India’s Wipro to buy Zhongshan Ma Er’s personal care brands
Deal will make Wipro’s consumer care arm the third biggest player in the shower and bath sector in southern China
India’s largest listed congelomerate, Wipro, said on Thursday it would take over four top Chinese personal care brands in what is likely to be the highest profile acquisition this year of a Chinese business by an Indian firm aiming to tap the world’s second largest economy.
The acquisition will see Wipro’s consumer care arm buy the entire stake of shower and bath goods maker Zhongshan Ma Er Daily Products, and subsequently become the third biggest player in this market category in South China.
The Bangalore-based software-to-soaps company, controlled by billionaire Azim Premji, has been on a buying spree of big consumer names, such as Singapore’s skin care brand Bio-essence, across Southeast Asia.
The latest move highlights the foray it has made recently into one of the world’s most sizable and rapidly-evolving consumer markets where people’s tastes are becoming sophisticated.
Though declining to disclose the money involved in the deal, the Indian multinational said it expected its Chinese consumer care business to touch an annual run rate of nearly 1 billion yuan (US$ 150 million) after adding the Guangdong-based firm’s basket of bath, shower and fabric care brands into its portfolio.
“We plan to launch new products in China and leverage our R&D and e-commerce strengths to cultivate our China business,”said Nagender Arya, regional director of Wipro-Unza, the Southeast Asian unit of Wipro Consumer Care and Lighting in an interview with the South China Morning Post.
“Chinese consumers get a lot of choices and are also increasingly discerning, while China has an advantage of size with a population of 1.4 billion.”
Chen Ruiqiang, founder and chief executive of Zhongshan Ma Er who will later serve as a special advisor to the company, said both parties had met each other six years ago, but they had only engaged in extensive discussions over a possible acquisition in last few months.
“We were approached by a few interested companies overseas, but were finally convinced to reach an agreement with Wipro given its efficiency and long track record of successful M&As,”said Chen.
The Guangdong entrepreneur said he hoped the company could bank on the tendency among Chinese consumers to pay a premium for higher-end personal care products.
Among the brands to be taken over are Enear shower and Pahnli fabric care products targeted at the premium end while Zici caters to mass market consumers, said Arya. “For the time being, we would like to grow all of them,”he said.
Wipro would “significantly increase” its advertising spending in marketing its Chinese personal care brands, both on television and on the internet, and also expected to boost their sales online.
“Zhongshan Ma Er is not as strong as us when it comes to e-commerce business in China,”said Arya.
Wipro Consumer Care currently has more than two dozen personal care brands under its umbrella, and Arya said the company would continue to expand its footprint into other emerging markets overseas through mergers and acquisitions.
Wipro’s international consumer care offshoot is currently ranked as the second biggest fast-moving consumer goods player in Malaysia and the third largest in Vietnam.