The US-based international fragrance and cosmetics producer Coty will focus on China in the next 10 years with an eye on the attractive growth potential of the market, company officials said last week.
The company has made plans to introduce more brands to China in addition to further investing in its existing Yue-Sai brand of prestige cosmetics and three mass lines under the names of Ma Promesse, Rimmel and Adidas, said Bernd Beetz, chief executive officer of Coty, during a recent visit to China.
Meanwhile, Yue-Sai Kan, a China-born international celebrity who founded the Yue-Sai brand in 1992 and merged with Coty in 1996, told Business Weekly that the plan to expand the Yue-Sai brand to the US market would be postponed this year in light of the sluggish performance of the US economy.
"By 2000, China's cosmetic market had seen a sales volume of US$4 billion, and we estimate that by 2010, the market size will reach US$10 billion," Beetz said. "There is no other market worldwide that has such a potential."
He added that Yue-Sai cosmetics have become a market leader in department stores in China, and this position will help Coty gain access to China's cosmetics market in the future.
"Our strategy is to build the momentum of Yue-Sai, while looking at other opportunities," he said.
"Meanwhile, there are still segments to cover and Coty will consider that," he told Business Weekly.
Beetz said his company had not worked out detailed plans for introducing additional brands to China yet, but as Coty favours the department store environment, some department store brands may be unveiled.
"We do not see any need to combine with other domestic brands," he said.
Beetz also admitted that competition is going to increase now that China has entered the World Trade Organization.
Industry experts said as tariffs gradually drop for imported cosmetic products, the prices for most big-name brands will follow suit. Currently, one attraction of Yue-Sai products is their high quality and relatively low price.
"However, in principle, we do not fear, but rather encourage, competition," said Beetz.
He dismissed the possibility of price cuts, saying there is no need when the user base is happy with the products.
He was echoed by Kan, who said prices for Yue-Sai products will increase gradually instead, "because we are not inferior to those big names in any aspect."
In the past three years, Yue-Sai Kan Cosmetics has established new counters, developed new cosmetic products and upgraded the prescriptions and designs for all of its product lines, said Leo Lui, general manager of the company.
In the first nine months of last year, the revenue from cosmetic products soared 25 percent from the same period the previous year, while that of skin-care products grew by 30 percent from the same period of 2000.
"Our newly designed products all staged very satisfactory sales performances last year," he said.
In the past two years, Yue-Sai Kan Cosmetics has speeded up the launch of new sales counters for Yue-Sai Kan cosmetics in middle-sized cities in China. By March this year, a total of 750 counters had been set up in 250 cities across the country.
The number of sales counters for the fragrance Adidas, a brand introduced by Coty to sell under the Yue-Sai umbrella in China, has reached 3,000 nationwide and its sales volume has increased 80 percent over last year, said Lui.
To survive in the Chinese market, a cosmetics company should be innovative and consistent in its development strategy, Beetz said.
(China Daily May 10, 2002)
