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UNILEVER TO HOLD 60% STAKE IN SHANGHAI TOOTHPASTE FACTORY JOINT VENTURE

This article was originally published in The Tan Sheet

Executive Summary

UNILEVER TO HOLD 60% STAKE IN SHANGHAI TOOTHPASTE FACTORY JOINT VENTURE under an agreement announced by Unilever on Nov. 17. The joint venture, which covers the production and marketing of oral care products in China, is expected to employ 1,350 people. According to Unilever, Shanghai Toothpaste Factory is the largest toothpaste manufacturer in Asia, with an annual production of more than 550 mil. tubes. The Shanghai Toothpaste Factory markets Zhonghua and Maxam branded toothpastes in China and exports Maxam to several other countries in Asia and Africa. Unilever will introduce its existing toothpaste brands, which include Close-Up and Pepsodent, in China through the venture. Unilever also manufactures Signal mouthwash. Unilever said it will also team up with the Shanghai operation "to utilize leading technological and marketing expertise to further develop" the Chinese brands. Discussing the growth potential of the oral care market in China, Unilever pointed out that "toothpaste is already widely used and there are significant opportunities as oral hygiene consciousness increases, prompted by educational programs aimed at the predominantly young population." The firm noted that "increasing affluence in urban areas will also stimulate the need for value added oral care products." Unilever currently manufactures products including Lux soap in Shanghai through Lever Brothers (China) Ltd. Joining the growing number of firms that have formed joint ventures to manufacture and market H&BAs in China over the past several years is Dep, which recently signed an agreement with its Hong Kong-based manufacturing and distribution partner. Announced on Nov. 19, the joint venture will be 50% owned by Dep and called Dep Asia Ltd. Under the deal, certain Dep shampoo brands will be added to the Dep products that are currently produced and sold in China and the number of products available under the L.A. Looks and Dep brand names will be increased. Dep hopes to eventually sell all of its brands in China, including the Topol and Lavoris oral care products and the Nature's Family, Cuticura and Porcelana skin care brands. Among other companies that have entered the Chinese market via joint ventures is Colgate-Palmolive, which began manufacturing Colgate toothpaste in southern China in 1992 through Colgate (Guangzhou) Co., a joint venture in which Colgate holds a 65% share. Procter & Gamble also entered into a joint venture in Guangzhou in 1988 to manufacture Head & Shoulders and Rejoice, the equivalent of Pert Plus. The firm also sells brands including Crest, Camay, Zest and Vicks in China.
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