TranscriptQuestion: How are western beauty brands expanding into the developing world?
Geoffrey Jones: As Russia and China and now India really opened up to global capitalism, to foreign firms, the very first reaction of consumers was a great hunger for western brands. Local products, if they were made at all were poor quality, dangerous, and absolutely lacking in aspirational value whatsoever. So, these new markets, these so-called "BRICs," have proved incredibly attractive to beauty companies and have grown incredibly quickly. China in 1980 didn’t have a beauty industry. Mao Tse-Tung had abolished it, as a matter of fact; it was regarded as a sign of bourgeois decadence. It’s now the fourth beauty market in the world. Let’s see, it’s the third biggest, Russia is eighth biggest.
So all of these markets have seen this in-pouring of western brands. The interesting thing is that over time we’ve seen, particularly in the case of China, growing confidence among consumers in traditional beauty ideals and practices, and this has increasingly obliged companies to consider and implement what we call local customization of various kinds.
So, in China today, there’s a huge demand for local ingredients, you know, ginseng skin cream, or whatever. And so even if a brand is a global brand, like Olay, or L’Oreal Paris, actually the ingredients often reflect a sort of local content. But it’s more than that. Companies have shifted, again in China in particular, from using western models—which a brand like L’Oreal Paris always did—to using local models. But it’s more than this, because they increasingly, or no pretty much always use local photographers, local agencies to do all the shots because they are very, very anxious to capture local feelings.
So, we live in a, I think, in an interesting period where globalization and tribalization are sort of dramatically interacting in the global industry. And I think nobody is quite sure about the exact balance and consumers are kind of saying different things. They’re saying, "Yeah, we want these fabulous Paris and New York brands because they are aspirational." But they are also saying, "We want them to be locally relevant."
Question: Will Paris and New York continue to be considered global centers for beauty?
Geoffrey Jones: If we go back again to the early 19th century, no one place was associated with being especially beautiful. If you look at the perfume industry, which some would regard is at the center of the industry, Britain was a bigger producer of fragrance and perfume for much of the first half of the 19th century; bigger than France. But, by the middle of the 19th century, in Paris you have the development of fashion, of Paris as a kind of a spectacle with the rebuilding of the city with wide boulevards. And the growth of the perfume industry becomes closely associated with this cluster of fashionable and luxurious industries.
So by the end of the 19th century, Paris is regarded as THE benchmark of all that’s chic and fashionable throughout the world. And fragrances and the beauty industry is part of that. And this process is self-reinforcing. Certainly the benchmark of aspiration is self-reinforcing, but because Paris is so aspirational, so talented entrepreneurs, artists, and other people, the suppliers of the beauty industry all cluster around Paris as well. So you both have a... what economists would call a agglomeration effect and reputation effects. And that proves incredibly strong and persistent throughout the next century. Paris is a symbol of chicness and style and aspiration and femininity.
New York is a slightly different story. By the early 20th century, the United States is the world’s biggest economy, the world’s richest economy; New York is the major commercial center. Entrepreneurs and others are attracted to New York. It’s a giant port for which ingredients of the industry come in. And so it starts to develop, again, a cluster of entrepreneurs. But then the growth of Hollywood, of the American film industry, to which New York is quite closely tied as the center of finance and the center of a lot of talent I think is really important in taking the division of America around the world.
And then in the inter-war years, and after-war years, a group of entrepreneurs like Elizabeth Arden, Helena Rubenstein, Estée Lauder develop expensive luxury brands of cosmetics, skin care, and fragrances which provide also New York and the United States with a range of not only mass brands, but also prestigious brands. And so New York and the United States come to represent a different vision of beauty. It’s a vision that’s more accessible, more democratic view of beauty, less complex, less chic, more hip, more exciting. Just like New York itself.
And it’s an interesting question why these two cities have continued that role. It’s partly because there is so much talent clustered if you reach a certain role, a certain size. But it’s also about the cities themselves. Both cities have emotional associations in people’s heads; Paris of cafés and the Left Bank, New York of skyscrapers and energy. And those images, the cities today are – you could say the cities today are still having those features. So, there’s no disconnect between people’s imaginations of those cities and those cities today even though they are two of the most fast-changing, cosmopolitan, evolving cities you could want in the world.
So I think the brand image of those cities, which is very important in the beauty industry, is persistent and realistic. You can get on a plane, go to those cities and you actually see what you imagine it to be.
Now, it’s a very interesting question if other cities can catch up, and I thought about that quite a lot. For example, Milan, after the Second World War, develops as a major global fashion center, but it doesn’t develop as a beauty capital. London has always been on the fringes of the beauty industry and at various times has become hip and exciting. The 1960’s swinging London, The Beatles, Twiggy, all the rest of it, but never quite sort of made it as a beauty capital.
Now one can think of Tokyo, or Shanghai, or Rio as potentials.
Recorded on April 21, 2010