CLEANING UP IN CHINA: P&G SOAP DEALS GROW

CLEANING UP IN CHINA: P&G SOAP DEALS GROW

U.S. companies are stepping up their activities in China as demand for consumer items grows.

Procter & Gamble Co. said it is adding three joint ventures to its existing base of laundry, cleaning and personal hygiene plants.In two of the new ventures, the Cincinnati company will work with its longtime Hong Kong partner, Hutchison Whampoa Ltd., and two Chinese state- owned factories.

They will jointly take over the laundry production facilities and brands of Beijing No. 2 Daily Use Chemical Factory in the Chinese capital and of the Chengdu Synthetic Detergent Factory in the southwestern province of Sichuan.

The third venture is with Hutchison and a state-owned toilet soap factory in the northern port-city of Tianjin. It will take over some production facilities at the plant, which has been making P&G's Safeguard brand bar soap for 18 months.

"We continue to see excellent profit potential in China and these new agreements underscore our confidence," said P&G president John E. Pepper.

P&G entered China in 1988 with Hutchison, a widely diversified conglomerate. They expanded the original factory in southern Guangdong province in 1991 to add sanitary napkins and diapers to the range of soaps, shampoos and conditioners with which it started.

At the time, the plant was described as the most successful of all P&G's subsidiaries. The company operates in 50 countries and reported sales last year of more than US$30 billion. No recent sales or profit figures from China were immediately available.

Its expansion comes only days after the Anglo-Dutch Unilever group said it would broaden China operations to include toothpaste and other oral care products in cooperation with the Shanghai Toothpaste Factory.

Earlier this year, Unilever added a detergent plant and ice cream factory to its China stable.

Henkel Co. of Germany said it is adding US$7.5 million to its detergent joint venture in Tianjin, raising its stake to 55 percent. Peter Hahnel said Henkel's aim is to "become the leading detergent producer in China."

Soaps - and especially toothpaste - will be in greater demand thanks to the activities of three other recent U.S. ventures.

Kraft General Foods Co. Inc. of Glenview, Ill., signed a US$42 million dairy agreement with the General Corp. of Beijing Agriculture, Industry and Commerce. It will produce yogurt, ice cream, cheese, milk powder and long-life milk.

While milk and its products were shunned by generations of Asians - who found them disagreeable and hard to digest - young people are keener. Chinese figures show sales rising 14 percent a year in recent times.

Kraft, a unit of Philip Morris Cos., will supply technology, patented techniques and trademarks to the venture, which is expected to produce 50,000 tons of products a year.

This is Kraft's third China undertaking. It has a Tianjin venture producing Tang and a Guangdong plant making Maxwell House instant coffee.

Baskin-Robbins International of Glendale, Calif., last month broke into China, offering its 31 flavors of ice cream to Beijing residents. The company, a unit of Britain's Allied Lyons PLC, is working with China Satellite Launch & Tracking Control.

The unlikely partnership was explained by Yang Gang, an official of the Chinese firm: "I was on the way to signing a deal with Hughes Aerospace (in California) when I went into a Baskin-Robbins store. I thought China needed an ice cream store with high quality like this."