in China

ISSUE 5
Autumn 2015
Gap’s
O2O Edge
in China
• Hilti’s direct sales
advantage in SE Asia
• Putting diversity to
work for clients
• The agile Asian HQ
• And the Jebsen Blue
Girl Beer story in HK
Abinta Malik,
SVP & GM,
Gap Greater China
With the support of

EDItor’s Highlights /Content
Dear Reader,
Our fifth issue of CEO Dialogues tackles a broad mix of issues, all of which are top of mind for IMA members across
the region.
In This Issue
In our cover story, CEO Dialogues sat down with Abinta Malik, Senior VP and GM Greater China of Gap to delve into
how their second mover advantage has helped drive efficient customer acquisition in China, both online and
offline.
Then, we look at retention strategies through diversity in an interview with Anthony Couse and Angela Newby,
managing directors at JLL. They take us through how promoting diversity has created positive material impact to
their bottom line and corporate culture.
This is followed by a discussion on what elements to consider when developing autonomous, accountable
regional headquarters in China with Arnold Sun, partner, EY, Shanghai.
We also spoke with Gavin Gui, head of Southeast Asia for Hilti, on how they skip dealing with distributors altogether
to win with a direct sales approach.
And there is also a great story about how Jebsen built up the mega brand Blue Girl Beer in Hong Kong, told by
Helmuth Hennig, managing director of the diversified marketing and distribution firm.
Lastly, we have developed a useful infographic that may help you when managing headquarters’ understanding
of how disparate and fractured the many markets of Asia really are.
So, enjoy the read. CEO Dialogues will be back on deck in May next year ready for the Singapore Overnight.
Best,
Richard Martin
Managing Director
IMA AsIA CEO DIAlogues
Autumn 2015
1
TABle of Contents:
2 GAP’S O2O EDGE IN CHINA
5 HilTI TAKes THe DIReCT APPRoACH to AsIA
7 Jll’s seCRet weAPon: DIverse teAMs
9 AsIA’s COMPleXITY peRMITs few shoRTCuts
10 ARE You READY TO PRIORITIse AGILITY IN ASIA?
12 Jebsen & CoMPAny’s Blue GIRl Beer

COVER STORY
Abinta Malik
GAP’S O2O
EDGE IN CHINA
A second mover advantage
IMA ASIA CEO DIALOGUES
AUTUMN 2015
2

COVER STORY
IMA ASIA CEO DIALOGUES
AUTUMN 2015
3
WHEN GAP INC. ENTERED China
in 2010, it was considered a late
entrant. Many of the US retailer’s
global competitors had already set up shop with
physical stores.
“One of our advantages has been seeing where
to go and where not to go,” says Abinta Malik,
senior vice-president and general manager at
Gap Greater China for Gap Inc. “We have had
four or five years of not making the mistakes a
first mover would have made.”
Over-investment in real estate is one mistake
Gap seems to have neatly sidestepped, as
shopping malls look set for hard times ahead.
Today, Gap has 136 stores in China, including
Old Navy, and expects to reach 160 shops by the
end of the year.
This is a modest number compared to other
retailers in their competitive set. But the
smaller bricks-and-mortar footprint belies a
much bigger strategy by Gap.
BUILDING OFFLINE AND ONLINE AT
THE SAME TIME
When they entered China, they took the
opportunity to build their online and offline
businesses together. “We entered China
multichannel and we operate as one business,”
says Malik. This was a lesson the retailer
learned from the US, where the channels
evolved as two parallel businesses and
integration has had to come later.
On the front end, it means Gap China can
share product stories, promotion and events
with customers seamlessly between channels
instead of dealing with them separately. And
on the backend, they benefit from a shared
inventory via a large distribution center.
Gap China, much like in the US, has become
an e-commerce frontrunner. But for Malik,
this does not mean following the US template;
she is looking keenly at what to take from
headquarters and what to adapt for China.
She comes to China after running Gap brand’s
global ecommerce channels for the US, Canada,
Japan and Europe. She says that these were
less complicated than juggling the company’s
greater China configuration, a mix of directlyowned
websites such as gap.cn, gap.hk, gap.
tw and their platform sites, Alibaba’s Tmall and
Tencent-backed JD.com.
“Dominance of platforms is very different
in China than in the US. One of our biggest
rules of engagement has been never do
anything that disintermediates yourself from
the customer. When I arrived in China, one of
my first comments was, “We are completely
disintermediated. Now what do we do?” says
Malik.
She says she switched her thinking about how
to build a business and a relationship with
the customer - a must when the big platform
players own a lot of customer data.
“We have learned to leverage the strengths of
our partners while remaining true to our brand.
What I appreciate about Tmall is we get the
traffic and their scale, but you go into a branded
environment when you shop Gap. So it is a great
balance for us,” explains Malik.
The Tmall business attracts a value-driven
consumer, while the more loyal customer
prefers shopping on gap.cn. This leads to
peaks and valleys on Tmall, depending on sales
and promotions.
The biggest peak comes from the runaway
success of Tmall’s Singles Day, or 11.11, which
Gap has found to have a significant impact. Even
though business slows before and after, Gap has
made the volumes work for them and has grown
sales for the event each year.
Gap starts preparations 12 months in advance.
Malik credits their success “to the level of
assortment and marketing planning. We don’t
let it happen to us. It is simple to think there is
going to be a lot of traffic, let it come. But there
is an art to it.”
According to Malik, the stakes are high;
recovering volume on alternate days is almost
mathematically impossible. “People have filled
up their shopping carts and spent their money,
so you have to win on that day.”
It is so big that she admits she is almost afraid
of it. Nobody wants a business to become
dependent on one day. But important insights
into Chinese consumer behaviour, gleaned in
part from working with platforms like Tmall, are
feeding other aspects of the business.
“One of the things we have done well, that
we have to do a lot better, is using that desire
customers have to play a game whether it be

