TJoy gets little joy from association with Coty

TJoy products displayed at a supermarket in Shanghai. French cosmetics and fragrance group Coty said it will discontinue the TJoy brand to focus on international power brands that have more growth potential in China. Provided to China Daily

When foreign firms buy Chinese product lines, sales sometimes suffer

Recent attempt by a Chinese domestic brand to work with overseas retailers has reportedly fizzled, with French cosmetics and fragrance group Coty Inc announcing it would halt sales of the products of Chinese skin-care brand TJoy.

In an announcement released on Tuesday, New York Stock Exchange-listed Coty said it will "discontinue the TJoy brand to focus on the international power brands that have more growth potential in China", as Coty has just entered into an agreement with Hong Kong-based consumer goods trader Li & Fung Ltd, in which the latter will distribute several of Coty's brands in China, including Adidas, Rimmel and Playboy.

Michele Scannavini, CEO of Coty Inc, said that the company expects its cooperation with Li & Fung to help expand some of its international brands into mass channels, "strengthening Coty's position in the fast-growing market".

Gerard Raymond, senior executive at LF Asia, a business unit of Li & Fung, said it will provide its expertise to Coty in terms of the supply chain, including sourcing, manufacturing and distribution.

Coty completed the acquisition of TJoy at the end of 2010 with $400 million.

Coty's second-quarter results, released in February, showed that the net revenue of the company's skin and body care sector declined by $2.1 million, which Coty explained was mainly "due to a decline in the TJoy brand". In its third-quarter results, Coty reported that "TJoy continued to struggle" despite a new ginseng product line that was launched at the end of last year and the reorganization of its management team and distribution network.

According to Jason Yu, general manager of the global market research institution Kantar Worldpanel China, TJoy's market share in 2011 was 1.1 percent, the first year after it was acquired by Coty. Its market share in the latest 12 months up to the first quarter of this year was only 0.6 percent.

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