Abstract

The case focuses on L’Oreal in China. L’Oreal has been one of the pioneers in the cosmetics industry and has been successful over the years to become the leader in the cosmetics market worldwide. L’Oreal has been able to respond quickly to the fast environmental changings. It has been successful due to its historical focus on research and development. L’Oreal has also faced the challenge of globalization and knew that globalization would allow the group to be always positioned as the brand leader in cosmetics. In 1997, when L’Oreal entered China, the group felt that the market had a great potential and opportunities to grow. It was clear that the emerging markets and among them China would be a great opportunity to reach the aim expected to become number one. Since then, L’Oreal has overtaken its main competitors in China but is still left behind by P&G which was the first one to move to China in 1985. For 17 years, L’Oreal has chosen to develop its own brand-portfolio from the mass market-focused brands (L’Oreal Paris, Maybelline) to luxury brands (Lancome, Yves Saint Laurent) and in parallel acquired Yu Sai in 2004, a Chinese brand. A few months ago, in April 2014, L’Oreal announced the acquisition of a new Chinese brand called Magic Holdings to penetrate the cosmetics segment of facemasks. However, some difficulties surged up when one of its main mass market brands, Garnier, announced its withdrawal in January 2014. Because it had not succeeded in attracting customers as its siblings L’Oreal Paris and Maybelline had done.

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