P&G’s Diaper Has a Hard Time in China

choi

Serena Ng and Laurie Burkitt, In Aiming Low in China, P&G Made Diaper Mess. Wall Street Journal, Aug 14, 2015.
http://www.wsj.com/articles/p-g- ... in-china-1439445897

The first four paragraphs:

"Procter & Gamble Co, America’s leading diaper maker, recently rolled out a line of premium diapers [Pampers] in China with a prominent new claim: 'Made in Japan.' * * * [P&G] may own the high-end diaper market in the US, but well-heeled Chinese parents in recent years have been gravitating to imported Japanese brands at the expense of Pampers, which have long been made locally to keep their costs down.

"P&G’s earlier mistake was that it traded down in China, targeting what its executives thought was a frugal middle class with cheaper diapers. 'We’re stuck in the middle of the market. We went down, the consumer went up,' Chief Executive AG Lafley said last month.

"The company’s pivot upward highlights a surprising development in one of the world’s most important markets: China’s consumers are proving increasingly willing to splurge—not just on $700 smartphones, but also on little luxuries like better diapers for their children.

"Even with the recent turmoil in China’s stock market, consumer spending is expected to rise as disposable incomes increase among the country’s population of 1.3 billion.

My comment: I am unsure of paragraph 4. Just yesterday, a graphic in WSJ shows consumer spending had been down for years, which together with other economic indicators show China's economy is ill, prompting China to devaluate renminbi.