Electrolux, look to China for growth.

Home appliance company, Electrolux recently published results for the third quarter of 2011. The main focus of analysts and journalists was the continued global cost saving program and attempts to increase purchasing efficiency. This led to a 8% drop of the Electrolux stock on the Stockholm Stock Exchange.

In the CEO commentary for the presented figures, there is more detail of the decline in mature markets, the cost saving programs and how Electrolux will optimize global purchasing. There is one bright spot: strong sales  in “growth markets”. These are grouped together as Latin America, East Europe and Southeast Asia.

But where is China? There is no mention of how China’s booming consumer market presents an opportunity for Electrolux. If not for the continued rapid growth in emerging economies like China and India, the world might easily have descended into a real depression in 2008.

There is no mention of how global purchasing can be steered to China for the Chinese market. Electroulx has a strong brand in China and this is in my view the market with the largest potential. Forget Chicago, look at Chengdu.

Of course, there is tough competition from domestic players like Haier but I still think Electrolux could create a stronger strategy for China.

So can several other companies. Companies need to realize the obvious. Growth is down in mature markets and China and other emerging markets hold the key. But to grasp this opportunity companies need to redefine their strategies for China, with products innovated in, designed for and both made in and made for China. China’s strong base for manufacturing need to be linked with the strong growth in the domestic market.

/Magnus