L’Oreal SA, the renowned French cosmetics giant, continues to have a positive outlook on the Chinese market amid ongoing tensions surrounding ingredient disclosure requirements. CEO Nicolas Hieronimus believes in the potential of the Chinese market, attributing future growth to the expanding middle class. He reassured stakeholders that L’Oreal is dedicated to investing in China and can comply with Chinese regulations while still protecting its trade secrets.

Last year, the European Union expressed concerns about the extensive product information demanded by China for beauty companies like L’Oreal and LVMH Moet Hennessy Louis Vuitton SE to sell their products in the country. Chinese regulations require cosmetics firms to disclose data ranging from ingredient lists to manufacturing processes, raw material sourcing, and formula composition. Bloomberg reported that this information is stored in a database managed by Chinese authorities.

One major worry for European companies is the potential risk of revealing trade secrets under the pretext of ensuring product safety. However, there is currently no evidence of China misusing the data collected from cosmetics companies. France and China have collaborated to improve the regulatory environment, aiming to protect both market access and product safety.

Hieronimus also discussed the performance of travel retail, particularly in Asia. He anticipates a gradual improvement in sales trends, with the second half of this year showing positive signs. As travel restrictions ease and consumer confidence returns, the challenging environment faced by the industry in 2023 is expected to improve.

The release of L’Oreal’s annual results on February 8th will provide further clarity on the company’s performance and future prospects. Despite the current challenges and tensions, L’Oreal remains committed to the Chinese market and maintains confidence in its long-term growth potential.

For more information on L’Oreal’s perspective on the Chinese market, click here. To learn about the impact of Chinese regulations on the cosmetics industry, click here.