COVER STORY
online or wherever,” says Malik. “We get a lot of
engagement when there is gaming and a sense of
fun that’s also on brand.”
She points to Gap’s public casting call to find the
next face for their kids/baby campaign, which
attracted huge attention in Shanghai, as an
example of leveraging game elements on social
media. Parents posted their children’s photo, a
popular practice in China, and people voted for the
winner.
Digital coupons that reveal prizes when scratched
online, often used during special holidays like Qixi
(Chinese Valentine’s Day) are successful because
they appeal to a customer’s desire to have fun.
Malik is also thinking deeply about brand loyalty,
harder to secure as the field gets more crowded.
has developed successfully elsewhere.
“If you do not put a lot of intelligence behind it
and you just light up inventory and have it
operationally execute, you can actually end up
losing money in the shipping cost or with different
prices and promotions in different parts of your
business,” says Malik. “I am looking at using
a more refined algorithm coming from North
America to do that.”
But in terms of social media and a mobile-first
strategy, the only place to look is at China itself.
And in these areas, the rapid pace is relentless.
“Just last year in the US, we were talking about
how everything should be mobile first. That
conversation in China happened three years ago,”
says Malik. Even in the last few years, there have
“THE CUSTOMER MOVES SO FAST that traditional
consumer insights every six to twelve months is pretty irrelevant,”
says Malik.
She says she is currently formulating a way to go
much further than they have before, not just with
discounts or bounce backs, but to provide unique
exclusives for the loyal consumer.
But she won’t be rushing in blindly. Her approach
is to continue to leverage their second mover
advantage. This means not haphazardly going
live with new initiatives - and being stuck with
attempting to tweak changes once online - but
pausing to think about what makes the relationship
with the consumer sticky and doing rigorous
testing before rolling out new initiatives.
been radical shifts. “When I first visited China
three years ago, everybody was talking about
Weibo; now, everybody is talking about Wechat.”
Malik finds herself fascinated by how much time
people spend on their phone.
“It is real communication that can turn into
commerce that happens here. I still don’t
see meaningful integration of Facebook into
commerce, of instagram into commerce, of
Pinterest into commerce. But Wechat has
integrated it.”
ADDING EASE, EXPERIENCE AND EMOTION
“There are a lot of shiny new coins. You have to be
very careful about which ones actually add ease,
experience and emotion to the customer versus
it being a gimmick or a good idea, but not really
being very well thought through,” she says.
She points to the latest online-to-offline (O2O)
craze around shipping product from stores to
consumers who purchased online, a service Gap
This is one area where Malik is not holding back,
but rather ramping up to boost Gap’s consumer
insights abilities. “The customer moves so fast that
traditional consumer insights every six to twelve
months is pretty irrelevant,” she says.
“The consumer is the only place to go to figure
out the future, because they are fast. If I could
exaggerate, I would say this is an entire country of
first movers and first adopters.” n
IMA ASIA CEO DIALOGUES
AUTUMN 2015
4

