China’s domestic beauty and personal care firms fighting back international rivals

June 10, 2013 Leave a comment

China’s domestic beauty and personal care firms fighting back international rivals

Staff Reporter

2013-06-10

Domestic firms within China’s beauty and personal care industry have gradually taken back some of the lost ground from international rivals, grabbing back 25% of the market share to reach a total 45%, while foreign brands such as Procter & Gamble and Unilever continue to underperform, Beijing’s Economic Observer reports.

Guangzhou Blue Moon, which grabbed just 14% of China’s laundry detergent market in 2007, has now taken 63% of the market share, while other domestic brands such as the cosmetics and personal health care product maker Softto has also seen a positive turn around in the market.Before 1993, domestic brands accounted for 80% of the total market share but gradually lost the share to foreign brands expanding into China, according to Guangdong Advertising. During 1993 and 2001, domestic brands took 60% of the market share, falling further between 2001 and 2008 to only 20%.

Shanghai Jahwa United, a listed Chinese cosmetics company, has also seen its fortunes turn around in recent years, the paper said. In 1992, Jahwa reported a gross profit of only 27 million yuan (US$4,4 million), while international rivals Procter & Gamble and L’oreal Paris each had an disposable advertisement budget of more than one billion yuan (US$163 million). In 1992, Jahwa’s sales also represented just one-tenth of L’Oreal Paris, but the company was able to close the gap last year, to one-third.

Procter & Gamble’s sales last year grew by 3.18% from a year earlier to US$83.7 billion, but its net profit fell by 8.83% to US$10.8 billion, chiefly due to the increased price of its products and the rising costs of marketing and labor.

In the face of competition from foreign brands, domestic firms have been adjusting their strategies. Some domestic brands, such as Softto, have cut costs by selling their products through dealers in shopping centers. The dealers, who can represent several brands at the same time, have a better chance of surviving amid rising costs, the Economic Observer said.

Last year, Soffto cut all its sales teams in supermarkets including Carrefour and Walmart, replacing them with dealers, the paper said.

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment