Johnson and Johnson invests in the Chinese market

By Katie Bird

- Last updated on GMT

Related tags: Johnson & johnson, China

Johnson and Johnson has bought a Beijing-based cosmetics company in an attempt to increase its presence in the booming Chinese market.

The consumer goods giant has acquired Dabao Cosmetics Company and with it a range of personal care and cosmetics products produced under Dabao the brand name.

Financial details for the transaction have not been released by the company although Reuters news agency said local press sources have quoted a figure of 2.3bn yuan ($337m).

Respected and established brand

According to Johnson and Johnson, the Dabao brand is well respected in China and has been operating since 1985.

In buying the brand the company is hoping to further infiltrate the Chinese market where it already trades its Johnson's Baby, Neutrogena and Clean and Clear products.

"Dabao is a successful brand in the Chinese market, and a brand we respect. We plan to develop the brand further with the help of Dabao's unsurpassed local market knowledge and our experience in marketing, research and product innovation,"​ said president of Johnson and Johnson (China) Investment Company Jesse Wu.

The announcement comes only a week after fellow American company Estee Lauder bought a stake in Indian company Forest Essentials.

A stake in India's number one spa brand will give the company better access to the growing prestige beauty sector in the region, said Kline analyst Carrie Mellage.

Focus on local brands

Purchasing local brands is an oft used strategy to increase market share by the multinationals in the emerging regions.

In addition to providing local market knowledge and consumer loyalty it also means new products from international companies can appear local to consumers, who may prefer purchasing a domestic brand.

Recent research from the Boston Consultancy Group on the Chinese market suggests that many consumers are unaware of the geographical origin of brands.

According to the BCG report, although consumers rarely misidentified a domestic brand, consumers often misinterpreted an international brand as local - a phenomenon that seemed to particularly affect the cosmetics and personal care sector.

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