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L'Oreal: Expansion in China                                                                                                                                                                                                                                            
Product Ref: 06/282C Company: L'Oreal

Product Type: Case Industry: Consumer Goods

Related Product(s): Teaching Note
Authors: Zhigang Tao   Li Dongya
The world's leading cosmetics companies are competing with¡Xand buying¡Xlocal cosmetics firms for a share of China's vanity cash. French cosmetics giant L'Oreal is grabbing a major share of the Chinese make-up market. The company recently announced its acquisition of Chinese cosmetic brand Yue-Sai . The surprising announcement came just 45 days after L'Oreal made a successful bid for Raystar Cosmetics (Shenzhen) Co. Ltd.,'s skin-care brand, Mininurse, in the beginning of this year. L'Oreal has been very successful in China's high-end and middle-segment cosmetic markets. The recent two acquisitions, however, indicate that L'Oreal is focusing more on the mass market and shows their determination to step up the pace of their growth in China. That's also some indication of how red-hot the cosmetics trade has become in China. What is the competition situation faced by L'Oreal? How can L'Oreal retain its leading position in China? Is it through more acquisition or the improvement on its own products? What is the impact when the tariff be reduced in the future?
Functional Area : Marketing
Strategy & General Management

Issues: The case concentrates on the expansion strategy by multinationals in the fast-growing Chinese market. To diversify into other segments, one can buy out established firms, build its own brand(s) or ally with incumbents. Each strategy has its own pros and cons. In this Case, L’Oreal adopted M&A strategy. Whether this was appropriate is what the Case wants to examine. L'Oreal, LOreal, Oreal
Length: Text: 9 pages
Exhibits: 7 pages
Country: China (People's Rep. of)

Pub. Year: 2006 Level of Difficulty: 2
This product type is available in the following language(s):      English   Simplified Chinese
Related Information: N/A
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