While most multinational companies simply create new products specifically for the Chinese market, the Estée Lauder Company takes further action working on a new line specifically designed for Chinese customers. Beginning this October, Estée Lauder is going to launch a new cosmetic brand, “Osiao,” at select specialty stores in Hong Kong. According to the New York Times, this will be the 13th brand from Estée Lauder’s line that is sold in China. The article discusses the reasons why Estée Lauder decided to develop a new line of skincare products in the same market. It’s a long-term plan to focus the company’s resources on markets with the greatest growth potential. Asia is now one of the company’s fastest-grown regions. Osiao is a part of its expansion plan, to establish it in China, and then market it elsewhere in Asia. Estée Lauder wants to build China as its “second home market.” Additionally, an east-meets-west beauty brand will give Chinese consumers “a sense of being local, of being really dedicated to them,” says CEO Fabrizio Freda.
While other brands of the company are already sold in China, the firm positions Osiao as a luxury brand, and unlike perfumes or other color cosmetics, it’s dedicated to skincare especially for Chinese people. The company has been examining Asian skin types for years and has conducted extensive market research. In the process, the firm learned that local women value clear, bright skin; hence the claims the brand will “help renew skin’s youthful radiance.” With customers interested in medicinal plants, the company has included Asian herbs and mushrooms in products.
Product development seems a good strategy for Estée Lauder to succeed in China, while their new product prepares to step into further diversifying their line and business in Asia. Not only is China becoming the main market in Asia, but the investigation and examination of skin types done by Lauder can establish a very good foundation for its expansion in the Asian market. The timing of this new venture in a high-end market is perfect because right now China’s government is striving to shift its economy from manufacturing toward consumerism. In addition, using a different positioning strategy is smart to attract new customers. It avoids the competition from the same parent company, but creates different features to appeal to customers at the same time.
However, there are still some concerns as mentioned in the article. First of all, analysts note that “there might be a question of credibility.” This means that persuading the Chinese consumers into buying a new brand that is designed for them by an American company would be more difficult than simply promoting its global best seller to the Chinese market. On the other hand, Osiao has to face a lot of strong competitors, not only from Europe and America, but native Asian brands such as “Aupres,” designed by “Shishedo,” which is a skincare line that focuses on the Chinese market. Also, because the size of the premium market is narrow, the revenue growth will be limited.
Product development within the Chinese market is a good idea for this company and will help the diversification in the Asian market. As long as they position the brand appropriately, they will build a new customer base. Though it will be initially strange for the Chinese audiences who may hesitate to purchase, the company can use its well-known reputation from their many other brands to convince these Chinese consumers. Finally, I would recommend the company make Osiao more individualized so that it may build customer loyalty and make it different from other high-end beauty brands. The company, as well as thousands of Chinese faces, are about to be revitalized.
