Growth in China a key target for AmorePacific
Samsung Securities has forecast that AmorePacific will spend more in 2011 to achieve long-term growth in China, which it states is the second largest cosmetics market in Asia.
Big players making their mark
Japan-headquartered Shiseido reported good growth in the Chinese market last week, whilst it has also become one of the important markets for many global cosmetics companies, including Procter & Gamble and L'Oreal, which have strong footholds in the mid-range to high-end segments.
The French cosmetics giant even announced last year that China was one of the markets it will look to in its research and innovation strategy as it strives to understand and gain more customers.
"AmorePacific expects its China subsidiary to see sales surge 35 per cent and to post an operating margin of up to 5 per cent in 2011 - suggesting it will keep spending aggressively," said Shin Jung-hyun, analyst at Samsung Securities.
The report claims that AmorePacific will invest KRW7 billion (€4.6m) in the direct sales channel, which will begin to operate in China by the end of this year.
"We see the strategy as focused on achieving long-term growth, and feel it appropriate that AmorePacific is concentrating on volume growth in China rather than profitability at the moment," Shin said.
AmorePacific China saw its 2010 sales rise 22 per cent year-on-year to CNY1,429 billion (€935m) and the cosmetics manufacturer will reportedly look to continue this in what it views as a rapidly growing market.
The company will further its growth as it plans to launch its new product line, Sulwhasoo, in March and place it in more than five department stores in major cities over the course of the year, while aggressively marketing its mass-luxury Mamonde brand.
According to China's National Bureau of Statistics, the country's cosmetics market reached CY74 billion (€8.2bn) in 2009, up 16.9 per cent from the previous year. During the first three quarters of last year, it registered a slower gain of 16.3 per cent, the bureau said.