Targeting China Again with New Strategy
The Face Shop, a skincare and cosmetics affiliate of LG LG Household & Health Care, will take over a factory in China. The company seems to have revised its strategy to local production after withdrawing all of its offline stores in China last year.
LG Household & Healthcare announced on Jan. 9 that The Face Shop has signed a contract to acquire 100 percent stake in U.S. cosmetics company AVON’s factory in Guangzhou, China for 79.30 billion won (US$70.86 million). Except for cash and cash equivalents of 30 billion won (US$26.80 million), the actual acquisition price is 49.30 billion won (US$44.50 million). The deal is expected to be completed in February after approval by local government agencies.
AVON's Guangzhou factory is a large-scale cosmetics factory with a floor space of about 50,000 square meters. Its annual production capacity is 13,000 tons. It has current Good Manufacturing Practice (cGMP) facilities that meet the U.S. FDA quality standards and can produce basic and color cosmetics and hair and body products.
The Face Shop’s acquisition of AVON’s factory increases LG Household & Healthcare’s Chinese production base from two to three. The company has two factories in China, one in Hangzhou which produces cosmetics, and the other in Beijing which produces daily necessities such as toothpaste. Until now, only a few products of The Face Shop have been produced at Hangzhou factory.