06.02.23
Fabrice Megarbane, North Asia President and China CEO at L'Oréal, shared insights into the company's thriving business strategy in North Asia and the remarkable recovery of China's consumer sector during an interview on Bloomberg. Megarbane shed light on the key signs of recovery, evolving consumer trends, and L'Oréal's investment plans aimed at bolstering their market presence in the region.
“We see a lot of visits in the big cities,” he explains. “And this obviously generates a lot of momentum in terms of consumption.
“They want the brand that also speaks to them,” Megarbane affirmed, underlining the increasing significance of emotional connections in consumer choices.
“There is no trading down when it comes to quality for the Chinese,” Megarbane declared.
L'Oréal has capitalized on these trends, witnessing the rapid ascent of new brands and innovations that have captivated Chinese consumers. Furthermore, the beauty market in China has seamlessly harmonized online and offline channels, allowing L'Oréal to tap into a broader consumer base spanning not only major metropolises but also emerging cities across the country.
“So, I would say, from one side, consumer sophistication and premiumization is still there, and very importantly, the consumption by capital in China is still lower in terms of beauty compared to other markets, so there’s still a lot of potential to increase the routines of beauty for the consumers,” Megarbane adds.
In addition to R&I investments, L'Oréal continues to pursue brand expansion and acquisition opportunities, reinforcing their portfolio of esteemed labels.
Recent strategic moves by L'Oréal also involved enhancing supply chain agility through the establishment of state-of-the-art distribution centers. These initiatives aim to facilitate seamless coverage of new cities in China, enabling L'Oréal to further extend its footprint and solidify its position as a leading beauty conglomerate in the region.
Signs of Recovery
Megarbane says that the first sign of recovery earlier this year was traffic returning to China. There was a lot of travelling, especially during the Chinese New Year and the golden week during the beginning of May. According to Megarbane, travel was almost at the same level as 2019.“We see a lot of visits in the big cities,” he explains. “And this obviously generates a lot of momentum in terms of consumption.
Spending Habits
According to Megarbane, consumers have become very knowledgeable and more sophisticated. They are not only looking for product functionality, but also a kind of emotional connection with products and brands.“They want the brand that also speaks to them,” Megarbane affirmed, underlining the increasing significance of emotional connections in consumer choices.
Consumer Trends
Despite the turbulence caused by the pandemic, Chinese consumers continue to exhibit a penchant for premium products. Megarbane stressed that Chinese consumers are uncompromising when it comes to product quality, refusing to trade down for lesser alternatives.“There is no trading down when it comes to quality for the Chinese,” Megarbane declared.
L'Oréal has capitalized on these trends, witnessing the rapid ascent of new brands and innovations that have captivated Chinese consumers. Furthermore, the beauty market in China has seamlessly harmonized online and offline channels, allowing L'Oréal to tap into a broader consumer base spanning not only major metropolises but also emerging cities across the country.
“So, I would say, from one side, consumer sophistication and premiumization is still there, and very importantly, the consumption by capital in China is still lower in terms of beauty compared to other markets, so there’s still a lot of potential to increase the routines of beauty for the consumers,” Megarbane adds.
Investment and Expansion Plans in North Asia
Highlighting L'Oréal's commitment to innovation, Megarbane underscored the company's regular investments in research and innovation (R&I) centers strategically positioned in Korea, Japan, and China. This network of innovation hubs ensures L'Oréal remains at the forefront of cutting-edge developments in the beauty industry.In addition to R&I investments, L'Oréal continues to pursue brand expansion and acquisition opportunities, reinforcing their portfolio of esteemed labels.
Recent strategic moves by L'Oréal also involved enhancing supply chain agility through the establishment of state-of-the-art distribution centers. These initiatives aim to facilitate seamless coverage of new cities in China, enabling L'Oréal to further extend its footprint and solidify its position as a leading beauty conglomerate in the region.