Hilti takes the
direct approach
to Asia
Gavin Gui
IMA AsIA CEO DIAlogues
Autumn 2015
5
To paraphrase a common saying, great
things come from small packages. A case
in point is Hilti. A market leader in premium
power tools and fasteners for construction
professionals, Hilti is headquartered in the tiny
principality of Liechtenstein, where they first got
their start in 1941.
Coming from a landlocked position in the Alps has
not stopped Hilti from becoming a global company
with 22,000 employees worldwide. This familyowned
firm has become accustomed to going their
own way.
Nowhere is this more evident than in their
commitment to the direct sales model. It is an
approach that few companies take when entering
emerging markets, opting instead for rapid topline
growth with the aid of local distributors and
partners.
But built over decades, Hilti views its direct
sales model as integral part of their competitive
advantage and have found it to be the source of their
success in emerging and developed markets alike.
Direct sales, a competitive advantage
“The beauty of direct sales is the customer
relationship. We effectively demonstrate our value
proposition, but also feed back our customers’
needs to our R&D team to come out with the next
wave of new products,” explains Gavin Gui, head of
Southeast Asia for Hilti.
The direct sales model is people-intensive. Gui
oversees a team of 1,000 in Southeast Asia, about
one-third of the overall headcount in Asia.
These boots on the ground consist of a well-trained
army of sales people. Beginning their day in a Hilti
red car, they are often equipped with the latest
client relationship management (CRM) system on
smartphones, making six to ten visits per day to
clients at construction sites.
“Much of our direct sales model is through peer
interaction to build the relationship on the job site,
we demonstrate our product value, letting people
see how different our products and services are
from other competitors,” explains Gui.
To cover this cost, Hilti is able to price its innovative
products — which set industry benchmarks in terms
of performance, safety and productivity — at a
substantially higher price than competitors.
“To make the direct sales model work sustainably,
we have to demand a premium that comes from our
better service, better product and better customer
engagement,” says Gui. “We must have premium;
otherwise, we can’t be successful.”
Attracting and retaining the best
To stay at the top, Hilti’s success hinges on its
people. The company has developed an impressive
culture and talent management system.
While the official mission statement of Hilti covers
integrity, commitment, courage and teamwork
as the company’s bywords, Gui says it goes even
deeper than that: performing a delicate balancing
act between a family-owned company that really
cares for its people with a performance oriented
culture that demands excellence in return.
On the one hand, “we want to outperform the
market, and be number one in our field” says Gui.
But “we continuously invest to retain our sales force,

