"L'Oréal's first year of profitability in China finally came after a seven year capital injection of €98 million, excluding the money paid for the acquisitions of Mininurse and Yue-Sai," said L'Oreal China's financial director Christophe Babule.
After acquiring Mininurse - China's third-largest seller of skin care products - in December last year, L'Oréal gained more than a 5 per cent share of the Chinese market. Acquiring Yue-Sai - a Chinese semi-selective brand - earlier this year also helped L'Oréal expand further into the Far East.
The two Chinese acquisitions are to add 160 million units of annual capacity to L'Oreal's existing manufacturing capacity of 100 million units in 2004.
The new research centre, which will open its doors in Shanghai by the end of the year, is to focus on mass market products. An increased capacity will enable L'Oréal to produce Matrix -a mass market hair colour and care brand - for distribution in China later this year.
"The absence of L'Oreal's shampoo products indicates more growth potential for the company. When you look at the absolute figure of China's market, it's still relatively small but when you see how it grows in comparison with the rest of the world, you will see that anything could happen," said Babule.
However, the efforts being made on gaining a foothold in China's mass market does not mean L'Oréal will give up on its high-end market products and luxury brands in China.
In addition to Lancome - the leading luxury cosmetics brand in China - and Biotherm, L'Oreal plans to introduce Shu Uemura, another selective brand, into China this year.