Ecolab, a US based company specializing in food safety and sanitation products, is building a new factory in Jiangsu Province. The new factory will be Ecolab’s largest in the Asia Pacific region with a production capacity of approximately 150 metric tons. China’s most recent 5 year plan stated that one of their goals is to improve food safety throughout the country. Ecolab is eager to capitalize in this market selling everything from hand soap to specialized conveyor belt soap. With government support of Ecolab’s business, Ecolab will be receiving a tax benefit to help break ground on this new project.
This story shows globalization in action. By having a domestic plant in China, Ecolab will be able to save on shipping cost, currency exchange, and offer a more “local” buying experience for their Chinese clients. As CEO Douglas Baker said “We are doing this for two reasons. It costs a lot of money to ship our products. It gives clients a natural currency offer. If they buy, manufacture, pay labor and sell locally, currency is not a strategic problem.” Ecolab’s building of this factory shows its commitment to becoming a dominant force in China domestically. Just as KFC in China will offer corn and soup adaptable to local taste, Ecolab is finding that centralizing production, marketing, and distribution in their target market helps the bottom line.
sources:
http://europe.chinadaily.com.cn/epaper/2012-10/05/content_15797034.htm
http://www.ecolab.com.cn/en