Secure in his own skin

PUBLISHED : Monday, 11 April, 2011, 12:00am
UPDATED : Monday, 11 April, 2011, 12:00am
 

Three years ago, when the financial crisis swept across the world, Christian Courtin-Clarins made two important decisions for his family business - one, to delist it from the Paris stock exchange where it had been traded for 24 years; two, to focus on its development in Asia instead of America.

'When I came to the stock market it was because we were small compared with the others, and we needed the money to buy a new factory, to invest in research and to strengthen the company,' said Courtin-Clarins, son of the business founder Jacques Courtin-Clarins.

'We moved Clarins from the stock market in 2008 because we wanted to maintain the quality. You don't have the pressure of the shareholders who want to make more profit now and I can have my time to do everything long-term. We only have six shareholders - my brother and myself, two daughters of mine and two daughters of my brother. We are the only ones who take the dividends, so we look at what the company needs, and we don't need that many dividends as when we were in the stock market.'

It was also in 2008 that the Courtin-Clarins decided to focus on Asia, particularly China.

While they had already captured the major market share of the European skin care industry - 25 per cent of the skin care market in France, 30 per cent in the UK, Courtin-Clarins said the group had yet to gain a foothold in the diverse Asian market, where competitors like Estee Lauder, Clinique and Lancome had already gained substantial market share.

'We beat them in Europe, they are stronger than us in Asia, but I plan to be number one in China and Asia in 10 years,' Courtin-Clarins smiled.

Clarins now has about 55 counters in mainland China, mostly in first-tier cities. It has recently entered into a joint-venture with its mainland distributor to strengthen its retail networks, and plans to open three more flagship stores on the mainland this year. Duty-free sales are going to be more important than before, Courtin-Clarins said, as the number of travelling Chinese is expected to hit 70 million this year - almost the size of the entire French population.

The beauty industry in the mainland is essentially a skin-care market, Courtin-Clarins observed. He said 80 per cent of the ground floor sales of mainland department stores came from skin care products, 15 per cent from cosmetics and five per cent from fragrances.

In Europe, the combination of business is 50 per cent fragrance, 20 to 30 per cent skin-care, and 20 per cent make up. Traditionally, the ground floor of department stores are devoted to beauty products.

But Clarins is under no immediate pressure to launch China-specific products, apart from the whitening line that it made to satisfy the passion of Chinese women to look fair skinned. What Clarins wants to avoid is the hectic cycle of products in the Asian market - that one should create new products to boost sales volume, only to discard it next season and launch another product again.

'A lot of companies are doing 30 per cent of their sales with a new product, and they spend a lot of money to put new products up on the market. Me, I don't want to do more than 10 per cent,' Courtin-Clarins said.

'If I do 30 per cent, that means the old ones are not as good. For me a good product is one that after five years time you sell more and more. My father made the day moisturiser in the 50s, and today the sales are still increasing.'

'Skin care is something that you put into the skin. It is long term research. Sometimes I need three years to (produce) my new moisturiser if I want to make something really new. Sometimes you see there is a new ingredient and everyone goes to the new ingredient, and produces something six months after. It is impossible to do a good product in six months. Of course, if you want to do a middle (range) product, then that is easy.

'I try to make people loyal to the quality, and not only to the new-new. The new-new may be attractive - you may buy a new product, then you realise that it is not as good as the old one then you come back to the one you really like.'

Despite being a shareholder of L'Occitane, a body, face and home products group that was listed on the Hong Kong Stock Exchange last year as it made its first foray into the greater China market, the Courtin-Clarins family has no plans to apply for an initial public offering in Hong Kong. Rather than rapid expansion, Courtin-Clarins said they would take their time to build up two to three flagship stores in the mainland this year. Currently, Clarins flagship stores are established in key cities like Shanghai, Beijing and Chengdu.

The flagship stores, usually situated in a department store and backed up by a Clarins spa, are a showcase of Clarins' skin care tradition, and an important strategic exercise in capturing the luxury skin care market. One of Courtin-Clarins' daughters spent six months in Asia and six months in the US, as well as months in the department stores in France, to learn more about the business.

Reaching the age of 60 this year, Courtin-Clarins and his younger brother, Olivier Courtin-Clarins had been conscious of the family business succession. While acting as father and a mentor to their daughters' professional development, the Courtin-Clarins brothers also have a pool of candidates outside the family whom they could consider to take the helm of the business.

'You know, I am responsible directly for nearly 9,000 people. If you add up the people working for the department stores, you may add another 10,000,' Courtin-Christian said.

'I can't give something if they are not good, so they have to be good - my daughters and my brother's daughters...We need to be sure that our daughters have the capacity to run the business.'

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