Shu Uemura

PARIS — L’Oréal will become a majority shareholder in Shu Uemura Cosmetics Inc. by raising its stake in the company to 52.9 percent early next year.<br><br>The French beauty giant has held a 35 percent share of the Japanese firm plus...

PARIS — L’Oréal will become a majority shareholder in Shu Uemura Cosmetics Inc. by raising its stake in the company to 52.9 percent early next year.

This story first appeared in the November 20, 2003 issue of WWD. Subscribe Today.

The French beauty giant has held a 35 percent share of the Japanese firm plus international rights to the Shu Uemura brand outside of Japan since November 2000.

Nihon L’Oréal K.K., L’Oréal’s Japanese subsidiary, will acquire the majority shareholding in Shu Uemura Cosmetics Inc., manufacturer and marketer of Shu Uemura-branded cosmetics in Japan, in the beginning of 2004. L’Oréal will obtain management control of Shu Uemura, as well.

The amount L’Oréal paid for its increased stake was not disclosed, but industry sources estimate it to be in the $59.5 million to $71.5 million, or 50 million euro to 60 million euro at current exchange, range.

“Shu Uemura will now benefit fully from the research, industrial expertise, marketing innovation and commercial power of the group,” said Gilles Weil, president of L’Oréal’s Luxury Products division, in a statement. “This majority shareholding also enables L’Oréal to strengthen its position in the luxury sector in Japan and boost the pace of this brand’s expansion all over the world.”

In 2002, Shu Uemura registered sales of $136.7 million, or 14.9 billion yen, up 8 percent year on year. Fifty-four percent of its sales were rung up in Japan. Of the 46 percent generated internationally, 83 percent came from Asia.

Shu Uemura’s domestic business is expected to reach $83.4 million, or 70 million euros, this year, L’Oréal said in a statement.

The firm added the agreement “confirms the commitment of the L’Oréal group to developing Shu Uemura — the first Japanese brand in its portfolio — as a major global brand, while highlighting its specific identity and authenticity, and to making Tokyo the group’s third center of creativity after Paris and New York.”

L’Oréal, which last year posted total sales of $17 billion, or 14.3 billion euros, also has in its portfolio beauty brands, such as Lancôme, Giorgio Armani, Ralph Lauren, L’Oréal Paris, Garnier and Maybelline.

— Jennifer Weil

Mary Kay Criticized

WASHINGTON — Mary Kay Inc. is facing sharp congressional criticism over a company mandate making its sales staff in China pledge to abide by all local laws, particularly the ban on practicing Falun Gong.

Falun Gong, which describes itself as an organization promoting spiritual meditation and exercise, was banned in 1999 by the Chinese government. A spokesman in the Chinese embassy in Washington called Falun Gong “an evil cult.” However, Falun Gong officials argue the Chinese government routinely persecutes, tortures and murders practitioners, of which there are upward of 100 million in China.

Three House members active in international human rights issues this week wrote Mary Kay chairman and chief executive officer Richard Rogers about the pledge the company said it briefly required its 120,000 Chinese sales associates to sign.

International Relations Committee vice chairman Chris Smith (R., N.J.), California Rep. Tom Lantos, the top Democrat on the panel, and Rep. Ileana Ros-Lehtinen (R., Fla.), chairman of the Subcommittee on Middle East and Central Asia, condemned the pledge for including membership in Falun Gong as an example of an illegal activity.

The congressional members accused Mary Kay Inc. of playing “an active role in enforcing China’s repressive laws related to participation of Chinese citizens in religious and spiritual organizations.”

“While we are not asking Mary Kay Inc. to aggressively confront China’s restrictive laws related to Falun Gong and other religious and spiritual movements,” the members of Congress wrote, “we are shocked that an American company, particularly one which purports [in its mission statement] to put God first,” would be willing to enlist in the Chinese government’s brutal campaign to identify and persecute members of a particular spiritual movement.”

A Mary Kay spokesman said the company instituted the pledge in late summer in response to a distributor in China “engaging in multiple illegal activities.” The spokesman declined to enumerate the crimes, but they were unrelated to Falun Gong.

The pledge, prior to the congressional outcry, was revised. “Falun Gong was simply used as an example” of an illegal activity, the spokesman said. “We have revised our sales force agreement to ensure that sales force members operate their Mary Kay business in accordance with all local laws. The revised agreement doesn’t mention any group or activity.”

— Joanna Ramey

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