Digital thrust on health goods to be Philips’ focus in 2021-25

The COVID-19 pandemic has also pushed the growth potential of the stay-at-home economy, as more people stay at home longer and purchase more personal health products such as oral health, skin care and other products these days. With more Chinese consumers prioritizing health and fitness, demand for personal health products has been growing among younger, digital-savvy millennial consumers, triggering renewed interest in a large number of consumer goods. Royal Philips, the Netherlands-based multinational, will boost the growth of its personal health goods in China during the country’s 14th Five-Year Plan period (2021-25), by investing more in e-commerce channels and innovation, said one of its senior executives.

The dual-circulation development pattern emerged as the overriding economic theme

Royal Philips, the Netherlands-based multinational, will boost the growth of its personal health goods in China during the country’s 14th Five-Year Plan period (2021-25), by investing more in e-commerce channels and innovation, said one of its senior executives.

Philips’ China strategy is a response to the country’s dual-circulation growth pattern, the national strategy of Healthy China 2030, consumers’ growing demand for personal health products and digital solutions, said Deeptha Khanna, executive vice-president and chief business leader of Philips’ personal health cluster.

Proposed by China’s central leadership, the dual-circulation development pattern emerged as the overriding economic theme, with innovation, opening-up and the need to boost domestic demand identified as priorities during the new plan period.

The new paradigm sees domestic circulation as the mainstay and domestic and international circulations reinforcing each other.

“We see that the dual-circulation development pattern will help further deepen and stimulate the domestic consumer market, and thus will add to the dynamics and resilience of the country’s business environment,” she said.

The dual-circulation mechanism will further support technology-driven growth, she said.

The COVID-19 pandemic has also pushed the growth potential of the stay-at-home economy

The COVID-19 pandemic has also pushed the growth potential of the stay-at-home economy, as more people stay at home longer and purchase more personal health products such as oral health, skin care and other products these days, said Khanna, who is also a member of the Philips’ executive committee.

She said China is not only the second-largest market for Philips but also a valuable source of inspiration.

Chinese consumers are rapidly evolving in their journey of self-discovery and are now driving innovation of digital technology globally.

They have become more health-conscious, and are shifting from personal to personalized healthcare products.

“They care for a quality lifestyle with more personalized products and services that add value and health relevance to their life,” said Khanna. “We see tremendous potential for our personal health businesses in China.”

With more Chinese consumers prioritizing health and fitness, demand for personal health products has been growing among younger, digital-savvy millennial consumers, triggering renewed interest in a large number of consumer goods.

Such consumers, be it singles, married couples or young parents, will begin to pay attention to health in the context of pregnancy, child care and home care. They will also become the mainstay of their families and begin to care about their parents’ health as well, Khanna said.

Philips’ first joint venture using the consumer-to-business, or C2B

During Alibaba Group Holding Ltd’s Singles Day global shopping festival from Nov 1 to 11 last year, Philips in China partnered with the Tmall Innovation Center, the in-house product co-creation program owned by the Chinese e-commerce giant.

That is Philips’ first joint venture using the consumer-to-business, or C2B, model and debuted an innovative C2B product, an electric shaver for the younger generation, exclusively on Tmall, Alibaba’s business-to-customer, or B2C, platform.

Rather than using the traditional idea-to-market process, C2B puts the consumer at the center of the entire product development process, by starting with consumer insights and then launching the product with the intent to gather more consumer feedback for future iterations－in about half the time as usual, Khanna said.

This agile, faster model is a huge step forward in product development and consumer marketing, she said.

“Therefore, it is equally vital for us to constantly update observations of consumer behavior, in order to improve productivity, retail capacity and branding power,” she said, noting Philips will keep on innovating with products that are smart and connected.

While 2020 was an unprecedented year, with numerous business challenges brought by the pandemic, Philips, especially its production facilities, has been operating largely uninterrupted as the company is committed to addressing the triple duty of care－ensuring employee safety, continuous business operations and addressing key customer needs.

Philips has also continued its investment and cooperation in China. Supported by a number of manufacturing facilities and more than 8,000 employees in the country, Philips in China currently accounts for 15 percent of the Dutch company’s annual sales.

Under the dual-circulation development paradigm, China’s increasingly open market has created a high-level business environment for global companies, said Zhao Ping, vice-president of the research institute at the Beijing-headquartered China Council for the Promotion of International Trade.

The paradigm also encourages foreign companies to accelerate their localization process in China, actively promote consumer upgrades and digital innovation, and embrace change and development, thereby continuously creating value, she said.

About E. J. McKay

E.J. McKay is a Shanghai-headquartered investment bank with a special focus on mergers & acquisitions. We are one of the most long standing independent investment banks in China, with core business of mergers & acquisitions and financing advisory.