Mary Kay to invest US$25M in new distribution center in Hangzhou, China, as it expects sales to rise 30% this year compared with 20% increase last year; construction to take one year
September 21, 2011
– Mary Kay Inc. will build a US$25 million distribution center in Hangzhou, China as the country’s cosmetics market is expected to surpass the U.S. by 2013, Bloomberg reported Sept. 19.
The center will be the company’s only overseas facility, and will be completed within a year.
With 600,000 saleswomen operating in all but six of China’s provinces, Mary Kay hopes to take advantage of the increasing disposable incomes that rose 13.2% and 20.4% in urban and rural China, respectively, in the first half of the year, according to the country’s statistics bureau.
Addressing 40,000 sales agents, CEO David Holl said Mary Kay does not rely on infrastructure and that is why it has strong growth rates in China’s third- and fourth-tier cities. Tier-three cities are expected to see up to 14% growth, Holl said, whereas tier-one and tier-two markets will only grow by 2% and 8%, respectively, reported Bloomberg.
According to Euromonitor International, China’s beauty and personal products market could grow by 58% to 255 billion yuan (US$40 billion) from 2010 to 2015.
Holl said, the company expects it sales in China to rise by 30% in 2011, compared to the 20% hike seen last year. Globally, sales are expected to increase to $3 billion from last year’s $2.5 billion, and maintain low double digit growth into 2012.
Mary Kay’s investment in China has been around $100 million since 1995 and the company currently has the seventh highest market share of 2.9%. Top company Procter & Gamble Co. has a 16.6% market share.
The primary source of this article is Bloomberg, New York, New York, on Sept. 19, 2011.