Jocelyn Chan stars in Fancl campaign.

LONDON — Japanese cosmetics and dietary supplements company Fancl’s Asia business outside its home market has attracted great interest from potential Chinese buyers. has joined a group of more than 10 entities to lodge bids for Francl’s Asian business, which is owned by Hong Kong-based Chris Chan and valued at $1 billion by the potential buyers, according to Reuters, citing people with direct knowledge of the matter.

In August, Chan hired Morgan Stanley to sell CMC Holdings, the sole distributor of Fancl’s skin-care products in Asia outside Japan, which operates more than 200 stores in China and Southeast Asia.

Taobao and Tmall’s owner Alibaba and Tencent, a key backer of Pinduoduo, have also shown interest and could join a bidding group later in the process, the people said.

CMC is expected to finalize a shortlist for the second round of bidding by the end of this week and binding bids are due by the end of January, the report added.

Meanwhile, The Japan Times reported that Hillhouse Capital and Fosun Group are also looking at the Fancl business.

Hillhouse Capital is considering a joint offer with Perfect Diary’s parent company Yatsen Holding Ltd., which raised $616.9 million in its U.S. initial public offering on Nov. 19, becoming the first Chinese beauty group to list on a U.S. stock exchange.

Yatsen and declined to comment on the issue, while Fosun did not respond to WWD’s request for comment at press time.

Fancl was founded in 1980 by Kenji Ikemori as a result of the emergence of many skin problems caused by “negative” skin-care products in Japan at the time. A pioneer in clean beauty, its “preservative-free” products have been popular with consumers since launch, and gradually formed a matrix of cosmetics and nutritional supplements.

The brand believes that while external care is important to improve the overall quality of the skin, nutritional supplements should also be used to directly replenish the skin with the nutrients it needs to better metabolize the skin cells.

In 1996, Chan acquired the sole distributorship of Fancl’s skin-care products in Hong Kong and expanded the business rapidly with a chain store model. Singer Gigi Leung featured in several of the brand’s commercials to promote its “preservative-free” beauty concept, helping to brand to gain greater popularity in Asia.

Chen established Wutianjia Trade (Shanghai) Ltd. Co. in 2004 and opened the first beauty counter at Parkson Mall on Huaihai Road in Shanghai, officially introducing the brand to Mainland China.

China is the biggest market for Fancl’s Asia business. It has 190 stores in more than 30 cities in mainland China and has penetrated into not only major cities in the north, but also second- and third-tier cities such as Nantong in Jiangsu, Luoyang in Henan and Weihai in Shandong.

In Fancl’s newly proposed vision 2030 plan, the group plans to increase the share of overseas sales from 8.5 percent in 2019 to 25 percent in 2030. The China business is considered to be the core of Fancl’s overseas growth strategy.

The brand’s full potential has not yet been reached in China, especially with e-commerce.

CMC Holdings has yet not launched Fancl official flagship stores for its skin-care products on Tmall or, while Fancl’s dietary supplements business, which is operated directly from Japan, has been enjoying rapid growth since its launch in 2017. Its online sales grew threefold in 2019 and the brand now has 309,000 and 264,000 followers on Tmall and, respectively.

The brand also hasn’t done enough to move away from its Hong Kong heavy communication strategy to appeal to mainland China’s young and affluent consumers, who are influenced by a different set of celebrities and social media platforms.