In an interview with Bloomberg’s Angie Lau, Fabrice Weber, President, Asia Pacific of Estée Lauder Companies, claimed that, despite the slowing Chinese economy, the company remains positive about its performance in China and that, thanks to the company’s diversification strategy, a Chinese recession would not affect the company’s performance as a whole.
“Broadly speaking China is slowing down. It’s a reality. We look at it ultimately with a lot of positive confidence and patience. We believe that the fundamentals remain extremely strong for the future of beauty in general, and prestige beauty in particular, in China. This is a corrective moment. We also see consumers from China shifting channels, and therefore we see consumption from those consumers in places other than China. I can quote Japan as an example, Korea and even Europe. The future looks very bright for us”
Weber also categorically denied that the strength of the US dollar has impacted on the company’s market share. “Right now, we don’t see any impact of the dollar on our market share. We estimate that we have a quarter of the prestige market and it is very stable. The conversion is slightly impacted by the strength of the dollar and the slight devaluation of the yuan.
“As a company what we have been doing actively is diversifying. Diversifying geographies, channels, categories and brands. And right now, for instance, all the other emerging markets are bigger than China when it comes to size and they’re growing about 25 percent, so a great example of diversification that helps mitigate the problem.”
Weber refused to be drawn on possible targets for acquisition, but admitted that the company was ‘actively looking’ to acquire new brands. “We will always be looking actively at acquisition. The company announced four acquisitions in the fall of last year. They’re not Asian brands, they’re not necessarily the most meaningful right now in Asia but they will be, which again adds to the portfolio expansion and the opportunity to diversify the company even further.”
However, it seems unlikely that Lauder would consider acquiring any local Chinese brands in the near future. “As a company we are committed and dedicated to the prestige side of the market so we will look at luxury cosmetics only and we believe that one day there will be very significant players out of China,” he revealed.