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L'Oreal grows with youngest markets

By Bao Wanxian (China Daily)
Updated: 2009-06-15 08:08

Young Chinese women sample L'Oreal cosmetics in a Beijing shopping mall.[Bloomberg News]

What is the beauty secret for prevailing in the current economic turmoil?

That question is raised by the latest data from the world's personal care industry. In the fourth quarter of 2008 - the start of the current financial crisis - L'Oreal registered a 4.7 percent sales growth in China, while globally it had an enviable 27.7 percent year-on-year increase.

Analysts said the trend is consistent with the so-called "lipstick effect" - when the economy is poor, cosmetics makers will not be as greatly affected because consumers need the products an all times, while their low prices keep them affordable.

Yet Paolo Gasparrini, president and managing director of L'Oreal China, has a different view of such resiliency.

"It is related to L'Oreal's 100 years of experience. It forms a strong base of capabilities to face crises like the current one," Gasparrini said.

Beauty for 100 years

He noted that the company's continued focus on beauty as its one and only task over the past 10 decades is the key to L'Oreal's success.

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In 1909, L'Oreal was founded as a lab by chemist Eugene Schueller to promote stronger research into hair care. From that small lab grew the world's largest maker of cosmetics.

Mergers with brands for diverse beauty products and continued R&D for sustainable strength "helped the company maintain its position and a stable foundation to face several of crises in the past 100 years", Gasparrini said.

In China, the company's continued focus on beauty is driving its success.

"The beauty products market is huge in China," he said. "Chinese people now like to try new things and advanced products and are more brand-conscious and more receptive to foreign ideas."

In the past 100 years, L'Oreal has grown from a hair care lab to the home well-known brands from different countries around the world, including L'Oral of Paris, Maybelline of New York, Giorgio Armani, Shu Uemura from Japan, Helena Rubinstein, Ralph Lauren, Lancome, Biotherm and the two Chinese brands Mini Nurse and Yue-Sai.

In addition to its status in cosmetics, L'Oreal is also known for its position as an investor that combines diverse products and brands in its beauty kingdom.

"L'Oreal's business is founded on respect for differences, building the capacity to match personal tastes with products and brands," Gasparrini said.

"We don't want to force any kind of beauty on consumers. Black skin, white skin, yellow hair, red hair, straight hair, curly hair - all are beautiful. So we have to make different kinds of products to satisfy consumers' demands," said Gasparrini.

The company now has 16 brands in China. "After we introduced Giorgio Armani makeup products to China last year, we have been preparing to bring Keill's skin care to the country this year," Gasparrini said.

The president of consumer giant stressed that L'Oreal "is a cosmetics provider for all people including men, children and the elderly".

"We want everyone to know that they have the right to be beautiful," he said.

Its men's products now contribute almost 12 percent of L'Oreal's sales revenue in China, a number Gasparrini expects to grow.

Gasparrini said the fast-paced growth in China has engendered in him two dreams:

"First I hope L'Oreal's products will grow to be the No 1 in China's market in both sales revenue and brand effect - I believe that is not far distant," he said.

His other dream is that China will grow to be the top market for the group worldwide.

The president said these are by no means idle dreams - as witnessed by the company's growth in the past 13 years in China. "All of our achievements of today started from absolute zero," he said.