L'Oreal halts sale of Garnier brand in China

PARIS (AFP) - French cosmetics group L'Oreal said on Wednesday it was halting the sale of its Garnier brand in China, the latest Western company to get cold feet over a chill in luxury sales.

In order to reinforce its leading position on the Chinese cosmetics market "...the decision was taken to halt the commercialisation of the Garnier brand in China," the company said in an email to AFP.

L'Oreal said it would now focus on its L'Oreal Paris and Maybelline New York mass market brands in China, which have been enjoyed better sales there than Garnier.

The Garnier brand accounted for only slightly more than 1.0 per cent of the 1.5 billion euros (S$2.6 billion) in sales that the L'Oreal group recorded in China in 2012, which made the French company the top player on the Chinese market with a 17-per cent share.

Western companies believe that the beauty and personal health products market in China, which accounted for more than a quarter of luxury goods sales there, still has enormous potential.

However, the sector has recently felt the chilling effect of a Chinese government clampdown on corruption, which often takes the form of bribes with luxury goods.

Sales growth of beauty and personal health products in China slid to 10 per cent in 2013 compared to the 15 per cent registered in 2012.

L'Oreal has not been the only company to reposition itself on the market, with its US competitor Revlon announcing at the end of the year that it was shutting down operations in China.