With the first deputy CEO, where will L'Oréal China go after the change of leadership?

"The Chinese market today is far more complex than the Western market. On April 19, 2024, at the "2023/2024 Development Strategy Communication Conference", Ma Xiaoyu, Deputy CEO and General Manager of L'Oréal China's Luxury Cosmetics Division, admitted that in the past, the Chinese market was very similar to the Western market, and only needed to focus on brands, investment, channels and talents. Nowadays, the Chinese market is becoming more and more complex, so I believe that the headquarters hopes to have a person who really understands the Chinese market and can sort out such a complex business.

It is worth noting that Ma Xiaoyu's position as deputy CEO is the first time that L'Oréal China has set up. This is also L'Oréal China's second personnel arrangement for the Chinese market. Previously, in order to respond to the challenges and changes in the market, L'Oréal underwent a series of personnel changes – the former President of L'Oréal North Asia, Mr. François Fernando was promoted to Chief Global Growth Officer, Vincent Boiney was appointed President of North Asia and Chief Executive Officer of China, and Emmanuel Goulin took over as President of L'Oréal's Travel Retail business and joined the Group's Executive Committee.

As L'Oréal's second largest market in the world, the complex and exciting Chinese market has a unique charm. According to L'Oréal's financial report for the first quarter of 2024 released on April 19, the group achieved sales of 11.24 billion euros (about 86.703 billion yuan¹), a year-on-year increase of 8.3%, and an increase of 9.4% based on the same exchange rate.

Although sales in North Asia fell by 3.9% year-on-year, the performance of China was still significant. According to the data, net sales in the Chinese market will increase by 5.4% and retail sales by 7.7% in 2023, and 6.2% in the first quarter of 2024. Among them, the e-commerce business performed the most prominently, accounting for 62% of the annual sales, and ranked first on the three platforms of Tmall, JD.com and Douyin during the Double 11 period.

In addition, the Luxury Cosmetics Division grew at three times the market average, the Consumer Products Division outperformed the market, the Dermatology Beauty Division grew at six times the market average, and the Professional Hair Products Division ranked first in the hair care market with online sales.

However, compared to double-digit growth in Europe, North America, SAPMENA-SSA5 (including South Asia-Pacific, Middle East, North Africa and Sub-Saharan Africa) and Latin America, the potential of the Chinese market remains to be tapped.

As the group's first local executive, Ma Xiaoyu, deputy chief executive of L'Oréal China, has a heavy responsibility after taking office. From General Manager of Lancôme, to the entire Premium Cosmetics Division, to now the Mass Cosmetics Division, the Professional Hair Products Division, and the Active Cosmetics Division, where will the 26-year veteran in China lead L'Oréal?

"Kérastase is poised to be the next Lancôme China"

It can be said that Ma Xiaoyu's 26 years at L'Oréal are also the 26 years of L'Oréal's rapid development in China.

He joined the company as a sales manager in 1997 and became the general manager of Lancôme in China in 2004. Because of this, L'Oréal said in the announcement that over the past 26 years, Ma Xiaoyu has built Lancôme into a leader in China's luxury market.

Looking back on Lancôme's development in China, Ma Xiaoyu believes that the brand's most important success story is to step on the pace of the times. During the take-off period from 2001 to 2002, Lancôme flew with the wind of the market through a large number of market launches. But by 2010, the market had changed, and due to pride, the change was not timely, and it was "slapped in the face".

At this time, the team once again seized the wave of opportunities in the beauty industry and shopping mall. Huizhou, Foshan, Zhongshan, Dongguan...... In these non-first- and second-tier cities, Ma Xiaoyu and his team once set themselves the goal of doubling the number of cities in three years, and after three years, they will make a lot of money. To this day, the sales of stores in these cities are still excellent - a counter in an old department store in Huizhou can achieve a sales of 30 to 40 million a year. Another store is opened in a shopping mall, with an average teller yield of 2 million yuan, and the mall also has brands such as YSL and HR Helena, while the Lancôme counter in Foshan can sell 40 million yuan a year, and the yield per person is about 2.6 million yuan.

At the same time, opportunities for shopping malls are emerging. In 2015, when shopping malls were not yet popular, Ma Xiaoyu noticed a set of figures from the BD department, where the number of shopping malls in China grew at 300 to 400 a year, while department stores seemed to be a little unopen. This made Ma Xiaoyu realize that the department store had encountered a bottleneck. In 2016, Lancôme opened a shopping mall counter.

The sinking market, shopping malls, and the opportunity of JD.com's 200 million customers, as well as the grasp of key nodes, have enabled Lancôme to achieve sustained and significant growth in the Chinese market. It also made Ma Xiaoyu deeply aware that "doing business in China is all about timing." ”

Today, the opportunities in the market are changing.

