Gotha Cosmetics makes first major step into China as it sets sights on Asian expansion

14-Apr-2022 - Last updated on 14-Apr-2022 at 01:23 GMT

Gotha Cosmetics aims to tap into the post-COVID growth potential of China. [Getty Images]

Gotha Cosmetics has set up local production in China, where it believes it can tap into the post-COVID growth potential of the market while lessening the burden of rising shipping costs and delivery lead times.

Gotha is an Italian contract manufacturer specialising in colour cosmetics. It recently announced that it had acquired China’s iColor Group, marking the Italian firm’s first major step into the Asian market.

“I think strategically, a company that looks to the medium-long term has to be in Asia, and China is the largest market in Asia,” said Paolo Valsecchi, CEO of Gotha Group, in an interview with CosmeticsDesign-Asia.

Founded in 2005, Gotha is based in Northern Italy, near the city of Milan. In addition, it has sales and marketing offices in Paris, New York, Los Angeles, Seoul and Shanghai.

Having a presence in China was a priority for the company to serve its international clients who are all vying for shares in its booming beauty market, as well as gain new partnerships with local players.

The company knows that a local presence is crucial to better understand the local consumers and local brands.

Beyond that, its expansion in China has become increasingly important given the current state of shipping and transportation.

“With logistic lead times, cost of transportation is becoming so heavy, even for the multinational companies, it’s becoming very difficult to keep getting products from overseas,” said Valsecchi.

He told us that he felt that this was the “right time” for the company to start building its presence in Asia, specifically China.

“Now after COVID-19, people want to go back to normal, especially in China where the restrictions were very tough compared to other countries. I think the opportunity for us in this period is very important.

“The market, in general, is almost at the level of 2019. We can say that in 2021, the market recovered almost 100% of what it lost during the COVID-19 period… The market in any case is developing. Chinese consumers like products from France, Italy and the US. We are expecting to have great success in China, but of course, it will take time.”

By acquiring iColor, the company now owns two production facilities based in Suzhou and Shanghai that are equipped with advanced technologies and machinery enabling it to process a wide variety of product categories within emulsions, powders and anhydrous cosmetics.

For 2022, Gotha’s priority is to develop a strong foundation in China which it can build from.

“For the first year, our plan is to better understand the market and reinforce the foundation of the company in order to be ready as we approach the market. The year is mostly going to be dedicated to key activities, like formula transfers, strengthening the organisation and customer base,” said Valsecchi.

In addition to China, the company also has one eye on the wider Asian region, where it sees huge potential for growth.

While South Korea and Japan are important markets, Valsecchi told us he was more interested in South East Asia.

“I do see more potential in SEA. You have huge countries like Indonesia, Malaysia and Thailand. These are the countries that would be the next boundary of our development.”