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Amorepacific Partners with Alibaba to Attract More Chinese Consumers
en.hangzhou.com.cn  2019/09/20 14:38  China Daily

South Korean cosmetics company Amorepacific Group is consolidating its digital footprint in China by forging a strategic partnership with Alibaba Group Holding Ltd and setting up a dedicated office for better engagement with the Chinese internet giant.

The company behind leading beauty brands from Sulwhasoo to Laneige is looking to incubate new products tailored to the Chinese market, facilitate online-to-offline sales, gain precise consumer insights and explore opportunities in overseas markets.

Amorepacific's special liaison office was established in Hangzhou, where Alibaba has its headquarters. The deal is a sign of its intention to unlock the potential of the beauty market through smart adoption of big data, said Amorepacific China President Gao Xiangqin.

"Digitalization has been an ongoing area of investment for us in the past several years," said Gao."E-commerce is an avenue we value a lot and will be our business focus from now on."

Ideally, the Amorepacific-Alibaba office is designed to shorten the average length for new product introduction to six to nine months, from the typical 24 months by many Japanese and South Korean cosmetic companies, said Hu Weixiong, general manager of fast-moving consumer goods practice at Alibaba's Tmall site.

"In the early stage, the office can enhance coordination between Alibaba and Amorepacific's headquarter office and hopefully speed up the decision-making process for the introduction of new products in China," said Hu.

The collaboration is also expected to draw expertise from Tmall Innovation Center, Alibaba's in-house product co-creation program, which relies on Alibaba's 674 million active users to extract consumer insights and conduct a myriad of pre-launch tests from pricing to packaging, Hu noted.

China is Amorepacific's second largest market after South Korea, recording revenue of 7.26 billion yuan ($1.02 billion) last year, official figures showed.

Foreign brands are flocking to ride China's digital wave through similar partnerships. In April, Japanese cosmetics brand Shiseido entered into a partnership with Alibaba through a similar liaison office and an initiative to jointly develop a new shampoo targeting young female users.

As retail sales growth for the first seven months of 2019 slowed to 8.3 percent in China, retailers are moving to strengthen digitization along the retail value chain through smart supply chain management powered by technology and big data, with a laser focus on experience, a report by global consultancy PwC released on Tuesday said.

"The drive for customization is to better navigate the Chinese market and understand consumers whose disposable income and shopping preferences vary greatly," said Jennifer Ye, PwC China Consumer Markets Leader. "Foreign brands are hoping to leverage such collaboration to grasp the 'touch moment' of local shoppers in a bid to exert a long-term influence."

It is trend-following young consumers who are driving cosmetic companies to become the avant-garde advocates of localized innovations, said Jason Yu, general manager of consultancy Kantar Worldpanel China.

"Emerging beauty trends normally debut online. In the foreseeable future, companies in other sectors are likely to follow suit and invest in the marriage of digitalization and customization," Yu said.

Author: Editor:Wang Yueyun
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