L’Oreal set to buy skincare company Magic Holdings

By SHI JING in Shanghaishijing@chinadaily.迷你倉最平com.cnFrench cosmetics giant L'Oreal SA said on Monday it acquired Hong Kong-listed skincare company Magic Holdings International Ltd, adding that the deal has been approved by China's Ministry of Commerce.The move comes one week after L'Oreal announced that its brand Garnier would stop selling its products in the country.A document, which will provide further information about the deal, will be sent to Magic's shareholders in due course, L'Oreal said in a statement. The transaction is expected to close during the second quarter of this year.Magic's facial mask brand MG is a good match for L'Oreal's consumer products division in China, L'Oreal said. By adding a major Chinese brand with a unique expertise to its portfolio, the consumer products division will be able to further accelerate its conquest of new consumers in the strategic Chinese market, it added.Magic's turnover in the 2012-2013 fiscal year was about 160 million euros ($218 million).Chinese consumers seem to be eager buyers of facial mask products, especially online shoppers, industry observers said.According to a recent report from digital audience analytics firm ComRatings and market research firm Nielsen, the facial mask category is the most popular in the cosmetics sector, with 92 percent of online shoppers buying it, followed by moisturizers, facial cleansers, eye cream and lip care products."Facial masks have experienced strong growth this year both online and offline. Offline, the annual total sales of facial masks from October 2012 to September 2013 reached 5 billion yuan ($821 million), with a year-on-year growth rate of 32 p迷你倉rcent," said Li Xin, managing director of Nielsen Online in China."A mix of products and pipeline focused on middle-and-low prices are likely to attract more online shoppers especially during online shopping-spree days when, generally speaking, consumers are price-sensitive," he said.Richard Ding, senior retail expert and chief executive officer of Shanghai Zonfa Commercial Management Group, said that the change of Chinese consumers' habits — more inclined now to buy products online — has provided much room for the development of domestic cosmetics brands."As most overseas brands are much superior to domestic brands in terms of the distribution channels in department stores and hypermarkets, some domestic cosmetics brands have been eyeing e-commerce," Ding said. "It usually takes more time and more sophisticated planning for leading overseas brands to adjust their marketing strategies. In this sense, smaller domestic brands may have the advantage of responding faster to the most recent market trends."Ding added that leading overseas brands have also been adjusting their strategies in China by attaching more importance to rural areas. With China's ongoing urbanization drive, Ding believes people living in rural areas will be the next driving force for consumption in the country."It's much easier to enter lower-tier Chinese cities with the products of a domestic brand than L'Oreal's own cosmetics brands," he added.It usually takes more time and more sophisticated planning for leading overseas brands to adjust their marketing strategies."Richard Dingsenior retail expert and chief executive officer of Shanghai Zonfa Commercial Management Groupmini storage