avoiding job cuts for short term performance” in
the down times. He emphasises that Hilti has a
long-term vision that public companies are often
unable to maintain.
A culture of coaching permeates the entire
organisation, starting with sales. On a regular
basis, sales managers sit side-by-side with
salespeople in the field, working together to
discuss what tactics are working and identify
areas for improvement.
In fact, all managers undertake professional
coaching training and are adept at asking
open-ended questions to spark insight and
progress. Gui dedicates every Monday afternoon
to coaching his team, but says, “for me, it is
teaching how to fish, instead of fishing.”
It is common for Hilti to receive hundreds of
applications for every job opening in Asia, and
they remain highly selective. “Our philosophy is
to choose the right people rather than hire a lot
of people and see who performs,” says Gui.
Given the firm’s heavy investment in training,
this makes sense. During onboarding, new
hires are sent to a Hilti training center in the
Philippines for a week to experience a Hilti
‘Culture Journey’, and, most importantly,
experience the tools firsthand, ideally falling
in love with Hilti products. This is the same
for engineers and sales as it is for the
administrative personnel in finance or HR.
New hires are not just given detailed handbooks,
but are informed what skills need to be
mastered by a given day and what assessments
will be required. There is ongoing onsite and
offsite training so employees are supported to be
increasingly more capable in their roles.
Still, attracting top talent in Asia is not always
easy. To counter this, executive leaders from
the Chairman and CEO level on down work
collaboratively with top business schools, from
Tsinghua University in Beijing to the Asian
campus of INSEAD, to guarantee a pipeline of
future leaders. An ‘outperformer program’
fast tracks top graduates with high potential
to be business unit (BU) heads or general
managers (GM).
Gui is himself an example of how Hilti grooms
talent. Initially brought onboard as Hong
Kong GM three years ago, the path was laid
out for him to take on the leadership role in
Southeast Asia he has today.
All this investment in people gives Hilti
remarkable control of its culture – and helps to
back up its expectations of integrity. “We have
very high standards of integrity about the way
we do business in emerging countries,” says
Gui. “Sometimes we have to walk away from the
business because of our high standards.”
While Hilti is inflexible on integrity, there is
recognition that Southeast Asia is a diverse
territory – a combination of different cultures,
different markets all at different stages of
development – and there is some flexibility
allowed in strategy.
For very emerging markets with lower
construction standards, Hilti has been known to
get a foothold with distributors. This is how they
first entered Vietnam, before switching over to
direct sales a few years ago, and is the approach
they are taking in Myanmar and Sri Lanka.
“We have to differentiate market to market,”
says Gui. “We keep our strong culture, that
should not change, but we utilise our strengths.
Each market differs depending on the stage.
There is no single Asia strategy.”
tHe latest trend in direct sales:
e-commerce
Although the direct sales model has over 200
years history, it has not changed much since
the advent of the catalog, that is until its latest
iteration, which promises to be highly disruptive:
e-commerce.
Hilti has not failed to make this aspect of the
direct sales model work for them as well. In
some markets, 25% to nearly 50% in revenues
come from online.
But selling online is not intended to replace
the all-important customer relationship or the
physical demonstration of product superiority. It
has been designed for the convenience of loyal
customers, to keep up with product innovations
and to make repeat orders, enhancing
productivity and efficiency.
The next step will be to use technology to
pay greater attention to a customer’s unique
needs and provide more tailored one-on-one
services online. So even for the people-intensive
business, – e-commerce beckons. “Digitisation
is the future for our company,” says Gui. n
IMA AsIA CEO DIAlogues
Autumn 2015
6

JLL’s secret
weapon:
diverse teams
Angela Newby
Most people will agree diversity is
a good thing. It is clearly the right thing
to do, and there is plenty of research to
support that it leads to better business results.
But how many firms move past the platitudes,
dig deep and really start to do the often messy
work of implementing change?
where they are chasing the rising local firms as
much as MNC clients. And MNCs, whether they
are in Singapore or Mumbai, are also largely
comprised of local employees.
This has meant the composition of JLL’s clientfacing
teams has also had to change.
IMA AsIA CEO DIAlogues
Autumn 2015
7
Last year, JLL Asia Pacific decided it was time
to commit to moving the needle on diversity.
“The challenge for us is that we do make
progress, and not just talk about it,” said Angela
Newby, JLL managing director of transaction
management, Asia Pacific
This has meant dedicating resources, and
“getting some of our best-in-class people in
working groups to effect change,” added Anthony
Couse, managing director, East China for JLL.
“To try and say we are going to crack diversity in
a year is not realistic. This is a very long journey.
It is changing culture and that does not happen
overnight.”
For Jll, which has over 250 years history behind
it, diversity has become more than a strategic
priority; it is an integral part of their value system.
They face a tougher uphill battle than most.
Diversity in the corporate real estate industry
has, in Asia Pacific and elsewhere, lagged
behind other industries. Property owners have
historically been male, and in some places
mostly white, and so have the business people
who sought real estate services. Of course, this
is no longer the case.
JLL’s customers have changed, particularly
in markets such as India, China and Japan,
“It is interesting how quickly diversity has gone
to the top of mind of a lot of people,” said Couse.
“We are seeing much more diverse pitch teams.
We look at what the client wants and put diverse
teams in play.”
Diversity shakes up the status quo,
strengthens creativity
Beyond having a greater understanding of the
client, diverse teams are a great way to burst
groupthink and the stultifying status quo that
occurs when too many like-minded people get
together and ‘sing to the choir.’
“When we put diverse teams, male, female,
local, expatriate, whatever in front of our clients,
we get a much higher performing team with
different opinions and different views. We get
much more creativity and innovative solutions
out of diverse teams,” says Couse.
This corresponds with the research. In terms
of sales, the American Sociological Association
found that for every 1% rise in the rate of gender
and ethnic diversity within a sales team, there is
a 3% to 9% increase in sales revenue.
But getting to the stage of having the talent
available is a big part of the challenge. On the
one hand, there is a need for diversity – which is
saying the right people are not there and going

