General Mills says its new $15 million technical center in Shanghai, China, confirms its belief that the Chinese market presents a huge marketing opportunity for its cereals, snacks and other food products. The 75,000-square-foot center, one of several international technical centers it operates outside of headquarters in Minneapolis, Minn., gives the company the ability to take advantage of emerging consumer trends, build “bigger and better innovation pipelines”, and ensure food safety within its product lines. The center will develop snacks, convenient meals, yogurt and super-premium ice cream for Chinese consumers. Product R&D, food safety, nutrition research, and food sensory evaluation will all be housed there.

China’s fast moving consumer goods market grew 5.6 percent in terms of value for the 52-week period ending June 13, 2014, compared with the same period in the previous year, according to data from market research firm Kantar Worldpanel. Lower-tier cities were a major driver for the FMCG market’s total growth, with counties experiencing 8.9 percent or higher growth rates. Growth slowed down from 15 percent in the second quarter of 2011 to 4.7 percent in the second quarter of 2014. Consumers’ move to slow down their trading up to premium products is cited as one of the factors that caused the lower growth rate.

An arbitration committee in the city of Changde in China ruled against a labor complaint filed by the local chapter of All-China Federation of Trade Unions, a Community Party-sanctioned labor union, against Wal-Mart Stores, Inc. Union official Huang Xingguo said many of the complaining workers plan to appeal the arbitrator’s ruling, claiming they have not received fair compensation or timely notification about Wal-Mart’s closure of a store in the city in March 2014. Wal-Mart said it complies with China’s labor laws, treats its employees with respect, and appreciates that “the arbitrator has agreed through the decision.”

L’Oreal acquired Chinese cosmetics company Magic Holdings International Limited, which marks the beauty company’s largest investment in the country so far. L’Oreal chairman and CEO Jean-Paul Agon said the deal strengthens the company’s leadership in China’s cosmetics market, currently the world’s third largest. Magic, which is China’s leading facial mask manufacturer, reported revenue grew 14 percent to €166 million in 2013. Currently the world’s number 1 beauty brand, L’Oreal reported its sales in China grew 10.2 percent to 13.28 billion yuan in 2013, marking the company’s 13^th consecutive year of double-digit growth rate in the country.

L’Oréal Travel Retail Asia Pacific opened its Maison Lancôme store at the Beijing Airport’s Terminal 3, the world’s biggest airport terminal. Described by the company as an “important milestone,” the store features a podium design aimed at promoting the cosmetics company’s leading brands Advanced Génifique, Absolue, and Absolue L’Extrait. Featuring a high-tech skincare analysis machine, the store also includes the company’s first Wonderland merchandising showcase in Asia.

British food ingredients supplier Tate & Lyle PLC announced it is acquiring China’s Winway Biotechnology Nantong Co. Ltd, a producer of polydextrose specialty fiber. Polydextrose is a low-calorie bulking agent and dietary fiber. The acquisition provides Tate & Lyle with “an excellent platform” for accelerating the growth of its specialty fibers business in Asia Pacific. Tate & Lyle said it will invest in the factory and laboratories in Nantong (Jiangsu Province) over the next two years to expand capacity. The Nantong factory will be the company’s third polydextrose facility. The transaction is subject to governmental approval which is expected later in the year.

In response to customer complaints and a Chinese television report, Amazon China and online retailer China Dangdang have closed online stores purportedly selling fake brand-name skincare products. Dangdang shut two stores and refunded customer payments unconditionally.  Amazon said it had closed the stores in February after receiving complaints from customers. The fake products were knockoffs of L'Oréal and Estée Lauder cosmetics that were priced far lower than the real things. A representative of one of the closed stores admitted that the knockoffs came from a wholesale market in Beijing.

Inadequate government oversight of the food processing industry in China has forced Western food retailers like Walmart and Carrefour to take inspection matters into their own hands.  Walmart, for example, is boosting supplier inspections after a recent donkey meat recall – the meat turned out to contain fox DNA – and now conducts more DNA tests of meat in China than it does anywhere else in the world. The company expects to spend $16 million over three years to increase food safety in China after being stung by previous scandals there. The FDA is beefing up its inspection presence in China as well. The best solution, however, would be for the Chinese food processing industry to take more responsibility in food safety and for the government to strengthen its enforcement of standards.

