L'Oréal is Playing Cards in China

[kit_hung]

L'Oréal has just announced that they have taken a small stake in a Chinese skincare brand called Lan. They have not yet said the price and amount. This is the second time in a few months that they are entering China. Vincent Boinay, the boss of North Asia, clearly said that China is a big part of their strategy and investing there is investing in the future.

This year they have already taken 6.67% of Chando for 442 million yuan and now they are taking another step. The Chinese beauty market is at around $75 billion, but domestic brands called C-Beauty have been gaining momentum and putting great pressure on Europeans with the speed of innovation and marketing.

Ben Cavender clearly said that L'Oréal and other international brands are being squeezed by local companies that are coming up with new products quickly and are marketing aggressively. CEO Nicolas Hieronimus also dropped data that the third quarter saw 3% growth in China for the first time in two years, so this move to buy stakes in local brands is like a shortcut to entering the momentum of the domestic market.

Source: marketscreener

 

[gwolf666]

I find L'Oréal's strategy of investing in Chinese brands like Lan and Chando very smart. Personally, I believe that in a market as large and competitive as China, international brands must adapt and collaborate with local ones to remain relevant. The pressure from C-Beauty brands, which innovate and promote themselves rapidly, is a challenge that cannot be ignored. L'Oréal's decision to invest directly in these brands shows that they understand the key lies in integrating into the local dynamics, rather than trying to impose their traditional products. Furthermore, the 3% growth in China in the third quarter indicates opportunities, and these investments could be a shortcut to capitalizing on that trend. Ultimately, I believe this strategy can be very beneficial for both parties and reflects a smart adaptation to a rapidly evolving market.