L'Oréal in China: Market Strategies and Yue Sai Brand Analysis

This report provides an in-depth analysis of L'Oréal's presence and strategies in the Chinese market. It begins with an introduction to China's economic growth and its impact on consumer behavior, particularly the increasing demand for premium beauty and skincare products. The report then examines L'Oréal's position as a leading cosmetic company in China, highlighting its sales performance and market share, and its brands. A significant portion of the report focuses on Yue Sai, L'Oréal's initial cosmetic brand in China, discussing its establishment, challenges, and acquisition by L'Oréal. The analysis includes the brand's marketing strategies, advertising decisions, and distribution channels, as well as the challenges and successes encountered. The report concludes by reflecting on the evolution of the cosmetics market in China and the need for companies like Yue Sai to educate consumers about beauty products.

RUNNING HEAD: L'ORÉAL IN CHINA 1
L'ORÉAL IN CHINA
Student Name
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Contents
Introduction................................................................................................................................3
L’Oréal China.............................................................................................................................3
Yue Sai.......................................................................................................................................3
Conclusion..................................................................................................................................4
Reference....................................................................................................................................6

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Introduction
The report will discuss in detail about the presence of L’OREAL in China. The country in
discussion is one of the oldest civilization and is also considered most populous country in
the world. there is consistent and rapid economic based growth since the time of 1970 and it
is considered as the one of the biggest economy in terms of GDP (Ajitha and Sivakumar,
2017). There is constant rise in disposable income and the consumers of the country are
constantly desiring more and more sophisticated and premium product in different categories
specifically including skincare and beauty.
L’Oréal China
The company is the largest in the cosmetic industry and exist across the world with huge
sales worldwide. In 2010, the sales in China also exceeded for the very first time and there is
eleven percent rise over the last year and there is a double-digit gain for the tenth consecutive
year which make the country the third biggest market for the company after USA and France.
The company holds the second position in beauty and skincare after P&G in the luxury
category. It also exists in the country with almost every brand considered as the major brand
with an exception of Body Shop (Checchinato et al., 2014). The company has also settled a
research and innovation centre in Shanghai and has production centre in places like Suzhou.
Yue Sai
The very first and initial cosmetic brand of the country is Yue Sai was established in 1992 by
the person called Madam Yue Sai Kan who was an Emmy winner host and entrepreneur and
has the aim to develop, produce and sell the best beauty as well as skincare products. The
promotion of the brand the founder also wrote a book on makeup for the modern China.
There were so many obstacles in securing the distribution in department stores in country and
appointing personally trained makeup experts (Heine and Gutsatz, 2015).

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L’Oréal acquired Yue Sai in the year 2004 and added more products in the store like L’Oréal,
Maybelline and Shu Uemura. Post acquiring the brand, the year was not that smooth but since
the company had acquired a brand with wide distribution, there were many benefits also like
strong sales, few good skin care products and many more (Wang and Gan, 2017). There was
a challenge to increase the sales and there was loss in market as well as innovative edge in
R&D perspective.
The company took a lot of efforts and the success started when the Alexis Perakis-Valat
become the CEO of the company and set some ambitious goals. The management team along
with the CEO the company started working on the advertising part of the company. Here the
crucial decision is whether to continue with the present campaign or to completely transform
it and at that time when cost of media was climbing slowly and deteriorating the limits for
sales and advertising along with promotion based budget (Yang and Chandon, 2013). From
the time more and Chinese brands are depending on the celebrities, the important questions
are that should Yue Sai depend on models or celebrities or not.
It is also important to determine the pricing of the company and how the company price
within L’Oréal brand in China. Another important decision is to take the appropriate channels
of distribution entirely based on the market category where Yue Sai can pursue and the
consumers it must target (Zhang and Kim, 2013).
Conclusion
For last so many years, cosmetics were seen as revolutionary as well as non-existent on
virtual platform in a country like China. So many generations of women in the country grew
without taking any sort of knowledge from the mothers which means that the cosmetic
companies like Yue Sai in 1992 had to first take initiative to educate the consumers of China
about the beauty and usage of cosmetics (Zhang and Kim, 2013). Just 10 to 15 % market was

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created for cosmetics since the women of the country was not very open towards its usage in
routine lives.

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Reference
Ajitha, S. and Sivakumar, V.J., 2017. Understanding the effect of personal and social value
on attitude and usage behavior of luxury cosmetic brands. Journal of Retailing and
Consumer Services, 39, pp.103-113.
Checchinato, F., Colapinto, C. and Giusto, A., 2014. Advertising in the Luxury Sector in
China: Standardisation or Adaptation? A Comparison Between China and Italy. The
Globalization of Chinese Business, p.241.
Heine, K. and Gutsatz, M., 2015. Luxury brand building in China: Eight case studies and
eight lessons learned. Journal of Brand Management, 22(3), pp.229-245.
Wang, X. and Gan, D.Z., 2017. Research On Marketing Strategy Of Shanghai Jahwa
Costmetics.
Yang, H. and Chandon, P., 2013. L’Oréal in China: Marketing Strategies for Turning Around
Chinese Luxury Cosmetic Brand Yue Sai.
Zhang, B. and Kim, J.H., 2013. Luxury fashion consumption in China: Factors affecting
attitude and purchase intent. Journal of Retailing and Consumer Services, 20(1), pp.68-79.