L'Oreal Buys Local Chinese Cosmetics Brand Yue-Sai
Leading French women's cosmetics maker L'Oreal has purchased
Chinese women's cosmetics brand Yue-Sai. L'Oreal, which
owns, makes and distributes the Lancome, Maybelline and
Shu Uemura brands worldwide, has lately stepped up acquisitions
in China. This is the second buyout for L'Oreal in two
months.
Last year, the Yue-Sai brand had sales in China of less
than 38 million euros. It is owned by Coty, which is in
turn owned by John A. Benckiser Gmbh, a German firm.
Exact terms of the deal were not disclosed, which requires
Chinese government approval. Yue-Sai was developed by
Yeu-Sai Kan, a Chinese-born American-educated woman who
became an example of social and business success more
than 10 years ago. L'Oreal said that it plans to continue
to develop the Sai-Kan brand as part of its portfolio
of products in China.
L'Oreal had sales of 159 million euros in China last
year. Since 1997, its sales have grown by 69 percent.
According to a local group, the China Association of Fragrance,
Flavor and Cosmetics Industry, cosmetics sales in China
in 2002 totaled US5.5 billion dollars. This makes China
Asia's second largest market after Japan.
The purchase follows on L'Oreal's purchase of Mininurse
last December.
The move suggests a period of brand consolidation for
the industry in China. The industry is now highly fragmented
with more than 3,000 manufacturers.
In the cosmetics industry, marketing and advertising
costs are very high, which winnows out many players. Those
that survive and succeed on an ongoing basis are crowned
by consumers as "brands".
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