Nice Group: From Ordinary to Glory       

Nice Group was incorporated in 2001. Its predecessor was the state-owned Lishui 57 Chemical Factory founded in 1968, which was transformed into a joint-stock company at the end of 1993. Headquartered in Lishui, Zhejiang province, the group has five production bases in Yiyang, Hunan province; Chengdu, Sichuan province; Zhengding, Hebei province, Siping, Jilin province and Urumqi, Xinjiang region. Now its annual production capacity is 1 million tons of washing powders, 300 000 tons of soap, and 250 000 tons of liquid detergent. The Group has two brands: NICE and DIAO, which are recognized as well-known trademarks in China's soap industry and washing powder industry respectively. It also has over 50 sales branches in China and three overseas subsidiaries. Its washing powder products occupy more than 40% of China's market, and its soap products have 67% of the market. Also, the output and sales volume of its liquid detergent products has been the largest in the household chemical industry for many years.

The current success of Nice Group can be attributed to its complete approach to doing business - including the low production and delivery cost, frequent and efficient advertisements, wide marketing channels and so on.

* Rising of laundry soap   

Nice Group thrived on RMB60 000 and its main product was soap then. In 1992, Nice Group began to produce laundry soap. The consumers then had no brand awareness about laundry soap due to its numerous shortcomings: large, rough, sallow appearance, lack of packaging, stinking smell. However, smelly laundry soap is still in great demand, because its cleaning effectiveness is better than the toilet soap which smells good.
   In 1992, Nice Group modified common yellow laundry soap to remove its odor and improve its decontamination capability. It also introduced the DIAO brand super performance laundry soap which cleaned more efficiently and also adopted blue concave shape as well as plastic packaging. Unlike yellow soap, the new product opened the market quickly with its beautiful packaging and good decontamination capability. Since then, Nice Group has attached great importance to product positioning and the work details. It also organized the "presentation of millions of bars of DIAO brand super performance laundry soaps as gifts" activity in the whole Zhejiang province to get consumers to understand the soap's super decontamination efficacy. This move helped the Group win 90% market share in Zhejiang province. Although that promotion activity is common today, it was unprecedented in 1993, let alone the fact that the annual pre-tax profit of Nice Group at that time was less than RMB1.0 million. Later, Nice Group introduced DIAO brand translucent soap. With decontamination efficiency and fragrance as its appeal, the soap captured the market rapidly upon its introduction with a medium price. The success of DIAO brand translucent soap lies in that it created a market and grew into a leading brand in this market quickly which cannot be imitated or overtaken by other competitors in a short period of time.


* Springing up of detergent powder    

In 1998, Nice Group unexpectedly announced that it would enter the detergent powder industry which was in depression and suffered from market saturation. At first, DIAO brand detergent powder sold poorly despite its frequent advertisement, for two reasons. First, the detergent powder market was not new and there were many competitors in the market; second, the advertising costs made the price of DIAO brand detergent powder higher than the market average, so the wholesalers wouldn't purchase it on a large scale, thus hindering its sales. During the latter half of 1998, DIAO brand detergent powder was phased out. So in 1999, Nice Group set up automatic spray equipment to improve the production efficiency greatly and also made the price of DIAO brand detergent powder drop sharply.
    At that time, the detergent powder markets in various cities were mainly occupied by overseas-funded enterprises like Procter & Gamble and Unilever. Those enterprises value brand promotion and place high price and high profit at the core. At the same time, although some domestic brands like Qiqiang dominated a considerable rural market due to their strong direct sales force and low price, their brand influence was weak. So Nice Group found the market gap - low and medium grade products with a strong brand. Later, Nice Group started to promote its brand with constant advertisement and expanded the market with a low price strategy. By 2001, Nice Group had sold near 900 000 tons of DIAO brand detergent powder and became the best in the market.
    Since 2000, Nice Group has continuously adjusted its product mix and increased the products' added value. For example, it has successively launched DIAO brand toothpaste, Nice soap, shower gel, shampoo, etc.


* Backing for Nice Group's success    

Nice Group's success does not rely solely on advertising and low prices. Every year, Nice Group will give certain rebates to the dealers. Moreover, for every 100 boxes of detergent powder sold by the dealers who act for DIAO brand detergent powder, Nice Group will give another 14 boxes as bonus on the basis of low price. But the precondition is that the dealers must pay in advance. This strategy can on one hand, provide Nice Group with circulating fund to secure its normal production and advertising, and on the other hand, take the dealers' circulating fund so that they can't act for other brands due to insufficient capital. Some insiders say that DIAO brand has developed in a short time and its relationship with the dealers is of an unstable short-term nature, too. A salesman for DIAO brand usually manages several areas and the markets below the third tier are operated by the dealers themselves. Obviously, the foundation for DIAO brand is not solid enough in today's world when the end market is getting ever more important. Nice Group is aware of this and has begun to change its marketing strategy from encircling the cities from rural areas to establishing branch offices nationwide and forming an 'radiating to rural areas from cities' pattern. Moreover, the flat network management will be introduced to reduce Nice Group's operating costs. At the same time, the dealer's margin system will continue to be implemented.
    Later, Nice Group will begin to set up commissions throughout the country. Now 30 enterprises in 19 provinces nationwide are providing commission processing services for Nice Group, including four detergent powder manufacturing plants of Henkel (German enterprise) in China and two plants of Procter & Gamble. The products processed are normally sold in local areas, thus reducing a lot of transportation costs. However, Nice Group did not stop with this. In 2001, it invested RMB300 million to build a production base in Yiyang, Hunan province which has an annual capacity of 200 000 tons. Later, it also built four more production bases in Chengdu, Zhengding, Siping and Urumqi. By doing this, a nationwide strategic framework is set up. In combination with its commissioned processing enterprises, this allows Nice Group's products to cover the whole country.

* The mystery of the profits    
    
People doubt if DIAO brand detergent powder can benefit from the frequent advertisement and low-price strategy. In 2000, the advertisement input for DIAO brand detergent powder was RMB150 million and the total profit was RMB340 million. According to the profit level of RMB500 per ton, 300 000 tons of detergent powder only created RMB150 million of profit. If deducting the adver