Cosmetics giant L'Oreal (OREP.PA) said on Monday that it has acquired a minority stake in the Chinese mass-market skincare brand Lan — marking the company's second investment in China in recent months, where local brands have been rapidly gaining traction. This is reported by Reuters, writes UNN.
L'Oreal did not disclose the size of the stake or the value of the deal, but L'Oreal North Asia President and China CEO Vincent Boinay said that this step highlights the key role of China in the corporation's global strategy.
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We firmly believe that investing in China is investing in the future. We will continue to develop the Chinese market, work with an increasing number of local brands to create a beautiful future and meet the expectations of sophisticated Chinese consumers
Reuters was unable to obtain a comment from Lan.
The investment in Lan came after L'Oreal paid 442 million yuan ($62 million) for a 6.67% stake in Chando — the Shanghai-based company reported last month in its prospectus for its Hong Kong IPO.
China has proven to be a challenging market for international players, as an increasing share of its $75 billion beauty and personal care market has been captured in recent years by local brands, known as C-Beauty. At the same time, overall market growth has slowed due to a prolonged property crisis and widespread concerns about job stability.
Buying stakes in well-known local brands could be a quick way for L'Oreal to tap into C-Beauty’s momentum, says Ben Cavender, managing director at the Shanghai-based China Market Research Group.
L'Oreal and other international brands face strong pressure from local companies that update products faster and often more aggressively promote new ingredients, concepts, and skincare routines
After publishing its quarterly report in October, L'Oreal CEO Nicolas Hieronimus said the group’s China business grew by around 3% in the quarter — its first growth in two years.
According to consultancy Frost & Sullivan, Chando Group is China’s third-largest local beauty brand (by retail sales) after Proya and Chicmas. Both Chando and Lan emphasize natural ingredients and "clean" formulations.
Chando’s strong position in the mass-market price segment — with products mostly priced between 49–390 yuan — as well as its reach into smaller Chinese cities, could help L'Oreal regain its footing in the country without directly competing with the group’s core brands, says Yang Hu, APAC Insight Manager at Euromonitor International.