Why Marilyn Monroe’s favourite skincare brand, Erno Laszlo, doesn’t mind being caught right in the middle of the US-China trade war
- New York-based cosmetics maker Erno Laszlo says it’s worth the cost of paying tariffs in both directions as it eyes ambitious growth in China
- ‘The demand is massive,’ says CEO Charles Denton as the brand beloved of Hollywood legends opens its first store in China
New York-based skincare specialist Erno Laszlo is caught right in the middle of the trade war. The company gets hit by elevated import tariffs twice, once as it imports packaging materials from China to the US, and again as it sends its finished products in the other direction.
However, it considers this a price worth paying, such is the importance of its loyal Chinese customer base. Far from scaling back, the brand famously favoured by Hollywood legends such as Audrey Hepburn and Marilyn Monroe has big ambitions in mainland China and has just opened its first stand-alone store, in Shenzhen.
“The demand is massive. We believe we can be a billion yuan brand in China within the next three to four years,” said Charles Denton, chairman and CEO of Erno Laszlo after a launch event for the new shop on Friday.
“Clearly the trade war is a problem – the cost is much higher and we are making less profit. We get pressure on both sides – we buy most of our packaging, jars, bottles, cardboard etcetera, in China and import them into America, paying higher tariffs now, and when we ship our packed beauty products back to china, we have to pay extra again.”
The CEO has set an ambitious goal of opening 30 stores similar to the 82-square metre one that has just opened in Shenzhen. He sees it as a means to solidify the blossoming relationship the brand enjoys with its Chinese consumers, who now contribute more than 30 per cent of its business.
“I really do not think the economy will turn sour, but sentiment might affect people’s appetite for spending money. I am willing to bring our prices down or maybe bring in different versions of our products to make it accessible to consumers here. This is an investment to maintain our relationship with them,” said Denton.
The 93-year-old beauty brand first came to China – the world’s second largest market for beauty products – five years ago by setting up several counters in department stores through distributors and Tmall, the popular online marketplace.