By Mieke Meintjes
L’Oréal has taken a minority stake in the Chinese mass-market skin care brand Lan, marking the beauty giant’s second investment in a Chinese beauty company in recent weeks. The move underscores L’Oréal’s heightened focus on China as international brands are losing ground to fast-growing domestic players.
“We firmly believe investing in China is investing in the future, and we will continue to cultivate the Chinese market, work with more Chinese brands to create a beautiful future, and meet the expectations of sophisticated Chinese consumers,” says Vincent Boinay, president of L’Oréal North Asia and CEO of L’Oréal China.
The deal follows L’Oréal’s 442 million yuan (US$62 million) purchase of a 6.67% stake in another C-beauty skin care brand, Chando, last month.
According to Yang Hu at Euromonitor International, Chando’s mid-range pricing and presence in smaller cities support L’Oréal’s long-term recovery in China by boosting L’Oréal’s growth without competing directly with its premium labels.
A similar dynamic could benefit L’Oréal’s stake in Lan, which also competes in the mid-market and appeals to consumers outside major urban cities.
The recent investments come as L’Oréal CEO Nicolas Hieronimus reported the company’s first quarterly increase in China in two years. The company saw third-quarter growth of around 3%, suggesting that the group’s recalibrated China strategy may be beginning to stabilize performance.
LÓréal has not disclosed the size or cost of the new Lan stake.
