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L’Oréal opens its largest factory in Cikarang

Bottling beauty: Workers in a section of L’Oréal’s new cosmetic factory prepare skin and hair care products, of which 70 percent will be exported

Mariel Grazella (The Jakarta Post)
Jakarta
Thu, November 8, 2012

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L’Oréal opens its largest factory in Cikarang

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span class="inline inline-none">Bottling beauty: Workers in a section of L’Oréal’s new cosmetic factory prepare skin and hair care products, of which 70 percent will be exported. The new factory was officially opened in Cikarang, West Java, on Wednesday. (JP/Mariel Grazella)

After roughly two years of construction, French cosmetic giant, L’Oréal officially opened the company’s largest factory in the world in Cikarang, West Java, on Wednesday, heating up the machines to achieve an ambitious goal of gaining one billion new customers in the next decade.

David Quetin, factory director of L’Oréal Indonesia, said that the Cikarang operation would manufacture 200 million units of skin and hair care products in 2013, 70 percent of which would be exported.

He added that this year, the company wanted to manufacture around 140 million units, some of which were produced in their old factory in Ciracas.

“We will manufacture 12 million units in each of the last two months of this year in the new factory,”
he said.

The factory, which sits on 66,000 square meters in the Jababeka Industrial Estate in West Java, was cost ¤100 million (Rp 1.2 trillion) to build.

Meanwhile, Industry Minister MS Hidayat, who attended the inauguration, said that the new factory would help fulfill growing domestic and international demand for cosmetics.

“The cosmetics industry did well in 2012, with domestic sales reaching Rp 9.7 trillion, a 12.9 percent increase from the Rp 8.5 trillion posted in 2011,” he said.

He added that exports in 2012 were expected to touch $406 million, up 20 percent from the $340 million attained in the previous year.

He further said that the factory helped answer the challenge posed by a deluge of imported cosmetics entering the domestic market, as demand for premium cosmetic products soared.

“However, the cosmetic industry faces another challenge, which is heavy reliance on imported raw materials,” he said.

Chatib Basri, the chairman of the Indonesian Investment Coordinating Board (BKPM), pointed out that the factory signaled Indonesia’s investment potential.

He noted that the potential lied in the growth of the “consuming class”, or people with purchasing power, whose numbers are expected to rise to 135 million people by 2030 from a current figure of 45 million.

Indonesia, with a population of 238 million people, has witnessed a middle-class boom as the country has maintained a GDP growth of above six percent this year and the last.

“We are looking forward to more investments from France and European countries interested in making Indonesia their production base,” Chatib added during the inauguration.

Jochen Zaumseil, executive vice president for L’Oréal in Asia-Pacific, said that “Indonesia would become even more important” for the cosmetic giant as the middle class pumped up cosmetic consumption, hence triggering growth in the cosmetic market.

“With an average growth of 10 percent [annually], the [Indonesian] beauty market by 2025 would be worth ¤5 billion, which is the total worth of the Asia-Pacific beauty market today,” he said.

He added that the Indonesian beauty market was currently worth ¤1.5 billion.

Vismay Sharma, president director of L’Oréal Indonesia, said that in the past six years, the company’s sales in Indonesia have grown four times in value and 10 times in unit sales.

“Indonesia will be the 15th-largest cosmetic market in the world by 2025,” he said.

He added that the company aimed to appeal to a large part of the 90 million people entering the consuming class in the next 20 years.

The robust market, he added, would enable the company to keep up its growth rate, which is three times above the 10 percent annual growth the domestic cosmetic industry has experienced.

“Next year, we estimate to grow by 30 percent, which is what we have been achieving in the last few years,” he said.

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