Are we in Europe to make noise or to make money?

Are we in Europe to make noise or to make money? asked Wang Zhuo deputy general
manager of Shanghai Jahwa Chinas oldest and largest manufacturer of cosmetics and personal care
products. Among the companies in Jahwas portfolio was Herborist a brand of personal care
products. Following slow but gradual growth in the domestic market Herborist had made its first
foray into international markets in 2008 by partnering with French cosmetics retailer Sephora.
Herborist had been reasonably well received in France and by 2010 the company made plans to take
the brand into other European markets. Wang was encouraged by Herborists early performance
abroad. He knew his chairman Ge Wenyao had plainly stated on several occasions that his dream
after 25 years of leading the company was the creation of a truly universal cosmopolitan personal
care brand. But in 2010 the skin care market globally and in China was dominated by European
American and Japanese global brands. Before Herborist could aspire to be a force internationally it
needed a plan to make progress against global brands domestically.
Shanghai Jahwa and Chinas Personal Care Industry
Shanghai Jahwa traced its origins to 1898 when a young scientist with an entrepreneurial bent
Fung Fook Tien founded a cosmetics business in Hong Kong under the name Kwong Sang Hong. It
soon expanded to the mainland building production facilities in Shanghai Guangzhou Hankou and
Yunghou. The firms first brand Shanghai Vive (Two Girls) thrived in a market dominated by
foreign products (see Exhibit 1 for a photo of the packaging). It achieved international recognition
receiving a gold medal at the 1915 Panama Expo in San Francisco. Top artists at the time designed its
posters calendars and labels which became prized collectibles. 1 The turbulent events in China
during the twentieth century forced the business to change many times sometimes at great cost and
sometimes to its advantage. The conflict with neighbors in 1937 worked to the cosmetics industrys
benefit because a backlash against foreign products led to demand for products manufactured
domestically including toothpaste cold cream and eau de toilette. After the 1949 victory of the
Communist Party of China in Chinas civil war the Chinese assets of Fungs firm became a stateowned enterprise. Its manufacturing capacities under the name of the Shanghai Mingxing
Household Products Factory emphasized household chemicals (called Jahwa) and cleaning products.

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