Chairman of the Board of Directors, L'Oreal
CIIE: L'Oreal chairman speaks on beauty by consumption
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How is the cosmetics industry coping with the pandemic, a time when everyone has a mask on? We speak to L'Oreal Chairman Jean-Paul Agon to find out more. #China #CIIE #cosmetic
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About Jean-paul Agon
In a June 2020 interview, Agon expressed confidence in the beauty market's ability to recover from the coronavirus crisis, stating that L'Oréal has historically seen a strong bounce back after crises. He described the situation as a supply crisis rather than a demand crisis, noting that consumers in China were eager to buy beauty products once restrictions were lifted. Agon acknowledged that the speed of recovery would depend on the duration of the pandemic and its economic impact, but argued that beauty products are inexpensive items that consumers may use to indulge themselves after a period of frustration. In earlier appearances, Agon emphasized the importance of digitalization for L'Oréal, stating in 2018 that "the future of beauty will be digitalized" and that the company's profit margin had accelerated alongside its digital efforts. He also discussed the company's decentralized operational structure, which allows local adaptation to consumers. In 2015, Agon spoke about L'Oréal's "Sharing Care" program, which aims to extend social benefits to employees outside France, arguing that economic and social performance are intrinsically linked and that companies have a duty to share social advances globally.
Transcript (23 segments)
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Tianwei0:14
On today's World Insights, the China International Import Expo features companies marketing everything from furniture to cosmetics. What is the role of the consumer in re-energizing a global economy? And they think much more about the health, about well-being, and about the planet. This is Shanghai, China's biggest city, a global financial hub, and now the city that hosts CIIE, a gigantic import expo China runs to share its market opportunities and contribute to world economic recovery. Join me on the sidelines of CIIE to meet smart business people and brilliant minds and be inspired by their wisdom and can-do spirit.
Hello and welcome to World Insight from Shanghai. I'm Tianwei. 2020 upended our lives. It's a tough year for everyone. At the time of crisis, what can we rely on? On the sidelines of China International Import Expo, also known as CIIE, arguably one of the largest import expos in the world, I've been talking to multinational companies I find at a time of crisis they are relying on what really matters: their customers. Beauty for all because everybody is worth it, as Jean-Paul Agon, Chairman and CEO of L'Oréal, reminds us once and again. Amidst the pandemic, when everyone has a mask on, what does it mean for the cosmetic industry?
Mr. Agon, what a pleasure to see you once again.
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Jean-Paul Agon2:15
It's a pleasure for me, nice to see you again.
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Tianwei2:18
What do you think of this year? I mean this is a very challenging year for all businesses.
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Jean-Paul Agon2:25
Yeah, absolutely. You know, first of course this epidemic is really terrible and the first terrible consequence is more for the health and the safety of people around the world. There are also some economic consequences in terms of business, in terms of sales, but it's very contrasted around the world. Some parts of the world are doing great, like China. China is the example, maybe the only example of a country where we are doing really, really well. But in the rest of the world we are also getting better now.
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Tianwei3:07
So what do you think? What are the things people aspire to have? I mean when they are in the middle of the quarantine, when they're having the lockdown, when they are just coming out of the difficulties, what are the products that they really prefer at this time?
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Jean-Paul Agon3:25
Yeah, it depends if it's during the epidemic or after the epidemic, you know. During the epidemic, of course, women and people are consuming less makeup, of course, because when you are quarantined, when you can't go out, when you wear a mask, you don't wear that much makeup. But you use more skin care to take care of yourself, hair care also to feel good. But after the epidemic, I think that we're going to see a bounce back of consumption of products that are important for the quality of life and the quality of the relationship together. So personally, I'm very confident that when COVID will be gone forever, I think that we're gonna see a bounce back of the consumption of makeup and hair color and even fragrances. I'm optimistic for the future.
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Tianwei4:41
And it's nothing wrong to seal the face mask with the lipsticks that will be reflected on. Having said that though, what about business-wise? What has been your contingency plan over the past 11 months?
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Jean-Paul Agon4:52
You know what, you have seen the number that we had. We had the first quarter where we were slightly below, we were slightly negative, and that was in the first quarter because of what happened first in China and started to happen in Western Europe. But then the second quarter was more down because of the epidemic spread in Western Europe, in North America, and Latin America and India. But you have seen also recently that on the third quarter we were able to get back to positive territory. So we are back to growth, thanks to China of course, but thanks also to other parts of the world that are really getting better. And we are confident for the end of the year. We think that we don't know yet exactly because the epidemic is really unpredictable, but we hope that we will be able to stay in positive territory.
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Tianwei5:59
So how much is China market contributing to the overall economic recovery, should I say, on your numbers? And what about the rest of the world? Where are the other active areas?