Supermarkets in China are facing growing competition from online retailers for their business, according to a report by the Communist Party-managed “Beijing Youth Daily” newspaper. According to the report, e-commerce has changed Chinese consumers’ buying behavior, adversely affecting traditional retailers’ business, with at least 80 percent of supermarkets and other retailers reporting higher management costs and declining gross margins. Since 2012, foreign-owned retailers, such as Wal-Mart, Carrefour, and Tesco, have seen sales slowdown, forcing them to close some of their stores. These companies have focused on selling refrigerated and frozen products, which attract customers and offer higher gross margins; however, online retailers are also seeking to expand their presence in this segment.

Wal-Mart is changing its business strategy in China by closing some of its big-box stores and focusing on private-label products and imported goods. China is an important component of Wal-Mart’s international expansion goals, but the world’s largest retailer lags behind market leader Sun Art Retail Group Ltd. and state-owned China Resources Enterprise Ltd. The retailer forecast full-year profit that is lower than what analysts had expected for fiscal 2015. Factors that drove down the company’s revenue included weaker international sales, which fell 0.4 percent to $37.67 billion; the November–January operating income, which dropped 45.8 percent due to store closures in Brazil and China, and a charge related to the company’s termination of business deals in India. Walmart’s failure to understand Chinese consumers, who prefer foreign brands for reliability and quality, and its emphasis on “everyday low prices” concept hampered its ability to grow its business in the country, market analysts said.

China’s second-largest online retailer JD.com filed for an initial public offering of its shares in the United States. Formerly known as 360Buy, JD.com has raised $2.23 billion in the past six years, with notable investors including the Ontario Teachers’ Pension Plan and Saudi Arabia’s billionaire Prince Alwaleed bin Talal’s Kingdom Holding Co. Company founder and CEO Richard Liu controls about 46 percent of the company’s shares. In 2012, local media reports put a $7.3 billion for the company, which has tried to differentiate itself from rival ecommerce companies, including market leader Alibaba, by operating its own network of delivery providers and warehouses.

Chinese ecommerce company Alibaba Group Holdings Ltd. reported net profit of $792 in the third quarter. Revenue increased 51 percent to $1.78 billion, significantly slower than the 61 percent growth reported in the previous quarter. For the third quarter of the previous year, Alibaba reported a net loss of $246 million, due to the $550 million charge to purchase some of its shares from Yahoo Inc., which currently owns 24% of the Chinese online company. Alibaba, whose coming IPO is expected to value the company at more than $100 billion, outpaced its competitors Tencent Holdings Ltd., which grew 34 percent; and Amazon.com Inc., which reported revenue grew 24 percent.

Advertising spending in Hong Kong rose 9 percent to reach a record high of HK$43.1 billion in 2013, driven by the strong recovery in ad campaigns in the second half of the year. Data from media monitoring firm admanGo revealed banking and investment services was the top industry in terms of ad spending, while Procter & Gamble was the territory’s largest advertiser. In February 2013, the Hong Kong Advertising Association predicted a modest annual growth for the market, citing persistent factors affecting the economy, such as Samsung Electronics’ reduction of its advertising budget. Ad spending by cosmetics and skincare companies grew 10 percent to HK$3.6 billion, while the pharmaceuticals and healthcare industry’s ad spending rose 12 percent to HK$3.3 billion.

Foreign companies are finding it harder and less attractive to do business in China as economic growth slows down and costs rise. China’s government is expanding its restrictive economic policies to include more industries in addition to banking, brokerage, and Internet. As competition heats up further, with local brands developing high-quality and innovative products, some foreign companies, such as Revlon, Best Buy, and Media Markt, have left the country. Others reduced their exposure and operations, such as L’Oreal’s decision to stop selling its Garnier brand of cosmetics and retailer Tesco’s joint venture with a state-owned enterprise. Some companies that chose to stay are facing difficulties, such as IBM, which reported a 23 percent drop in China revenue in the last quarter of 2013; and French drinks company Remy Cointreau, which said sales of its Remy Martin cognac dropped by 30 percent in the first three quarters of 2013.

