HONG KONG: Johnson & Johnson (China), the US-based diversified healthcare company, is expected to see its sales jump on the mainland after forming an alliance with a Hong Kong retailer yesterday.

Under the co-operative agreement between the two firms, Johnson & Johnson granted Water Oasis three years' exclusive rights to distribute and sell its Neutrogena products in department stores on the Chinese mainland.

Water Oasis plans to set up 40 points of sale in the first year of its alliance with Johnson & Johnson, mainly in department stores in first-tier cities such as Beijing and Shanghai, and in cities in booming East China, said Water Oasis chief executive C. Yu.

The points of sale would extend to 100 in the second year and 200 in the third year, Yu added.

"Johnson & Johnson has a very good brand image in China and this will undoubtedly help us sell its Neutrogena products in the local market," Yu said.

A brand recommended by dermatologists, 20 Neutrogena products are sold in the mainland market with an average retail price of 100 yuan (US$12.5). Some of the products were rated as the most popular skincare products in the mainland's major cities such as Shanghai and Guangzhou.

"The first Neutrogena counter has already been set up in Shenzhen at the end of this March," Yu said.

Water Oasis, which retails H2O+ skincare products, has around 110 self-managed or franchised outlets on the mainland.

Cindy Lau, Managing Director of Johnson & Johnson (China), said she was upbeat about her firm's co-operation with Water Oasis.

"We believe that Water Oasis' strong sales experience and comprehensive sales network in China will help boost Neutrogena's sales there," said Lau, who also predicted that by the end of 2007 the product sales figure for Neutrogena would double that for 2006.

According to Lau, Johnson & Johnson would spend all revenue from the sale of its Neutrogena products on further marketing and promotion of the products.

"The money will be used to further strengthen our marketing and promotion campaigns executed in the first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, where Neutrogena products are being and will be sold," Lau said.

Water Oasis also expected to see better sales from Neutrogena products on the mainland than from H2O+, its major product.

"Neutrogena targets the mass market in China while H2O+ products mainly target medium and high-end markets. Therefore, Neutrogena has a huge space to further grow and make profit," Yu said.

Shares in Water Oasis have risen 24 per cent this year, outperforming an 11 per cent gain in the benchmark Hang Seng index. Shares in Johnson & Johnson have slipped 2 per cent over the same period, lagging a 6 per cent rise in the Dow Jones Industrial Average.

(China Daily 05/16/2006 page11)

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