Henkel focuses on its cosmetic business

Despite the economic downturn, 34-year-old Vicky Liu still shells out and dyes her hair every other month, sticking to her favorite hair coloring and care brand, which she calls "Black Head".

"Black Head" is a nickname among Chinese consumers for Schwarzkopf, a premium hair beauty product from Henkel, a German detergents, cosmetics and adhesives company.

Henkel's cosmetics business has been less affected by the slowing economy than its industrial adhesive business, according to Jan-Dirk Auris, Henkel's Asia-Pacific president.

"In fact, it is developing very nicely," Auris said.

Michelle Cheung, general manager of Henkel Cosmetics in China agreed.

"At the moment, we don't see any big impact on our brands," she said.

Cheung said she believes Henkel's cosmetics business will continue to grow in China in 2009 since the company has both premium brands that cater to high-end consumers and value brands that serve the mass market.

Schwarzkopf is one Henkel's high-end brands. Schwarzkopf entered China's professional salon market in the 1990s and launched a retail product line in the country in 2005, which featured products such as the Extra Care hair care series and the Brilliance hair colorants series.

Schwarzkopf's sales in China have jumped by at least 60 percent each year for the last three years.

Trainers of Schwarzkopf Academy (ASK) of Schwarzkopf Professional have traveled across the country to teach hairdressers from professional salons. In addition to the three existing ASKs in Shanghai, Beijing and Guangzhou, a new one is expected to open soon in Chengdu, capital of Sichuan province.

Henkel's other brands in the Chinese market include medium market brand DEP, Fa deodorants and body spray, coloration brands such as Guangming and Beizhishi, skin and hair brand Kemeng and popular child skin brand Haiermian.

Henkel is doing relatively well in the cosmetics business but Cheung said Henkel would not move some of its overseas cosmetics manufacturing capacity to China in a bid to save production cost, as some of its rivals have done.

"We need to balance manufacturing cost and convenience in logistic support. China (manufacturing) will mainly supply the China market," she said.

Cheung also said the company has no plan at the moment to acquire new cosmetics brands.

"Henkel has enough brands in the market at the moment. Our focus is to further grow these existing brands before we consider more products," she said.

Auris, Henkel's Asia-Pacific chief, also said the company has no acquisition plan for 2009 and will instead focus on integrating the National Starch adhesives business it acquired last April.

Henkel saw its overall sales in China climb by 48 percent year-on-year to 4.8 billion yuan in 2008, while its global sales went up 8.1 percent over the same period to 14.1 billion euros.

Henkel has not changed its strategy in China and Asia-Pacific under the current global economic downturn, said Auris.

"Despite the crisis and its impact on certain industries, the fundamentals in China and Asia-Pacific have not changed, therefore our strategy has not changed," said Auris.

"Henkel will continue to invest in China," he said.

(China Daily 03/23/2009 page9)