Four years ago, Shanghai Toothpaste Factory Co Ltd regained the dying brand "Maxam" from Unilever, the world's leading household products provider, since the British giant failed to develop the brand to reach the agreed target.

Four years later, it is Unilever again.

Market rumours say another domestic brand "Jinghua," which receives little attention from the stepmother, Unilever, will go back to its original parent company, Beijing Tea Corporation.

Insiders are now questioning whether the firm is "an eliminator of domestic brands."

With the global trend of mergers and acquisitions (M&As), Unilever has never stopped vying for local brands in China.

The firm has so far bought six local brands - Zhonghua toothpaste, Maxam for oral care, Jinghua tea, Mountain ice cream, Lao Cai savoury and Fangcao washing powder - through M&As or by gaining brand leasing licences.

But so far Zhonghua is the only one that has performed well. As for the rest, some are struggling to survive, some have withdrawn from the market and some were purchased back by its original owners.

"International giants tend to 'freeze' local brands they purchase, and then make market room for their own products. Such a measure brings disaster to local brands," said an anonymous expert.

Unilever denies the accusation.

Wu Liang, Unilever's spokeswoman, told China Business Weekly that the company has never differentiated its brands into local or international categories.

"We are trying our best to develop all brands ... It is the market that decides which brand is stronger."

She said the company actually "has spared more efforts" to boost local brands.

Take Zhonghua, for instance, Unilever has spent 95 per cent of its promotional budget on it, leaving only 5 per cent for Signal, its sister brand.

She said the company last month held a grand ceremony to celebrate the 50th anniversary of Zhonghua. Unilever gained the brand leasing licence in 1994.

Wu admitted the company's failure in Jinghua, but she attributed the reasons to the company's inadequate experience in the green tea market.

"Although Unilever is the world's leading instant tea provider, such as the well-known Lipton, it lacks the experience in producing and distributing green tea," Wu said.

She said that, as an example, a large portion of the green tea distribution in China is done through company welfare systems, something Unilever did not know about.

Wu ruled out rumours that Jinghua's original owner, China Tea Corporation, is preparing to regain the leasing licence of the brand.

"There is no move for Jinghua," Wu said.

But the anonymous expert said it is a typical strategy when Unilever decided to enter the green tea market under its own brand of Lipton.

Unilever bought the brand of Jinghua in 1999.

"Unilever once owned over 2,000 brands worldwide, and the firm is a good brand player," the expert said.

The traditional Maxam toothpaste is another victim.

Zhang Hongyu, vice secretary-general of China Beauty & Cosmetic Chamber, said Unilever carried out a war of "annihilation" with Maxam toothpaste.

The brand used to be the market leader in 1994 when Unilever sought a brand leasing licence with Shanghai Toothpaste Factory Co Ltd.

At that time the brand had an annual sales volume of 60 million tubes.

But when Shanghai Toothpaste Factory regained the brand, the sales volume had dropped to 20 million tubes.

Zhang said Maxam has overlapped with other Unilever brands, such as Signal and Zhonghua, and it ended up being the victim.

"In order to gain the largest profit and market recognition, the capital operation is a widely-used method for multinational companies," Zhang said.

Unilever announced recently that the firm is slashing its 2,000 brands to 400 worldwide.

In China it has 15 brands, and three of them are local ones.

Zeng Xiwen, external relations director of Unilever China, said the company will continue expanding its brand range in China through various methods, such as M&As, according to a Beijing business report.

The areas of food and personal care would be Unilever's interest, Zeng said.

Unilever set up its first local joint venture in Shanghai in the mid 1980s. It has so far invested more than US$1 billion in China, employing 4,000 staff.

In order to lower costs, Unilever moved its manufacturing centre to Hefei, East China's Anhui Province, earlier this year. From there, it enjoys convenient transportation, a qualified resource supply and abundant cheap labour.

Meanwhile, the firm has decided to build a new headquarters building in Shanghai to direct its operations in China. It plans to move into the new building by mid-2006.

(Business Weekly 10/13/2004 page11)