out and finding them. On the other, there is a
need for inclusion – finding that the people are
there, but not engaged.
In terms of hiring intake, JLL could easily decide
to pat itself on the back. In China, for example,
they hire 65% female employees. But when they
examine the composition of their directors, it
whittles down to the less than ideal 30% female.
“If you look at JLL, our offices are very diverse in
race and culture. In many locations, we are 85%
local. It is not to say that culture differences and
other dimensions of diversity aren’t important,
but gender is the big rock we need to move right
now,” says Couse. JLL do not claim to have
all the answers and Couse says he is working
to better understand why there is so much
dashboard that allows leaders to check-in
regularly to measure progress. The dashboard
in Sydney can and should look different than the
dashboard in Shanghai.
The dashboard incorporates a set of key
performance indicators (KPIs) to track measures
such as gender by country and corporate grade;
hires and leavers by gender, corporate grade and
country; and promotions by gender and country.
The action plan being implemented includes
diversity intelligence leadership training – with
an emphasis on understanding and breaking
unconscious bias. This includes a mentoring
program for senior female leaders, a diversity kit
for managers explaining the basics and possibly
most importantly, says Couse, flexible work
“When we put diverse teams, male, female, local, expatriate, whatever in front of
our clients, we get a much higher performing team with different opinions and different views.
We get much more creativity and innovative
solutions out of diverse teams,” says Couse.
Anthony Couse
attrition of female leaders in China. Unlike
western countries, Chinese women are likely to
have one child and they have family to rely on,
with grandparents pulling together to take on
childcare duties.
The piLLars: culture, visibility, talent
and employee benefits
In Asia Pacific, JLL is focusing on four pillars –
the culture and its impact on diversity; the need
for making diversity visible; building talent for
the future; and employee benefits, checking to
ensure that the right benefits and procedures
support the diversity agenda.
Guided by the pillars, says Newby, they then take
a tailored approach within each country. Local
autonomy to decide what works is a key facet to the
exercise. This shows an understanding that culture
rarely changes when mandated from on high.
At the start of the process, the APAC Diversity
and Inclusion Group worked with an external
facilitator to put together a plan with key
milestones. Instead of setting targets or
quotas, they are designing a diversity-inclusion
practices that will allow both men and women to
reach their potential in the business.
Change is on the way
“As a female in commercial real estate services
for over 20 years, I am pleasantly surprised
how many women are choosing to enter the
profession,” says Newby. She says now her focus
is on the inclusive challenge to get more of those
women into leadership roles.
Her male colleagues have shown great
enthusiasm for diversity and inclusion initiatives,
another welcome surprise. “There has been a
real mind shift from male colleagues about how
important this is, not just as the right thing to do,
but how much more business will be generated
from this.”
“We have really gone out on the front foot on
this to make diversity a differentiator,” added
Couse. “I think an equally important part of it
is what our clients expect. They are expecting
diverse teams to work together with them to
bring more creative, innovative solutions to their
business.” n
IMA AsIA CEO DIAlogues
Autumn 2015
8

