China's Lipstick Wars

BEIJING (TheStreet) -- In what might be a warning shot aimed at health and beauty multinationals, China's consumer product safety agency has announced that it recently seized 36 lots of imported, name-brand products.

Incoming shipments of Elizabeth Arden (RDEN) skin gel, Johnson & Johnson (JNJ) baby shampoo, Revlon (REV) lipstick, Kao shampoo, Fa soap and Maybelline (owned by L'Oreal (LRLCY)) nail polish were blocked at Shanghai and other ports for "substandard quality" or "cargo certification" problems in recent weeks.

 

The Chinese government's General Administration of Quality Supervision, Inspection and Quarantine announced the action March 8, saying all intercepted products had been destroyed before reaching stores.

In a story on Monday, March 10, the official People's Daily newspaper said the products were "the first 2014 lots on a blacklist of imported, substandard cosmetics."

The quantity of goods in each lot was not disclosed, but the announcement implied that more seizures of imported personal care products could be expected.

The announcement was unusual because it emphasized several famous, multinational brand names and affected more products than usual for Chinese dockside action against health and beauty imports.

No brands were named in a similar report last December that cited seizures affecting three imported shipments of perfume and mouthwash.

Among goods cited in the latest action, the Revlon lipstick was the only product cited as manufactured in the United States. In December, Revlon said that due to falling sales it would close its China operations, eliminating about 1,100 jobs.

The Johnson & Johnson-brand shampoo and shower gel recently stopped at Chinese docks, authorities said, was made in Singapore.

In general, business in China has been improving for multinational makers of personal care and cosmetics products, especially those catering to the country's growing middle class.

China's customs agency reported a 10.7% increase in the value of all cosmetics imported between 2012 and last year to nearly $ 1.7 billion. Chinese cosmetics exports, meanwhile, grew 7% last year to nearly $3 billion.

About half of China's imported cosmetics are made in Europe. But the value of North America's share of imports grew faster than any other region's last year, jumping 36% from 2012 to $239 million.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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