Wal-Mart Stores Inc. said it plans to upgrade its vendor compliance process in China, after it was accused by state-owned China Central Television of violating the country’s vendor permit policies to jack up its profits. As part of its compliance efforts, Wal-Mart will expand its inspection of vendors’ fulfillment documents for products sold at its stores and will collect more documents to verify product labels, test results, and product claims. Wal-Mart defended its compliance practices, saying accelerated product approvals are only for current suppliers. The company has encountered various obstacles in China, an important growth market for the U.S. retailer.

Geoduck clams, oysters and other two-shelled bivalves harvested off the coasts of Washington, Oregon, Alaska and Northern California have been banned from import into China, because of a contamination problem. Chinese government inspectors discovered that some of the clams were tainted with arsenic and a toxin that causes paralytic shellfish poisoning. U.S. officials are waiting for more information from China to determine the source of the contamination. The open-ended ban is seen as a major blow to the $270 million Northwest U.S. shellfish industry.

Walmart plans to develop small community shopping centers in China’s third- and fourth-tier cities, replicating its U.S. small-town community-based stores approach in the country. Walmart’s development strategy, which involves selecting locations in less popular cities including those in Guangdong Province, has been described as a smart move by market analysts, such as Wang Rong, vice president of Roland Berger Strategy Consultants’ Greater China office. With a Walmart supermarket or a Sam’s Club membership warehouse as the planned shopping centers’ anchor tenant, Walmart will not find it difficult to recruit other businesses as tenants. Despite market analysts’ endorsement of Walmart’s expansion plans in China, the retailer has been very cautious with its strategy, driven mainly by growing market competition. Commercial real estate investments in the country reached $82 billion in the first half of 2013 alone, with as many as 150 shopping centers opening or have been opened this year.

Wal-Mart Stores Inc. plans to expand its Sam’s Club wholesale operations in China as part of its efforts to grow its business in China, currently one of the retailer’s most difficult markets. At present, the company operates 10 Sam’s Club stores in China, a country of more than 1.34 billion people, while in the United States, with 300 million people, Walmart operates 550 Sam’s Club stores. Walmart China chief executive Roger Foran said his company plans to open more Sam’s Clubs in China in 2014, eventually reaching 10 new stores per year in 6–7 years.

Unilever’s Comfort brand of fabric softeners partnered with mobile app Face Gossip to launch a marketing campaign in China. Aimed at consumers who love doing the “selfie” self-portrait and self-taken photography trend, the campaign includes a game that automatically measures the brightness level of clothes worn by the users who take their self portraits. Comfort offers clothes designed by celebrity fashion designer Zhang Jingjing as prizes for five lucky participants who also have to share their photographs on China’s leading social media site Sina Weibo.

The growth of the cosmetics industry in China slowed down, with gross retail sales reaching $21.94 billion, according to the report “China Cosmetics Industry Report, 2013–2016,” by search engine Reportlinker.com. In contrast, the cosmetics market in the country saw faster growth rates in the start of the century, with sales of beauty and personal care reaching $24 billion in 2010, according to a report published in the July 2013 issue of the “Cosmoprof-Asia” magazine. At present, foreign brands dominate with local cosmetics market, with the top 3 —L’Oréal, Olay and Mary Kay —together accounting for 12.45 percent of retail sales, according to the Reportlinker.com report.

L’Oréal’s sales in China grew 12.4 percent year on year to RMB12.05 billion in 2012, according to market research firm ResearchMoz. Data also revealed rivals Olay and Mary Kay combined accounted for 12.45 percent of the cosmetics industry’s retail sales. Local brand Shanghai Jahwa, with its popular product lines Liushen, Herborist and Maxam, is competing quite capably with its bigger international rivals for share of China’s beauty market. Overall, retail sales grew 21.5 percent YoY to RMB134.01 billion, with skin care sales growing 9.9 percent to RMB80.48 billion, making it the market’s largest segment.

Johnson & Johnson appointed Jesse Wu as chairman of its J&J China business unit as part of the company’s reorganization of its management team and business operations in China. Wu will be reporting directly to Johnson & Johnson chairman and CEO Alex Gorsky. Also part of the company’s reorganization in the country, each general manager of the company’s China units will report to Wu although the units will still be responsible for determining their respective business strategies.

Unilever launched its third China manufacturing plant in Pengshan County in the country’s Sichuan Province. With a total land area of 27 hectares, the manufacturing site’s first phase will be a $48.7 million detergent production facility capable of producing more than 200,000 tonnes. Aside from catering to the China market, the Sichuan facility will supply products to other countries.

