L'Oreal arm to bolster open innovation
L'Oreal's flagship store in Shanghai. The year 2022 marks the 25th year since the brand's entry into the Chinese market. WANG GANG/FOR CHINA DAILY
L'Oreal Group has established its first investment company in China, a move highlighting China's open innovation and signaling continued confidence in a market it has operated in for a quarter century.
The founding of Shanghai Meicifang Investment Co Ltd was announced during a virtual signing ceremony on Sunday between the French cosmetics giant and Shanghai's Fengxian district, which is home to a dedicated cosmetics industry cluster dubbed "Oriental Beauty Valley".
L'Oreal said the investment arm will be dedicated to investing in innovative beauty technology in China, and will utilize its proprietary strategic innovation venture capital fund known as BOLD.
"For the 25th anniversary of L'Oreal China, we bring in our open innovation investment, demonstrating our commitment to the Chinese market, and our determination to empower the Chinese innovation ecosystem and to accelerate its business application in China," said CFO Christophe Babule in the online conference.
The venture is a key component of L'Oreal's technology transformation, which is engaged in investing in high-growth potential innovative tech companies in the areas of marketing, digital, research, data, supply chains and packaging.
BOLD, the in-house venture capital vehicle, will financially support the development of startup firms while providing access to L'Oreal's global ecosystem, according to the company.
The move represents another vote of confidence in Shanghai, which is on track to resume business operations temporarily held back by the current COVID-19 outbreak, said Fabrice Megarbane, president of L'Oreal North Asia Zone and CEO of L'Oreal China.
"The signing of the investment this time truly benefits from the rapid and effective implementation of Shanghai's resumption policies," Megarbane said.
"Against the background of our joint victory fighting against the epidemic, our investment also firmly proves L'Oreal's undoubted commitment to Shanghai and the Chinese market, L'Oreal's sincerity to co-create with industry partners in the ecosystem and L'Oreal's confidence in the Chinese market," he said.
L'Oreal has long been betting on beauty technology, and aims to nurture fledgling businesses through initiatives like the Big Bang Beauty Tech Startup Challenge launched three years ago in China.
It has teamed up with Fengxian's Oriental Beauty Valley since the second edition of the China International Import Expo, a flagship import-themed fair, and has taken it to an international level.
According to company figures, the program has drawn the participation of more than 1,000 Chinese startups and some 50 French startups, and seen the completion of 30 projects.
Megarbane said the investment will give rise to more local partnerships, talent nurturing and commercialization for meaningful open innovation.
"Being the witness, participant and contributor of China's reform and opening-up, we have benefited a lot from the constantly improving business environment in China over the past 25 years," he added.
Winning in China requires multinationals to compete through efforts to "design for China, decide in China, deliver at China speed and digitize China business", according to a report by global consultancy Bain&Co released last month.
The study cited how China-specific consumer insights have led to the development of the Eye Cream for Face product in a small tube for the L'Oreal Paris brand.
"In fact, all L'Oreal Paris innovations in China, whether in product formulation or packaging or both, are developed domestically based on Chinese consumer insights," said Bruno Lannes, a Bain partner and co-author of the report.