Domestic brands winning out with China's continued growth

By Lucy Whitehouse

- Last updated on GMT

Domestic brands winning out with China's continued growth

Related tags Revenue Brand management

A new market report by research firm China Research and Intelligence notes that total sales revenue of the China cosmetic industry reached CNY 260 billion in 2013, and the analysts attributed this growth to rising resident income.

However, while the emerging market continues to grow robustly, global beauty giants are still struggling to gain a firm foothold in the country, as the fast-moving pace of the market means that the more responsive domestic players are winning out.

L’Oreal’s recent acquisition of Magic Holdings, part of an expansion strategy in the emerging that Forbes has called “particularly aggressive​”, is representative of the ongoing need for global brands to operate from within to keep up with the market’s rapid movement.

Quicker domestic brands

Although still a major player in the region, with two of its brands leaders of their respective market categories, L’Oreal’s recent acquisition of Magic Holdings, a key player in the country’s skin care segment, suggests the international brand is looking to gain a stronger position against increasingly dominant domestic brands.

China’s gross domestic product grew 1.5 percent from the previous three months, according to the median estimate in a Bloomberg News survey, with brands within the APAC region better equipped to adapt to fast-moving customer demands.

South Korean brands in particular, reports WWD, are proving able to react better to local customer demand than the larger multinationals: Mamonde, Laneige, and Etude House are brands of South Korean brand AmorePacific, which is enjoying rapid expansion in China.

Magic Holdings acquisition

Despite the strengthening position of brands from within the region, L’Oréal’s acquisition shows the brand is keen to reinforce its commitment and presence in the China market, following the announcement back in January of this year that it was pulling its Garnier brand there.

“This is the most important acquisition for L’Oréal since the acquisition of Yves Saint Laurent Beauté in 2008,” ​Jean-Paul Agon, Chairman and CEO, confirmed.

This acquisition marks the acceleration of our conquest of new consumers in China,” ​the brand boss stated.

Related news

Show more