A well-known confectionery manufacturer was reported to have withdrawn from the market and closed its stores in China
“Small size, big taste”, with this slogan, chocolate brands quickly made the circle suddenly exploded.At present, the company in tmall, JINGdong and other online flagship stores have been terminated.And in the offline market, has been removed from the cupboard closed stores, its company in China, Hershey (China) has been liquidated.Although Hershey customer service said the company has not withdrawn from China, but from the development of the company, customer service said it is difficult to establish.So what went wrong with Hershey China?Back in January, Hershey’s official account announced that it would scale back its business in China due to business adjustment.At present, the company’s offline many places have withdrawn the cabinet closed shop, the company’s legal person has left China.Many netizens later noticed that Hershey China’s official flagship stores on Tmall and JD.com were suspended and out of stock, respectively.At the same time, many consumers also said that Hershey’s products are not on sale in large supermarkets such as China Resources and Yonghui.In fact, as early as 2020, Hershey China also started to lay off staff at its Shanghai operations center.Now, that year’s layoffs are also in the follow-up withdrawal from the Chinese market in advance layout.Hershey’s sudden withdrawal from the Chinese market has also raised a number of questions.Hershey’s offline dealers, for example, said they were affected by the sudden shortage of Hershey products.Previously, they also faced heavy losses on their investments in offline stores, and on top of that, they had to pay an expensive penalty to the supermarket.A number of Hershey dealers are already preparing to Sue Hershey to recover their losses.At the same time, the author noticed that Hershey (China) company had produced liquidation information as early as November 20 last year.On December 1, Hu announced his resignation.But very subtly, as early as last September, Hu Tingzhou promoted Hershey (China) company as general manager, chairman and corporate person.So why did Hershey pull out of China?Public information shows that Hershey has been in China for 27 years since it entered the Chinese market in 1995, but the development of the company is not particularly smooth.In 2014, Hershey completed the acquisition of golden Monkey for 2.6 billion yuan.However, the acquisition did not lead to the growth of the company’s performance. In 2018, the company had to sell golden Monkey at the price of 400 million yuan to reduce the company’s losses.In fact, judging from Hershey’s performance development in recent years, the company’s growth has been particularly lackluster.In 2018, for example, the company reported revenue of $7.791 billion, up 3.7% over the same period.But revenue in China fell 20.5 per cent.By 2019, the company had not improved significantly.Revenue for the year was just $7.986 billion, up 2.5% from the same period, but revenue in China continued to decline.In 2020, Hershey’s annual revenue was $8.15 billion due to the impact of the epidemic, but its revenue in China plunged 46 percent compared to the same period.In the fourth quarter, revenues plunged 82.2 per cent, almost halving.By contrast, Hershey’s sales rose 4.7% in North America and 4.1% in Canada.Hershey’s net revenue in North America for the fourth quarter of 2020 was $1.974 billion, up 8.9% from the same period.So from this point of view, Hershey’s withdrawal from the Chinese market is actually a kind of “abandoning the car to protect the handsome” practice.Later, Hershey will devote more energy to the North American market, which can promote the development of the company.In fact, the epidemic is only one factor contributing to Hershey’s declining performance.The deeper reason lies in its awkward market positioning.In 2020, for example, Hershey’s market share in China’s chocolate market was only 3.2 percent.Mars and Ferrero had 32.8% and 22.3% market shares respectively in the same period.Hershey is generally considered less well-positioned than other chocolate brands.For example, in the high-end chocolate market, Godiva is marketed as “the Hermes of chocolate”, while Filori is known as “Italian master craftsmanship”.And in the middle and low-end chocolate market, Dove has been to seize the terminal market, the company is constantly innovating in marketing dynamics.Obviously, Hershey’s low status is very embarrassing.In addition, Hershey’s acquisition of Golden Monkey didn’t produce a profit breakthrough.In addition, the market segmentation of Hershey’s products is not in place and it is difficult to meet the diversified needs of consumers, which is mainly reflected in the insufficient regional differentiation management.China is a country with a vast territory and obvious regional differences. Regional differences lead to different eating habits, folk customs, economic capacity, acceptance of new brands and recognition of Hershey’s brand.In the process of development, Hershey often engages in a “national chess game”, and various activities are frequently promoted across the country, which has certain advantages.For example, it is conducive to management and regulation. With the increasing sales volume, some regions have increased their efforts in media advertising and other aspects, and the gap between the acceptance and recognition of Hershey’s products has become larger and larger.At the same time, the disparity in spending power in the hundreds of cities covered by Hershey has become a growing issue, leading to what many companies consider best-selling products that don’t sell well or live up to expectations.Hershey company has many brands, and each brand has a variety of packaging characteristics, which determines that it is different from ferrero, which insists on high-end and unified management. For example, Mars even promotes different products in stores of different consumption levels in the same region.In this case, the implementation of unified management and the so-called standardized management of different regions is less effective.In addition, when Hershey first entered the Chinese market, on the one hand, it did not have its own factories to produce products with local tastes and characteristics in China and Asia.On the other hand, because the American market is extremely mature, the company has every reason to believe that it will be successful in The Chinese market by imitating the packaging and image building in the American market.At this time, Hershey’s image building is mainly based on the original American version and the lovely shape of the version. In terms of product categories, on the basis of comprehensive coverage of taste and specifications, it emphasizes the categories that emphasize its own advantages, such as nuts.However, Chinese consumers have different brand recognition of chocolate from that of the United States, and such a copycat model also doomed Hershey’s brand awareness in China to be difficult to be opened.Conclusion: From the above analysis, Hershey’s withdrawal from the Chinese market is actually a way to abandon the car and keep the company.For example, the company’s performance in The North American market has been growing, but the Chinese market is gradually declining.The reasons for this situation are related to Hershey’s brand positioning and the company’s business strategy.Finally, I would like to ask you, do you like to eat chocolate?