US cosmetics brand Mary Kay is in talks to buy a office building in Shanghai's central Jing'an district, in a bid to expand in the China market, bucking the trend in a country where rivals are looking at downsizing, The Wall Street Journal reported on Tuesday.
The Texas-based direct-sales beauty company said in an e-mailed statement that it is in negotiations to buy the Point Jing'an, an 11-story building in the central Jing'an district of Shanghai. The price could reach 820 million yuan ($135 million), people briefed on details of the sale told WSJ.
Coco Zhang, a spokeswoman for Mary Kay in China based in Shanghai, said it would be the company's first office building purchase in China. The brand entered China in 1995, focused on beauty suggestions, skin care and makeup products.
The company awards pink Mercedes Benzes to its top salespeople in China.
Mary Kay China became one of the leading cosmetics brands in China's second- and third-tier cities by 2011 according to research company Kantar Consumer Panel Report. Sales revenue in China in 2011 was 55 times higher than in 1999.
China has been a thriving market for international cosmetic brands, but fierce competition and pressure brought by online sales are cutting profits.
French cosmetics giant L'Oréal SA said in January it would no longer sell the Garnier mass market brand in China so that it could focus on its L'Oréal Paris and Maybelline lines.
Rival Avon Products Inc has acknowledged missteps in China and in its most recent quarter reported a 67 percent decline in revenue for its operations in the country. Company executives have said that they are strategizing on how best to compete in China.
The seller of the Point Jing'an is a joint venture made up of units from Hong Kong-listed firms Nanyang Holdings, Van Shung Chong Holdings and Celestial Asia Securities Holdings, according to a statement on the Hong Kong Stock Exchange website from late January. The joint venture purchased the property in June 2007 for 420 million yuan, the statement said.
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