Fast-Growing China Market “Heart” Of L’Oréal’s Focus

Parisian Beauty Giant Expects 250 Million New Customers 

L’Oréal Group Chairman & CEO Jean-Paul Agon discusses the company's China strategy on April 11, 2013. (The Moodie Report)

L’Oréal Group Chairman & CEO Jean-Paul Agon discusses the company’s China strategy on April 11, 2013. (The Moodie Report)

In a press conference on Wednesday, L’Oréal executives emphasized the extent to which their market has shifted toward China, and it’s huge—the country is expected to serve as the source for the conglomerate’s largest number of purchasers as early as next year.

“Chinese consumers are at the heart of L’Oréal’s focus and energies,” said Chairman & CEO Jean-Paul Agon. “A potential 250 million new Chinese consumers will be using L’Oréal’s products within the next 10 to 15 years.”

His forecast is based on the prediction that 260 million new Chinese people will move into the middle class by the year 2020. The company believes that China will make up the largest market for the brand no later than 2015, but probably as early as 2014.

Long-term visions for its China market have been part of L’Oréal’s thinking for quite a while. The company’s luxury sales there have doubled every four years for the past decade, according to Nicolas Hieronimus, the company’s luxury president. And as Jing Daily reported in 2010, L’Oréal’s bounce-back from the 2008 crisis was heavily driven by growth in BRIC countries, with China at the forefront.

Luxury has been an important aspect of the brand’s massive China growth, as its luxe division comprises one-third of its beauty sales in the country, and China’s move from the second- to first-largest country for luxury beauty consumption is imminent. Despite these sheer numbers, executives stated that L’Oréal still has massive opportunities for market saturation. For example, Lancôme, the company’s most popular brand in China, will see its current number of 170 beauty counters in China increase in coming years in order to begin to rival the United States’ 2,000.

Hieronimus said that the specific demands of the Chinese market have already been shaping L’Oréal’s products and strategies. “We have raised our game in retail excellence and even recreated our brands, such as Helena Rubinstein, prompted by this market,” he stated. “We have learned to create specific products for Chinese consumers, tailored our advertising for this market and we have recruited a new generation of Chinese management.” He also noted that L’Oréal-owned Chinese brands may be internationalized, such as Chinese traditional medicine brand Yue Sai.

Jing Daily previously covered the company’s plans to target male consumers in China, which also remains a “high priority,” according to another luxury executive at an earlier conference in Hong Kong.

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