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Harvard Case Herborist: A Chine Personal Care Brand Goes Abr
Transcript of Harvard Case Herborist: A Chine Personal Care Brand Goes Abr
Summary of the Case
1998 first China cosmetic brand
Present in Europe, Hong Kong and Taiwan
Vision: high-end international -competitive cosmetic brand
Driven by other international competition
Challenges: distribution issues, competition, branding, recognition of philosophy -“natural” product
Fung Fook-tien, 1889
1905: VIVE Brand
Imported ingredients to ensure quality
1920s: 350 cosmetics, medicines, essences and disinfectants
1949: Communism and nationalization
"Shanghai Mingxing Daily Chemicals Factory"
1990s: Restructured = "Jahwa"
Multi-brand strategies and cooperative relationships
L'Oreal, Adidas, Sephora
Jawha & Herborist
Distribution & Marketing Strategies
Brazil : approx. $20,000 million
Middle Class expansion increase consumption rates.
HOFSTEDE BETWEEN CHINA, BRAZIL & FRANCE
Foreign Direct Investment into Hong Kong in 2001
Establishing 2 storefronts
After 2 years the stores had failed to breakeven due to lack of market knowledge
2nd attempt: Herborist partners with Manning Retail stores.
Begins Piloting its products in 10 Manning Stores located Hong Kong
In 2005 Jahwa entered a joint venture with Sephora.
2008 Sephora begins selling Herborist personal care products in France.
–Focus on product image a presentation to European Consumers
Ex. Hiring local marketing firms to design product appearance to suite the needs of the European market place
Result: Successful, the Herborist personal care line
Potential Strategies for Expanding Abroad
Effective Marketing &
Expanding into Brazil
Indirect export to Brazil -joint venture in Sephora
Similar model seen with the indirect export in France
Opening of stores - massive FDI opportunity.
By 2017 open 40 stores -recognized by Sephora to be top 10 countries of importance for sales
Advantages & Disadvantages
Top 5 Skin Case Countries -Brazil
Latin America has the biggest marginal growth out of all geographic areas.
President Dilma Rousseff focuses on social and rural projects
Big taxes on production cost, foreign exchange rate & credit
Leader in the inter-American community
7th largest economy (GDP) in the world, predicted to be 5th
caution and tightness on exchange rate
Economically cautious growing; 7.5% in 2010 to 2.7% 2012
large flow FDI
Increase mim. wage, decrease in prices
Increase in skin-care awareness
Increase in middle class
High crime rate
Regional leader in science technology
Government supports innovation and advances in laboratory in market
Strong labor force
Foreign Direct Investment into Hong Kong
Joint Venturing with major retailers.
I.E. Sephora and Mannings
Advantage: Knowledge of local Markets(including cultural, economic, and political information).
Selling through already established retailers.
L'Oreal threat: global cosmetic brand
Saturated high-end cosmetic and personal care market
Sought a differentiation technique
Mid- to High-range
Holistic traditional Chinese medicine
20 SKUs (1998) to 180 SKUs (2009)
Aggressive expansion techniques