Is China worth it for L'Oreal?

L’Oreal aren’t the first and won’t be the last of the big companies who have had their hands burnt trying to enter the Chinese market through using their marque brands from Western markets. When thinking of China the concept sounds like a great one at face value. A thriving market and prospering economy that continues to grow has resulted in an increase of consumers with significant disposable income. With this in mind why wouldn’t companies who sell high margin, luxury items like L’Oreal not want to exploit the market and grow their brands? However the reality is that the target market just aint buying it

http://www.scmp.com/business/companies/article/1404118/loreal-brand-and-revlon-call-time-china

There are a number of theories as to why companies like L’Oreal might be struggling in new markets. The Brand Avenger would argue one of the key reasons L’Oreal has struggled is the assumption that one single universal brand approach is strong enough to stretch across all markets in both the West and the East. This assumption is a problem that more and more companies will begin to experience as they become more global.  In essence L’Oreal’s decision to target Garnier products in the market with no differentiated approach is either naïve or lazy. It is for that reason L’Oreal this week deserves to be critiqued by the ever-watching eye of The Brand Avenger.

http://www.marketingmagazine.co.uk/article/1226943/why-china-losing-its-lip-gloss-western-brands

Of course its not all doom and gloom for L’Oreal and they certainly are far from taking the decision to entirely remove themselves from expanding into the Far East. Through acquiring local companies in the Chinese market L’Oreal are demonstrating that they understand the mistakes in their previous strategic approach and are preparing themselves to do something about it.

http://articles.economictimes.indiatimes.com/2014-01-14/news/46186240_1_l-oreal-skincare-hong-kong-listed

As the market becomes more and more saturated with imported foreign brands localization will become the key as opposed to globalization.  Put simply companies like L’Oreal will have to work harder to understand the new segments of customers they are exposed to. Through investing in the right infrastructure, researching the market thoroughly and adapting the product offering to meet the needs of the base, investing in the Chinese market might just still be worth it yet for the French facial experts.