L'Oreal expands factory, bets on future in China

As leader of the Chinese makeup industry, L'Oreal has developed a wide range of products especially for Chinese consumers. L'Oreal Paris is the No 1 cosmetics brand in China, while Maybelline is the top makeup brand.

"We are locally producing almost all of the L'Oreal Paris, Maybelline and Yue-Sai-branded products that we sell in China," Perakis-Valat said.

"We still have a dream that the makeup market in China will keep growing rapidly, to become the largest in the world," he said, adding, "It's a realistic dream."

Compared with Japan and South Korea, China's makeup market holds great potential.

According to L'Oreal, on average, American women purchase three makeup products a year, French women buy two, and South Koreans five or six annually.

"In China, the figure is no more than 0.5 a year, which indicates a huge potential," said Perakis-Valat. "That's why we have heavily invested in China."

Although Perakis-Valat admitted that labor costs in China have risen, "we need to stay here, not only for the reason of being close to the most important market but also for the local talent".

S&P Consulting data show the total revenue of China's makeup market in 2011 topped 15 billion yuan and is expected to double within the next few years.

According to Euromonitor International, China's cosmetics market has maintained 15.4 percent annual growth over the past five years, far outstripping the global average of 4.7 percent.

Its researchers also found that while the US makeup market doubled its skin-care sector, in makeup in China it comprises only one-quarter of all skin-care sales.