Asia’s COMPLEXITY
PErmits few shorTCuts
Don’t become a victim to HQ’s tunnel vision. AP’s attractive
growth rates can lead to high expectations but it has never paid to
underestimate the complexity of our region.
When setting direction, the challenges of managing Asia needs to be
put alongside goal setting and strategy, not after the fact. Our region
may be the fastest growing, but it is also more diverse requiring higher
operating costs than any other.
Asia is big.
AP heads can spend a lot more time in the air than their regional counterparts in North America or Europe.
Flight times demonstrate the span of control challenge in our region.
EurOPE
North AMEriCA
Asia/Pacific
Sydney to Delhi –
14hrs 50min
(via Singapore)
Mexico City to Vancouver – 5hrs 50min
LA to NY – 5 hours
Rome to Stockholm – 4 hours
London to Istanbul – 3hrs 50min
Sydney to Tokyo – 9hrs 50 min
Singapore to Tokyo – 7 hours
New Delhi to Tokyo – 7 hours
Asia LACks a COMMOn regionAL MArkET.
In 2012, Asia Pacific accounted for 30.5% of global GDP. But there is no single Asian market. It is a fragmented
group of nations, some high income others low, each requiring their own country level operations. It is hard to build
economies of scale in the region just as it is challenging to move staff from one country to the next.
11.3% 8.3% 3.1% 2.6% 2.3% 1.6% 0.6% 0.4%
China
Japan
India
hk
ASEAN
(and this must split into
6 countries)
Australia/NZ
Korea
Taiwan
IMA AsIA CEO DIAlogues
Autumn 2015
*AP countries contribution to global GDP.
9

Are you ready to
prioritise agility
in Asia?
The rise of the autonomous, accountable
regional headquarters
Arnold Sun
In Asia’s fast growing economies, the one
constant managers have counted on has been
rapid change. But the trajectory of change has
hit a startling inflection point. As positive numbers
decelerate, the days of easy growth in our region are
behind us. China is a major factor, as the country
retools, trading in its low-cost manufacturing,
export-driven past for a shiny new high-value,
consumer-driven economy.
The good news is this new pool of consumers offers the
best chance at growth over the next decade.
emerging markets demands an increasing level of
autonomy at the local level.
“The pace of change and intensifying competition
means that companies have to prioritise agility,” says
the EY study. “We believe that companies need to
give local management autonomy over key business
decisions, but within a carefully defined framework.”
Location, location, location
When setting up a RHQ, one of the first discussions is
around where to locate.
By 2017 emerging Asia will account for one-quarter of
the global consumer products market and generate
38% of total consumer products increase, according to
a recent study by EY.
The bad news is multinational firms now have much
more competition from local players, both private- and
state-owned firms, that are chasing these consumers
with fresh insights and innovative business models,
often at a lower cost.
How international firms structure themselves to
respond to the region’s volatility will ultimately
determine who will succeed over the long term.
Trying to find that happy medium between global
excellence — best practice and processes — and
between local agility — insight and entrepreneurship —
is not a new dilemma.
Too much centralisation means that regional or
global managers sit too far away from consumers and
local relevance is sacrificed. Too much localisation
and duplication creeps in, eroding profitability and
introducing inefficiency.
Drawing on the examples of high performers and their
own insights from working with clients in the region
EY has found that the volatility and diversity of the Asia
Taxes, human resources, infrastructure and proximity
to the consumer are all factors to be considered when
determining a location for RHQ. While Singapore has
been a popular hub to manage ASEAN markets, EY has
identified Malaysia as an attractive alternative, pointing
to the government’s Invest KL program and plentiful
human capital – making it ideal for people-intensive
businesses.
China-for-China
Many firms are adopting a China-for-China approach.
Given the sheer size of its contribution to many firms’
global revenues and the difficulty to transfer funds
outside its borders, China is becoming its own RHQ.
This leads to a twin regional hub strategy: one in
Shanghai to cover China and North Asia; another to
cover South Asia.
CEO Dialogues spoke with Arnold Sun, EY partner in
the Shanghai office who has observed the trend firsthand.
He has found that “many more regional HQ are
being built out of the China marketplace across a wide
spectrum of industries.”
When giving more autonomy, he points to several ways
firms are making it work.
Greater autonomy to deliver local needs
When fostering local autonomy, it is important to set
IMA AsIA CEO DIAlogues
Autumn 2015
10

