时间：2022-08-09 01:08:27
Three years after acquiring Tjoy， Coty did not see the good results as expected. Instead， it failed to put this Chinese cosmetics brand into shape and had its own business slowed down by this asset-turned burden.
With the unbearable regression， Coty， the largest perfume brand in the world， decided to give up Tjoy. On June 4， the French company announced the halt of selling the skincare products of Tjoy. This means that another Chinese local brand of chemical products for daily use disappeared after being acquired by foreign companies.
At the same time， Coty announced its will to expand its business in China and restructure its Chinese business. It had already reached an agreement with Hong Kong Li & Fung Group. Li & Fung is going to take charge of the distribution of some key brands of Coty in China， including Adidas perfume， Rimmel cosmetics and Playboy.
“For Coty， giving up Tjoy is a choice out of the strategic and financial need，” said an expert in the cosmetics industry. After acquiring Tjoy， Coty’s business in China was severely affected by the ever-shrinking sales of Tjoy. This did not match Coty’s ambition in China. It needs to find a new starting point with no burdens to expand its business as big as possible.
The failure in integration
Ending Tjoy， as Coty has officially stated， is to “be more focused on the international brands with more development potentials in China”.
The connection between Coty and Tjoy could date back to December 2010. At that time， Coty and Tjoy reached an agreement， according to which Tjoy sold most of its shares to Coty. After that， Coty published a prospectus in June 2012， stating that it held 100% shares of Tjoy. The acquisition of Tjoy cost Coty 2.4 billion yuan in total.
After acquiring Tjoy， Coty also took back the distribution of its Adidas skincare products and perfume， which was originally held by Shanghai Jahwa， as well as the Rimmel business whose distribution right previously belonged to Kose. “Tjoy will provide the platform for the production and distribution in China，” said Coty in its IPO road show in 2011. This was the most important reason for Coty to buy out Tjoy.
What happened later seemed to prove the wise choice of Coty as the sale of Adidas skincare products and perfume got fast development through the distribution channels of Tjoy. An insider from Coty said that the sales of Adidas reached 200 million yuan in 2010. After embracing the distribution network of Adidas， the sales almost doubled to 300 and 400 million yuan in 2012.
Even though Coty benefited much from Tjoy， it did not do very well in the integration of Tjoy. A source who is now a middle-level manager in Coty after working in Tjoy for over 10 years， said： “The senior executives of Coty are quite different from Tjoy’s sales team in the operation ideas and concepts. This is an important reason for the failure of the integration of Tjoy.”
The difference in working methods has forced many senior executives of Tjoy to leave their positions， along with which the sales team of Tjoy went through great changes as well. This landed a heavy blow at Tjoy， which was centered on the salespersons. In the two years after being acquired， Tjoy’s sales dropped 50%.
“Objectively， Tjoy was already on a decline before being acquired by Coty， its sales volume had dropped to 800 million yuan or so，” an expert in the cosmetics industry said. “Therefore， the deal at that time was a result of the needs of both parties. Coty hoped to open up the Chinese market quickly through the channels of Tjoy. But it did not invest heavily into the marketing of Tjoy， rendering the Chinese brand vulnerable to competitors. Its market shares have been taken， causing the continuous drop in sales and profits.”
In spite of this， he does not believe that Coty did nothing to Tjoy. For example， it once launched ginseng-based products. However， the efforts in R&D did not bring back the previous glory as the business of the new products still struggled to get past the line between loss and profits.
Therefore， Coty has to reconsider its options in the mass channels of the Chinese company for a better profit margin， especially when its research has confirmed the better cash flow that can be brought by the change of distribution channels of Tjoy.
According to the latest financial report of Coty， Tjoy has become a drag for Coty’s business. The devaluation of this brand led to the loss of 253.3 million U.S. dollars in the third quarter of 2014 financial year.
Coty’s dilemma in China
Actually， before the acquisition of Tjoy by Coty， Maxam， Little Nurse， Dabao and other famous local cosmetics brands in China were all taken over by foreign companies. It seemed to be an inevitable fate for the Chinese local brands of chemical products for daily use to be acquired by foreign companies.
Another inevitable fate awaiting these acquired Chinese brands is that they were usually hidden from the market or encountered the improper management， leading to their complete disappearance.
The analysts said that the Chinese local brands’ doom to be acquired was because of their single business structure or brand portfolio， which is impossible for them to get bigger. In comparison， L’Oreal， Unilever， Procter& Gamble and other international giants follows the strategy of multiple brands. They can make reasonable use of their resources and dilute the cost. They also have the power to solve the risk.
After acquiring these local brands， many foreign companies did not spare too much time in understanding the Chinese market. They usually had great differences from the original teams of local brands in the way of thinking and selling. This led to the failure of integrating these local brands into their international systems and the loss of the vigor local brands previously possessed.
Before Tjoy， Coty once bought out another Chinese local cosmetics brand Yue-sai in 1996. This acquisition opened the door of Chinese market to Coty. However， this international giant has been suffering from being unaccustomed to the Chinese market. Its business was far behind L’Oreal and Estee Lauder.
Since Yue-sai did not have good development under Coty. In 2004， Coty sold it to L’Oreal and left the Chinese market. Its Adidas and Rimmel business were entrusted to Shanghai Jahwa and Japan-based Kose.
However， the smooth and fast development of L’Oreal and others in China made Coty realize the potential of the Chinese market again. It made up its mind to return to the Chinese market in the late 2000s. At that time， Tjoy， which has placed itself on the shelf， triggered the interest of Coty. However， this deal， like the one in 1996， did not help Coty to succeed in China.
After two futile cases， Coty is eager to change the status quo in China. However， the task is far beyond its own power. In the 2012 financial year， the emerging markets contributed 23% of Coty’s income. According to its plan， it will continuously get into more emerging markets and grow bigger there， increasing the proportion of emerging markets in total income to over one third.
“The Chinese market is an important part of the global strategy of Coty，”said Anita Yang， CEO of the Mass Cosmetics Business of Coty China. “Coty has a definite goal to turn China into one of its core markets in the world.”
Therefore， Coty announced on June 4 that the company is trying to restructure its business in China. It will be more focused on expanding its business in China. According to the foreign media， the agreement between Li & Fung and Coty gave Li & Fung the rights to sell some key brands under Coty， such as Adidas， Rimmel and Playboy.
“We hope to make use of our cooperation with Li & Fung to accelerate the expansion of our international brands in the mass channels for enhancing the position of Coty in the fastgrowing Chinese market，” said Coty’s CEO Michele Scannavini.