. O. Smith opened a second plant in Nanjing, larger than the first one. Its water heaters are sold in 9,000 stores in China, and 20 percent of its revenue comes from booming e-commerce. Total sales in China were just under $900 million in 2016.
To leverage its brand in China, A. O. Smith has moved into new sectors, including water purification and air-purification products. Those categories are growing at a rate of 30 to 40 percent a year, according to Rajendra. A plant to make waste-treatment products has been built in Nanjing, employing 1,200.
Next year, one of the largest US sausage producers plans to open its second production facility in China.
Johnsonville sausage from Sheboygan Falls, Wisconsin, entered China 10 years ago by opening a sausage restaurant to study consumers’ taste.
Today, its packaged 100 percent pork sausages are sold in many high-end supermarkets. The company is opening a new plant in Yantai, Shandong province, to capitalize on Chinese consumers’ buying power.
“You’re getting to a point which the Chinese consumers are very quickly becoming the consuming class that will on a regular basis buy what we would call premium goods,” said Michael Stayer-Suprick, president of Johnsonville Sausage.
“We are seeing double-digit growth in our target market, that upper half of the consuming base, so I would say we should be able to double and triple our business in the next five to ten years,” he said at the American Club in Kohler, Wisconsin, where his friend since elementary school, David Kohler, is running the family business that manufactures kitchen and bath fixtures. Kohler has been in China for two decades and is a household name.
Now, when they meet, the old two friends often talk about China, especially about the 2008 Olympics in Beijing that they attended together.
To appeal to the growing middle class, brands are not only marketing their products, but often the American lifestyle. Kohler will kick off its 2017 Kohler Family Run in Hangzhou, promoting a family-oriented healthy lifestyle. The top winning families will get a smart toilet seat and lid.
To extend their reach to potential customers in China, motorcycle maker Harley-Davidson is rolling out its “Live Your Legend” tour across seven cities — Suzhou, Nanjing, Hangzhou, Chengdu, Changsha, Xi’an and Tianjin — this year.