appropriate authorisations, determining what decisions
are made at HQ and what is left in the hands of the
regional headquarters.
“It is important to strike the balance between the need
for autonomy and the mitigation of associated risks,”
explains Sun.
For human capital and funding decisions, there are
many creative ways to design different layers, or
thresholds, to manage risk. For example, decisions
over a certain amount or scalability – such as over $50
million or $100 million – the decision reverts to global.
Anything under that amount is a decision taken by RHQ.
An EY study found that high performing companies
are giving greater autonomy on decisions such as
choosing suppliers, product development, branding,
choice of channels or route to market decisions, and
product range.
To a slightly lesser extent, local managers are also
being granted autonomy around setting targets and
key performance indicators (KPIs), forming local
partnerships and alliances, supply chain investment and
headcount changes.
level — to adapt swiftly to local market needs — is
lost if economies of scale are sought at the expense of
forsaking value to customers.
Increasingly non-core activities such as supply
chain, strategic analysis and market research and
even parts of sales and marketing such as training
are moving to regional shared service centers. This
leaves the customer facing parts of the business free
to concentrate on delivering higher value work that
requires customer proximity or local knowledge.
But true clustering goes beyond geographic boundaries.
Instead of going after economies of scale, Sun suggests
considering economies of scope This approach looks
for creative solutions that can be shared and adapted
between countries and regions, leveraging similarities
rather than just allowing for differences.
Firms are beginning to realise that the high-end
Shanghai consumer may have more in common
with high-end consumers in Paris or London, rather
than consumers in other Chinese markets. Or that
the emerging market consumer in Asia, Africa and
Latin America may have certain characteristics in
common.
To make autonomy work, the right processes need to be in
place, consistent with global standards but still permitting
flexibility. Local autonomy does not mean local execution.
Managers should take full advantage of standardised and
centralised resources to support them.
A holistic approach will set performance indicators to
properly incentivise the high performance teams needed
to deliver locally relevant decisions. While determining
the governance structure between RHQ and HQ cannot
be overlooked. In some cases, firms are putting their
local CEO – the China business head – as part of the
global executive team.
“When going with a China regional HQ, there has to be a
clear rationale about what the value creation the RHQ can
really develop to the subordinating markets,” says Sun.
Clustering to leverage global capabilities
Part of that value comes from cost savings found
when regional management, finance, HR and IT are all
brought under one roof. This is typically the first step
in a regionalisation strategy, crucial to avoid wasteful
duplication of effort.
But the main point of greater autonomy at the local
“Whenever thinking of business expansion, almost
always the first thing is your customer focus:
who are the customers and what are their unique
characteristics,” says Sun, who urges companies
to refine the customer segmentation along with the
evolving dynamics of the China market.
Sun relates his experience in an interior Chinese city
with a population of 1.5 million. Urban residents in and
near the city centre shared more consumer preferences
with consumers in first tier cities than they did with
their neighbours in the rural suburbs. The differences
veered between traditional and modern trade, requiring
different products and adapting to different preferred
modes of payment.
“There is no longer a single way to look at tier 1, tier
2, or tier 3,” says Sun. His clients have used their
local autonomy to reorganise, including restructuring
business units (BUs), to respond to the new consumer
segmented reality.
By bringing a firm’s focus to bear on consumer
segmentation, MNCs can take advantage of both
worlds: they can at once be sensitive to local needs, yet
leverage the power of global resources. n
IMA AsIA CEO DIAlogues
Autumn 2015
11
This publication contains information in summary form and is therefore intended for general guidance only. It is not
intended to be a substitute for detailed research or the exercise of professional judgment. Member firms of the global EY
organisation cannot accept responsibility for loss to any person relying on this article.

