CIIE: Cosmetics giant L’Oreal strengthens China supply chain to reduce risk of disruption

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‘We are working on this programme of localisation, trying to produce as much as we can, where we can in China,’ executive says

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L’Oreal is tweaking its global supply chain to protect against disruptions. Photo: Reuters

Mia Castagnone

Published: 5:15pm, 8 Nov 2024

L’Oreal, the world’s largest cosmetics company, plans to make its supply chain in China more resilient to reduce the risk of a global disruption, company executives said at the world’s biggest trade expo in Shanghai.

“We are working on this programme of localisation, trying to produce as much as we can, where we can in China,” said Pankaj Gupta, the senior vice-president of L’Oreal China and North Asia at the China International Import Expo (CIIE).

“[In doing so], our dependence on global supply chains, which are beyond China, mostly in the US or mostly in Europe, will reduce over time.”

The Covid-19 pandemic and wars in Ukraine and the Middle East have disrupted the global supply chain from Europe and the US to North Asia, Gupta said, which prompted the cosmetics giant to re-evaluate its operations.

The group has already made enhancements to its supply chain operations in Suzhou and Yichang and started using Guangzhou as a port after finding it was too reliant on Shanghai, which experienced severe slowdowns during Covid lockdowns.

“We have warehouses in places where we didn’t have before, [including] in the northeast of China, getting closer to the consumer,” Gupta said. “And for the big warehouses that we have, we’re also automating them, and this reduces our dependence on a lot of people.”

The company has also adopted technology to help plan for online sales.