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China's cosmetic industry embarks on reshuffle
Updated: 2004-04-04 10:31

China's cosmetic industry has been reshuffling as more powerful cosmetic companies have begun operation.

Mini-nurse, a popular Chinese cosmetic brand made in Shenzhen, a boomtown in south China's Guangdong Province, was taken over by L'Oreal Group, one of the world's largest beauty products firms, which is based in Paris, France.

Via the takeover, the French cosmetic group is able to sell its products such as Maybelline and Garnier to more ordinary Chinese customers through the 280,000 sales outlets established by Mini- nurse across China. Yuesai, another Chinese cosmetic brand, was also purchased by the Paris-based cosmetic product company shortly afterwards.

Even more Chinese cosmetic makers will face similar fates as Procter & Gamble Co.(P&G) and Avon, both from the United States, and Shiseido of Japan, are following L'Oreal's lead, said Luo Xielong, head of the Chamber of Beauty and Cosmetics Industry with the All-China Federation of Industry and Commerce.

The beauty and cosmetic industry, also known as the "beauty economy", has become the fourth consumption zone hit after real estate, cars and tourism in China, as Chinese people seek a higher standard of living.

According to Luo, there are 3,700 cosmetics companies in China, most of which were small and medium-sized ones, producing more than 20,000 kinds of cosmetic products. And the number of beauty parlors has increased to 1.54 million.

Sales revenue of cosmetics shot to 52 billion yuan (about 6.27 billion US dollars) last year from only 200 million yuan in 1982. And the total earnings generated by the beauty industry was 168.7 billion yuan (20.33 billion US dollars) in 2002, accounting for 5. 4 percent of China's service trade or 1.2 percent of the country's gross domestic product.

It is expected that by 2010, the total revenue from the industry will exceed 300 billion yuan (about 36.15 billion US dollars).

"Though the cosmetics and beauty industry has been expanding at an annual growth of 13 percent in the past decade, or 50 percent at the peak, the sector has been suffering from low-level, repeated developments and has the difficulty of gaining a strong competitive power on the market," said Luo.

Luo believed China's lack of its own big cosmetic companies with branded products is one of the main factors behind the fact that more overseas investors are keen to enter the Chinese cosmetic market through takeovers.

Several Chinese cosmetic makers, including Dabao produced in Beijing, are capable of sales of 500 million yuan annually.

However, L'Oreal Group alone, which landed on the Chinese market in 1997, made 15.98 billion US dollars in sales revenue globally last year, according to Joe Zhou, Communication and Public Relations Manager of L'Oreal China.

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