JEBSEN &
COMPANY’S
BLUE GIRL
BEER
How a German product brewed in
Korea became the market leader
in Hong Kong
Helmuth Hennig
BEGINNING AS a shipping agency
in the late 19th century, Jebsen
& Company developed into a
marketing and distribution firm operating
across the consumer, industrial, beverage
and automotive sectors in Greater China.
Its participation in China’s beer industry
began in the early 20th century when the
company acquired Blue Girl Beer, a brand
brewed in Bremen, Germany that was
owned by a small German trading company
and mainly exported to Qingdao, China, to
serve the German colony there.
Jebsen acquired Blue Girl in 1906 but
stayed mainly nascent and quite small
until the 1990s, focused only on the Hong
Kong market. Since then, a “combination
of foresight and coincidence” helped Blue
Girl expand in China, Taiwan and especially
Hong Kong, where it has become the
market leader.
Helmuth Hennig, Group Managing Director,
Jebsen & Company, described how Blue
Girl achieved its recent success and why.
“NOTHING MUCH HAPPENED” WITH BLUE
GIRL UNTIL ABOUT — 20 YEARS AGO.
WHAT CHANGED JEBSEN’S APPROACH
TO THE BRAND AND WHAT WERE THE
RESULTS?
Blue Girl was just kept alive as a small
business before that time. The beer was
being brewed in Germany. This challenged the
viability of the business from a financial point of
view due to the strength of the Deutschemark
and quality point of view as the long transit time
to Hong Kong, adversely affected the freshness
of a natural product like beer.
So, we had to ask ourselves whether this was
a business we were serious about or whether
it would just go down in the annals of
something we did for a while. The decision
was made to be more serious about it.
Our review coincided with a series of
conversations we were having with an
entrepreneur who was building breweries
in Asia based on German technology.
He suggested that Jebsen consider an
alternative to brewing in Germany and
recommended South Korea’s Oriental
Brewing, which produces OB beer - then the
market leader there. OB, which was owned
by the Park family as part of its Doosan
conglomerate, was interested. However, we
IMA ASIA CEO DIALOGUES
AUTUMN 2015
12

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did a lot of ‘soul-searching’, concerned that
Blue Girl’s customers would react adversely
to changing the character and taste of
the beer.
YET YOU WENT AHEAD AND BASICALLY
NEVER LOOKED BACK.
The move to Korea allowed us to change how
we did things in the past. We felt that making
this change wasn’t a big risk for us. Up to
that time, it was a minute business. So, we
decided to go ahead.
Almost immediately, there were three
benefits:
• Our cost of goods improved
• The beer was fresher
• We took the opportunity to optimize the taste
to better suit the local Chinese consumer. It
was stilled brewed in the German tradition
but was adjusted to be slightly milder in
taste
critical marketing elements, such as
choosing the popular hit ballad “Waiting for
a Girl Like You” by Foreigner to accompany
Blue Girl Beer ads.
The results were that we grew to 5%, 10%
and then 20% of the market – which took
about 20 years
YOU SELL BLUE GIRL ALMOST
EXCLUSIVELY IN GREATER CHINA. HOW
DO OTHER MARKETS COMPARE WITH
HONG KONG?
We’ve been in Taiwan for about 10 years.
It’s similar in some ways to Hong Kong in
past, dominated by one brand – Taiwan
Beer – and one import, Heineken. While
the market is growing, it’s not been
exponential.
Blue Girl also has moved into southern
China, but took a conscious decision
not to be a national brand – competing
“We had to ask ourselves whether this was a business we were serious about
or whether it would just go down in the annals of something we did for a while.
THE DECISION WAS MADE TO BE MORE
SERIOUS ABOUT IT,” says Hennig.
FOLLOWING THAT MOVE, BLUE GIRL, WHICH
WAS VIRTUALLY UNKNOWN PREVIOUSLY,
GREW RAPIDLY IN HONG KONG. HOW DID
THAT HAPPEN?
San Miguel, with about 60%, and Carlsberg
(10-15%) dominated the market in the 1990s
and fought ‘hammer and tong for market
share.’
We took a ‘slow and steady’ approach,
focusing on local, not expat, Hong Kong
consumers. It was mostly sold in Chinese
restaurants and in big bottles, and was
popular at weddings. It’s only in recent years
that we’ve started to market more extensively
to Western-style restaurants, pubs and
karaoke bars.
The brand was managed by an highly effective
Jebsen executive, who had patience and
good instincts. He and his team added some
with the Tsingdao’s, Snow’s, Harbin’s,
etc. At the same time, Jebsen has
noticed the development of ‘pockets’ of
premiumisation in China; appreciation of
quality beer, as well as wine, that helps
brands like Blue Girl. This means that
Blue Girl has done well in Fujian province,
especially in and around Xiamen, and
Guangdong, where Jebsen focuses its
attention.
Throughout Greater China, Blue Girl now
sells around 7 million cases a year, which
represents progress but only a drop in the
bucket in the China market.
Going forward, we will continue to
concentrate on Greater China – and are
quite happy with that. We’re better off
being in three markets and doing them
well. n
IMA ASIA CEO DIALOGUES
AUTUMN 2015
14

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