L’Oreal sees opportunity in beauty-craving China
According to L’Oreal China’s CEO Stephane Rinderknech, the company’s growth potential in the country is unlimited. Why? Because of affluent middle class consumers that are hungry for the best fashion products. That’s why, even if China’s economy is on track for a gradual slowdown, L’Oreal isn’t worried about business: it’s more concerned with an increasingly affluent middle class and what Rinderknech describes as a “craving for beauty”.
Speaking at the Fortune Global Forum in Guangzhou, China, he said: "The growth potential is I believe unlimited in China because of this rise of the middle class. If we can really continue to be consumer-centric and to innovate in China for Chinese, as we do currently with our research and innovation center in Pudong, then the growth rate can be really phenomenal in China ... I'm very confident for next year."
Rinderknech is not dismissive of experts’ fears that China will experience growth headwinds, as the country struggles to contain financial risks, he believes that the trend towards beauty and wellness will outpace them, effectively protecting L’Oreal’s business in the region. He explained:
"I think the economy is slowing down maybe in GDP growth but I think we're really going towards quality ... More quality and more sophistication of consumers. Consumers that want more and more beauty."
Part of the cause for this demand, he says, comes from the technology sector – an area where China has caught up to the west with frightening speed. In fact, in many ways, China is now far ahead of the west – Ecommerce and digital culture being just two examples.
Rinderknech said: "China is much ahead in the digital revolution and the selfie is making you really be willing to improve your self-expression. This is why there's a boom in make-up, a boom in hair color products. You want to have your individual personality, your individual appearance, your self-expression. And this is a huge trend we're seeing in China, with a scale of hundreds of millions of people."
Dominion holds L’Oreal in its Global Trends Luxury Fund.
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