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Laundry products, expansion in China have Pigeon flying high

‘Soon enough, you’ll hear Chinese saying “pigeoning” just like Koreans.’

Mar 12,2007
Pigeon Chairman Lee Yoon-chai: Business fires still burning at 72. Photo by Ahn Sung-shik
In Korea, the word pigeon is often used as a verb. In fact, “pigeoning” refers to putting fabric softener in the laundry. The term was coined because Pigeon is a well-known fabric softener here. It is similar to the term Xeroxing, often used in place of copying because of the reputation of Xerox as a brand.
As these examples show, brands or products with a long and prominent market share can sometimes become household words.
That is the case with Pigeon, which has stood its ground against multinational companies and conglomerates since its establishment in 1978. Its chairman, 72-year old Lee Yoon-chai, is still passionate about business. Last July, the company broke ground for a plant in Tianjin, China.
“Soon enough, you’ll hear Chinese saying “pigeoning” just like Koreans,” Mr. Lee said.
This is not the first time that Pigeon has knocked on China’s door. In 1993, one year after Korea and China forged diplomatic ties, Mr. Lee took Pigeon’s major products and went to Beijing and three northeastern provinces in China. At the time, the Chinese were not familiar with laundry detergent, but Mr. Lee knew that with economic growth, the demand for household necessities would explode. That explosion, however, took longer than expected. “I’m disappointed at the results in the Chinese market,” Mr. Lee admitted. “But with the 2008 Beijing Olympics just ahead, this is the perfect time to strike again.”
Pigeon is investing $25 million to build a 66,116 square-meter (711,660 square feet) factory in the Binhai New District of Tianjin, which the Chinese government is seeking to develop. The plant will be completed in mid- 2007 with production starting in the second half of this year.
The company plan is to have the Chinese facility produce more than 500,000 tons of laundry detergent, fabric softener, and sterilizing detergent. The goal for the Chinese operation is to make 500 billion won ($540 million) in annual sales five years from now. Last year, sales were 150 billion won, and this year they were 180 billion won, surpassing the sales level of Korea.
“There may come a time when China-made products will be exported to Korea and other Southeast Asian countries,” Mr. Lee said.
Of course, Pigeon has plenty of competition in China, especially from famous multinational companies such as Procter & Gamble.
Mr. Lee isn’t worried too much about the big boys, due to his successful experience in the Korean market. One of his favorite slogans is, “You’ll get something if you do what others don’t.”
In the late 1970s, less than 10 percent of Korean homes had washing machines. But just a few years after Pigeon was founded, washing machines became a must-have appliance, and the fabric softener market grew as well.
Ten years after Pigeon was established, the market was 20 billion won; now it is more than 180 billion won.
In 1990, when bar soap was the only cleanser that most Koreans used to wash their bodies, Mr. Lee released a body cleansing liquid. Last year, the company began to stake out new ground with the release of a liquid-type laundry detergent. Although liquid-type detergents had been widely used in developed countries, many Korean detergents were still powder. Mr. Lee focused on the fact that liquid detergent would not “fly around” like powder or leave residual “cakes.”
The liquid detergent product sold 10 billion won in the second half of 2005 and 20 billion won in the first half of this year. Currently, liquid detergents comprise about 8 percent of the laundry detergent market, but Mr. Lee predicts that in five years, more than 20 percent of consumers will use liquid detergent.

By Kim Pil-kyu JoongAng Ilbo [wohn@joongang.co.kr]



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