Small Chinese Firm Used Creative Marketing Against Unilever

The way Unilever PLC's fortunes diverged from a much smaller Chinese rival highlights some of the reordering in the Chinese retail market.

Bai Queling was founded in 1931 and is now run by a cosmetics company implausibly named Shanghai Daily Chemical Co. Pecholin. Selling some of its creams in packaging unchanged from the 1930s, Bai Queling is much smaller than Unilever, ranking 27th among beauty and personal-care brands by market share, compared with No. 4 for Unilever.

But Bai Queling, which means Hundred Birds, enjoyed a rush for its skin-care products last year after it designed lotions and creams for China's first lady, Peng Liyuan, to give out on official overseas visits.

The company also marketed itself by sponsoring "The Voice of China," one of the country's highest-rated TV shows, and by selling creams online that weren't available in its stores. It also sold more premium, higher-profit products online, often in decorated bundles.

Unilever generally sells its products all the same way, though it rolled out its Dove men's skin-care series online months before it hit Wal-Mart store shelves and last year did the same with a line of Lux body wash. But industry insiders say it has been too wedded to its buy-one-get-one-free promotions at grocery stores, at the expense of e-commerce strategies.

The result came into stark relief on China's biggest Internet shopping day last year—known as "Singles Day"—when search volume for Bai Queling via e-commerce giant Alibaba was about eight times that of Unilever brands.

Singles Day, started by Alibaba Group Holding Ltd. in 2009 and marked with big discounts on Nov. 11, or 11/11, also illustrates the e-commerce dominance of Alibaba, which accounts for around 80% of online transactions, according to Beijing research firm iResearch.

Write to Laurie Burkitt at [e-mail]

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