Estée Lauder's Osiao brand of beauty products for Asian women announced its endorsement deal with actress and singer Miriam Yeung. As brand ambassador, Yeung will be featured in the brand's advertising and advertorials, public relations, in-store, and on the Osiao website. Launching in October 2013 issues of beauty magazines, the campaign will highlight the brand's Inner Radiance Concentrate and Inner Radiance Beauty Tablets product lines.

Stevia producer GLG Lifetech announced it is working with state-owned China National Cereals, Oils, and Foodstuffs Corporation, the largest food company in China, on three major healthy food and beverage formulation projects. Two of the projects cover dairy products for the COFCO Mengniu Dairy business unit and one involves the company's China Foods subsidiary, according to GLG investor relations head Stuart Wooldridge. China's government is concerned about the increase in number of obese people in the country to more than 200 million, while those diagnosed with diabetes have reached 90 million. As part of its deal with COFCO's Nutrition and Health Research Institute, GLG will supply stevia ingredients and technologies and help the Chinese company develop products with zero or reduced sugar content.

Tea manufacturers and retailers have a key opportunity to increase sales through premiumization and a deeper understating of the evolving preferences of consumers, according to researcher Euromonitor. Tea is by far the most consumed beverage in the world, far outpacing water, coffee, carbonated drinks, etc., especially in China, India and Pakistan. But that high level of consumption is not really reflected in sales, which at $40.7 billion a year lag far behind coffee at $75.7 bullion and carbonate drinks at $183 billion. Consumer tea preferences are changing: they are switching from unpackaged tea bought in open-air marketplaces to branded teas sold in stores. And the fact that tea is appealing both in brewed and bottled form makes it “ripe for customization and premiumization in all channels” – and a “huge amount” of long-term growth.

British supermarket chain Tesco has abandoned attempts to make a profit by itself in China, and is pursuing a partnership with China Resources Enterprise Ltd. Retail analysts say the move by Tesco is an acknowledgement that it -- like other foreign retailers -- had a tough time negotiating with suppliers in a “fast-growing but tricky market”. CRE has an intimate knowledge of local customers and an established supplier and distribution infrastructure. The joint venture would have sales of $15.6 billion, with CRE and Tesco’s interests pegged at 80 percent and 20 percent respectively. Tesco would merge its 131 stores with CRE's Vanguard unit, which operates 2,986 mainly hypermarkets or supermarkets across China and Hong Kong.

Nestlé opened two new factors in China as part of its expansion of its business in the country by growing its range of local and global brands. Nestlé CEO Paul Bulcke attended the opening of the Nescafécoffee factory in Shandong Province and the Yinlu Foods factory in Anhui Province. Part of Nestlé’s joint venture with China’s leading manufacturer of ready-to-eat peanut milk and ready-to-eat rice congee, the Yinlu Foods factory created more than 2,000 new jobs.

Chanel is the most sought-after global luxury brand in China, according to the second edition of the study World Luxury Index China. Data showed the brand has overtaken rival Louis Vuitton, due mainly to increased consumer interest in various product segments. Also, Louis Vuitton’s ranking is limited by the fact that interest in the brand comes mostly from the fashion market. Also, the report showed that interest of China’s consumers is dominated by automobiles, 53.5 percent; beauty products, 22.7 percent; and fashion, 14.9 percent. In the beauty segment, Estée Launder, Lancôme, and Dior have retained their spot as the top 3 brands, with Lancôme overtaking Dior at the number 2 position. Skincare accounted for about 60 percent of all beauty-related searches, according to data from the report.

Stocks of cosmetics and personal care products companies gained 32 percent in 2013, according to market research company IBD. Leading the industry’s expansion are anti-aging products maker Nu Skin Enterprise, which gained 19 percent, and Peers Prestige Brands and Inter Parfums, both of which rose 13 percent. In the United States, the industry achieved $68.7 billion in sales and $433.4 billion globally in 2012. Sales in the US are forecast to grow 3–4 percent over the next five years to reach $81.7 billion by 2017, according to Euromonitor International. Growth in the emerging markets has made up for the slowdown in Europe, North America, and Japan, and global sales are forecast to expand around 5 percent yearly to reach $562.9 billion by 2017.