WhiteCat on road to delisting
By Wang Ying (China Daily)
Updated: 2009-04-03
http://www.chinadaily.com.cn/cndy/2009-04/03/content_7645252.htm


SHANGHAI: After two consecutive years of losses, Shanghai WhiteCat Shareholding Co Ltd, maker of a wide range of household goods, is sliding down the slippery road to de-listing from the Shanghai Stock Exchange.

Although the company's products have lost their competitive edge against numerous foreign brands and its stocks are being shunned by investors, the demise of the "white cat" has touched a chord in the hearts of even the most hard-nosed punters, who have lingering childhood memories of seeing their mothers washing dishes after dinner with detergent from bottles emblazoned with the head of a wide-eyed feline.

"We may not love the company, but we still love the brand," said Fang Lei, analyst with Industrial Securities. He and others agreed that there was nothing wrong with the "white cat" brand, which has remained one of the most well known domestic trademarks, especially in Shanghai, its home turf.

The fault lies in the management, analysts chimed. "The fundamental problem leading to the company's losses is not because of its branding, but because of the inefficient management mechanism, which is slow in responding to the rapidly changing trends in the consumer market," Fang said.

The company earlier posted a net loss of 35.56 million yuan for 2008, which had widened from a shortfall of 9.25 million yuan in 2007. As a result, the company was capped with the ignominious label of "special treatment," or ST, on the stock exchange to alert investors to its poor performance.

In its latest annual report, the company attributed its troubles to the weakening of its competitiveness in overseas markets by the renminbi's appreciation against most other major currencies, the slashing of export rebate for toothpaste and other personal health care products, and rising commodity prices. On the domestic front, the company faulted itself for inadequate spending on marketing and advertising when faced with intensifying competition from foreign brands.

Indeed, WhiteCat was a household name in China, synonymous with detergents and personal care products before such foreign competitors as Unilever and P&G began to make inroads into the domestic market in the 1990s. Now, the major contributor to the company's profit is income from the leasing of one of its sub-brands, Zhonghua, to US consumer product giant Unilever. This, according to analysts, is a clear signal that the company has largely lost its own marketing initiative.

Talks of reviving the company's lost fortunes are underway between its two major shareholders, Xinzhou Group, a property developer based in Zhejiang province with a 27.59 percent stake, and Shanghai WhiteCat Group, the former parent company whose holding has been reduced to 13.3 percent. Analysts said they expect to see some major reshuffling in the company's management and operations in a bid to return to profitability this year, or face a suspension in the trading of its stock.

Interviewed over the phone, Luo Yaping, president's office director at WhiteCat, confirmed to China Daily that a restructuring was in progress. Declining to provide details of the process, Luo said that the restructuring involves transferring of the entire household goods production to WhiteCat Group, leaving the listed company with only the profitable property development business.

The process, he said, would keep the WhiteCat brands alive while allowing the listed company to turn in a profit.

"WhiteCat's case is just one example of China's domestic brands fighting for survival in our highly open retail market," said Zhu Lianqin, director with Shanghai Academy of Social Science. To succeed, "they would need support from consumers as well as the government," he said.

"This is not a question of protectionism, but the healthy development of our cherished national brands."

(China Daily 04/03/2009 page15)