L’Oreal maintains growth in Chinese cosmetics market

The world's largest cosmetics producer by revenue disclosed Thursday that its 2012 sales in China saw a two-digit growth for the 12th consecutive year despite the country's economic slowdown.

L'Oreal China announced in Shanghai that its sales last year reached 12.05 billion yuan ($1.94 billion), an increase of 12.4 percent over a year earlier. The sales growth rate in China was 5.6 percentage points lower than the 18 percent registered in 2011.

CEO Alexis Perakis-Valat attributed the still-growing sales to the company's innovations, efforts to expand in additional cities, and rising e-commerce business.

"And for this year, we will continue to capture low-tier city growth opportunity," said ­Perakis-Valat, adding that the L'Oreal-owned brand ­Lancome entered 18 new cities last year, bringing the total number of cities that sell Lancome products in China to 74.

China has been the Paris-based beauty company's third biggest market by sales since 2010.

"One reason (for the slower sales expansion) was that after years of growth, the sales base has become too big … and the general market slowdown has impacted our sales a little," said ­Perakis-Valat.

The world's second largest economy saw its annual GDP growth drop to 7.8 percent in 2012, the slowest pace since 1999.

Perakis-Valat said the beauty industry is "very resistant to economic ups and downs," so he is confident that L'Oreal will reach double-digit sales growth in China again this year.

Echoing that opinion, Zhang Bingwu, an expert in cosmetics marketing and general manager at Guangzhou Taking Advertising Co, told the Global Times Thursday that he thinks the economic slowdown will not have a negative influence on people's willingness to spend on beauty and cosmetic products.

"Chinese people have already upgraded their consumption habits and they pay attention to their health and looks," said Zhang, noting that besides L'Oreal, other domestic and foreign beauty products makers have also done well in recent years.

Herborist Cosmetics Co, a Chinese brand, announced earlier this month that the company raked in 2.5 billion yuan in China last year, a surge of 30 percent from a year ago.

The Procter & Gamble Co, also known as P&G, disclosed in its 2012 fiscal year report that it realized an average annual growth rate of 17 percent between 2002 and 2012 in China, which made China P&G's second largest consumer goods market globally after the US.