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Seventeen years ago, an executive from an international company paid a visit to Shanghai Jahwa United Co. Ltd. — among China’s oldest and largest cosmetics firms — and implied its products lacked originality and competitiveness.
The chairman of the board at the time “was so embarrassed that he decided to develop something really special, really different, really impressive,” recalled Zhuo (Joe) Wang, executive vice president of Shanghai Jahwa, during his speech, which was peppered with poetry he had translated from Chinese into English.
Three years later, Herbalist (whose name literally means “an anthology of 100 herbs”) was born. The brand has since been built into a powerhouse based on a “three ‘i’ motto” — insights (“understanding your consumers’ needs and wanting to position a brand competitively, attractively and successfully”); integration (“making your products, distribution and marketing communication match one another and work together”), and insistence (“staying the course and avoiding self-inflicted setback”), said Wang.
The brand was sold with entry-level prestige positioning from the start.
“Most local Chinese companies are playing the defensive in the low and middle ends of the market. There are a few progressive companies also playing the offensive, moving upward to target the upscale, affluent consumers,” explained Wang.
Herbalist opened its debut store in Shanghai in 1998, and practically no sales were rung up the first day.
“We started with stand-alone, exclusive stores — our own stores. Why? Because we were forced to do that. None of the department stores wanted us to be in them,” he said.
Today Herbalist is in 1,001 doors, including Chinese department stores. The brand is expected to generate more than $400 million in retail sales this year.
Yet there’s still some resistance to it domestically. According to a recent survey, although an increasing number of Chinese consumers want luxury goods made for them, 85 percent of such consumers are still not ready to accept that sort of prestige brand made by a domestic company, said Wang, adding, “This perception creates huge hardships for companies like us doing luxury goods in China.”
Herbalist dreams of being a global leader. Four years ago, the brand launched in France, through Sephora, and has since entered Holland, Spain, Italy, Poland and Turkey. It’s been registering 40 percent on-year growth in Europe, yet considers it a challenge to create favorable perceptions in the mind of consumers.
“To Chinese companies, going global — especially going to the developed markets — is really a new and daunting task,” said Wang.