According to the data of Jiuqian Zhongtai, the list of Tmall TOP10 brands in 2023 shows that the high-end hair care brand Kérastase defeated Pantene, Head & Shoulders, etc., and ranked first with annual sales of more than 1.5 billion yuan. Cao Yue, marketing director of Kérastase Paris, once revealed to the titanium media APP that the current outstanding performance of Kérastase is the ELIXIR series (camellia hair care essential oil), the GENESIS series (Yuanqi ginger essence), and the CHRONOLOGISTE series (Haiyuan Black Diamond Hair Mask). These are Kérastase's most popular products in China, and they all achieved the first place in the category during Tmall Singles' Day.

Not only that, but Kérastase and the L'Oréal Hair Products business line behind it have both achieved significant growth. According to L'Oréal's 2023 financial report, the group's full-year sales increased by 7.6% year-on-year to 41.18 billion euros, a consolidated increase of 11.0%, achieving double-digit growth for the third consecutive year. Among them, the Professional Products division grew significantly, with a consolidated growth of 7.6% and a year-on-year increase of 4.0%.

The two largest brands of the Professional Hair Products division, L'Oréal Professionnel (exclusive to L'Oréal Paris salons) and Kérastase, also saw significant growth.

"I think that in the future, Kérastase will be the next Lancôme China. In Ma Xiaoyu's view, Lancôme did not win in the product, but in the brand. Chinese consumers are too focused on the efficacy of their products, especially for high-end products. Therefore, in the future, if Kérastase wants to better practice the high-end route, it needs to further emphasize the beauty of hair. I hope that in the future, Kérastase will not only look for opportunities in terms of channels, but also build the brand stronger.

But competition in the high-end market is fierce, and Ma believes that the strategy for the future is not to rely too much on promotions and driving up GMV. For high-end brands, the focus in the future is more about brand power, experience power, and creating beautiful dreams for Chinese consumers.

Character design does not have to highlight "localization"

In addition to the hairdressing business, the Chinese market is still full of opportunities in Ma's eyes.

"For L'Oréal, the '50+' crowd is the blue ocean track of the future. In her view, the new generation of 50-year-olds is well-educated, and although they are facing retirement and changes in income levels, their pursuit of quality of life remains the same. However, it is still not noticed by the market, so L'Oréal is expected to launch corresponding products for this specific group of people.

In addition, Ma Xiaoyu is also very optimistic about China's men's beauty market. The market is well developed in other countries, while Chinese brands are still making less efforts in this area, and Chinese male consumers still need to be educated. According to her, Biotherm has achieved certain results after adjusting its strategy to fully attack the men's market. In some malls, Biotherm counters are placed on the first floor, which is not necessarily good alongside women's beauty products, but when Biotherm is located on the fifth floor, adjacent to brands such as Arc'teryx and Descente, it can achieve very good sales results.

In addition to male users, young customers between the ages of 15 and 18 are also full of potential. In Ma Xiaoyu's view, today's high school students are particularly active in their spending power, and their consumption psychology is different. When they see the promotion on TV or social media, they will have the willingness to buy, and the price of 30-50 yuan can make them what they see is what they get. "This is a very new attempt at consumption, and this is an opportunity. ”

In comparison, perfumes still account for a small share of the Chinese market, accounting for only 6% of the global market. However, according to Ma Xiaoyu's observation, although the act of spraying perfume is not so popular in China, everyone is very willing to hang a sachet or burn incense to make it smell good. With the rise of the younger generation of consumers, the perfume market will surely open up step by step. Today's Chinese women tend to have skincare, makeup and perfume in hand. "To win in China, skincare has to win because it has a high market share. But makeup and perfume are more about returning to the basics, testing the brand's ability to make dreams, and it must be fast, spiritual, and immortal. Buying this product is not buying a result. Ma Xiaoyu pointed out.

According to reports, in the future, L'Oréal China will continue to make efforts in all dimensions such as categories, products and channels, including tapping the potential of emerging categories such as perfumes, providing more diversified and high-quality products for different consumers, and strengthening consumer linkage through O+O (online + offline) channel innovation, etc., and plans to reach 500 million Chinese consumers in the next few years. In addition, L'Oréal has also released its "3S" strategy model, which will continue to increase its investment in the Chinese market in the areas of innovation, society, planet and team.

This is not only a continuous exploration of consumer demand, but also reflects the integration and understanding of the Chinese market by an overseas company that has been in China for 27 years.

But Ma Xiaoyu is reluctant to put too much emphasis on the concept of "localization". In her opinion, the core image of the brand is the persona of the brand, every brand is a person, and this persona should not be too localized, it is who it is.

For overseas brands, they should start from maintaining the core value of the brand, understand the brand spirit, deconstruct it in the most original language, and express it with what Chinese can understand at a glance. The core of the brand cannot be abandoned in order to cater to the current trend in China. Then we started to adjust our products and marketing tools. Ma Xiaoyu concluded: "The Chinese market is changing so fast that if you abandon your roots and just cater to the present, you don't know who you are. (This article was first published on Titanium Media APP, author | Xie Xuan, editor - Fang Yu)