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Jean-Paul Agon6:11
China is the most important part of the positive contribution, as you say, because China is the only major country in the world that was positive and it has been very positive, as you know, because at the end of September in total we were up plus 20% of our sales in China, which is by the way much more than the market itself because the market in China was positive, was slightly positive, and the plus 20 is much more than the market itself. So China is the major contribution and we are really happy that China was able to recover so fast. And the other major countries of the world are still in negative territory, but we hope that until the end of the year or the beginning of next year they will also be back in positive territory.
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Tianwei7:07
Tell me, what does that mean for your company when China says we want a higher quality opening up? Would that be good news for international companies like yours? What does it really mean?
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Jean-Paul Agon7:18
Yeah, absolutely. It's very good news. To be honest, it's not surprising news because you know I know China very well. I've come to China at least 50 or 60 times. I have created with the team, the Chinese team, the subsidiary in China, so I follow China very well and I know that for the past 20 years China has always been contributing to opening up of the world and developing a multilateral relationship. But it's true that this movement is accelerating now and I think it's extremely positive not only for L'Oréal but for the world itself because the world needs to be an open place where there are exchanges, trade between countries, between people. And by the way, this is also why we are so committed to CIIE because CIIE is the most symbolic event in order to maximize this global trend and exchange.
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Tianwei8:33
How do you as a business leader see some of the major changes in the world? For example, technology, for example geopolitics, all these uncertainties. What does that mean to you when you look at your plan, your implementations?
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Jean-Paul Agon8:49
Yeah, you know we have to permanently adapt. You know, you cannot control the evolution of the world, so we have to be very agile. I think the consequence for us is that more than ever we have to be very agile, really able to adapt to different situations, to different changes, and that's what we do. And it's true that in our industry it is not too complicated because you know we serve in every country consumers, so we don't do politics, we serve consumers. And so we serve American consumers, we serve Chinese consumers, we serve Brazilian consumers, and so we adapt to the evolution of the situation. First, what is important is that consumers still are looking for a better life, a better quality of life, and we contribute, we think, to this quality of life and this happiness. So the bottom line is that we try to adapt and evolve as the world is changing all the time.
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Tianwei10:04
As chairman and CEO, you need to get hold of the overall situation, you also want to know what is happening really on the ground. But I know you know where you are has to be quarantined or there were lockdowns from time to time. So how would you do that?
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Jean-Paul Agon10:22
Yeah, you know it's interesting because on one side we could not travel, but because we could not travel we had also more opportunities to communicate with more people. I'll give you an example. Until now we were doing one country manager meeting per year in Paris where we invited all the country managers, you know 100 people from all over the world, once per year in Paris in person. Because we couldn't do it this year, we organized it virtually but instead of doing one we did five or six. So in fact, you know, there is always a good side to any situation. So in fact I had more contacts with the people all over the world this year than I had in the past because of this virtual organization.
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Tianwei11:20
Right, well since we're talking about technology, let me ask you technology from another perspective. I mean e-commerce that has been extremely important for your industry, particularly here in China. As we speak, the Singles Day which is almost a day for shopping in China on November the 11th, 11/11, would happen. So that is a huge occasion. So how are you competing at this occasion and how to catch up with the latest trends, even minor trends in e-commerce, in order to appeal to markets of all different generations and levels?
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Jean-Paul Agon12:00
Now we do it very well. You know, in fact we have been one of the first companies to embrace e-commerce from the very beginning, especially in China. I remember that our team in China was the first company to invite Alibaba 10 years ago when it was still very at the beginning. Daniel Zhang was invited at the executive committee of L'Oréal in 2011. So it was the first company that he visited. And really, so we have been embracing e-commerce from the very beginning and I think that we are probably one of the best companies in terms of e-commerce. And I have to say that the team in China is doing an extremely great job in terms of e-commerce but also in these special events like 11/11 or June 16, etc. And I'm glad you remember all these numbers. Yeah, of course, there are more and more every year. But they do such a good job that our market share during this event is even much stronger than our market share along the year, which means that even in these special circumstances, our brands are stronger than ever and consumers are really looking for our products. So for us it's a great evolution.
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Tianwei13:31
Your business, especially your company, has been talking about 'beauty for all' for a long time and that's a beautiful sentence, shall I say. But on the other hand, over the past few years we've experienced many say ugliness of the world, we've seen the worst side of human nature and we've seen the weakest point of our human society, for example in facing up to the disease. So how do you see this reality and the aspiration?
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Jean-Paul Agon14:08
You know, I think that I'm not sure that the present period is worse than previous period. You know, humanity has lived also through very difficult periods of time. You know, in the 20th century, in the 19th century, in Europe, in Asia, it was life has never been easy. So I don't think it's more difficult today than it used to be. It's just different. And I think that's also why I'm so happy and proud to do the job that I do because I think that beauty products are bringing happiness, quality of life to billions of consumers all over the world. You know, a famous writer Dostoyevsky said that beauty will save the world. So I don't know if it will save the world but it contributes every day to saving a little bit your quality of life, your happiness. And that's why we are proud to do this job.
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Tianwei15:25
Thank you so much as always, Mr. Agon. What a pleasure.