The quiet make-up giant decides time is right for major expansion

SHANGHAI - Jala Group Inc, the "invisible champion" of the cosmetics industry that for 10 years has quietly been gaining ground in smaller cities, has decided the time is right to go all out in China's major metropolises.

"We grew up in the third- and fourth-tier cities, but if we limit ourselves to just these cities, our brands will never get widely accepted," said Zheng Chunying, president of Jala Group Inc.

Although Jala may be unfamiliar to some, several of its brands have influential champions. Its Chcedo brand is endorsed by the Taiwanese pop star Vivian Hsu and its Maysu by the Taiwanese film star Shu Qi. They have become increasingly popular among the Chinese over the years.

The other two brands, Aglaia and Insea, are gradually getting better known.

Established in Shanghai in 2001 and restructured in 2009, the private enterprise has maintained robust growth over the past 10 years. It saw an average growth rate of 80 percent over the past five years, while most Chinese private cosmetics companies struggle to reach double-digit growth.

Jala has 23,000 sales outlets in 31 Chinese provinces and cities, covering the major distribution channels including department stores, supermarkets and pharmacies. With 88 patents in design and product formulas now at hand, the group's national level research and development center will start operation in Shanghai this October.

For its best-known brands, such as Chcedo, Jala has set up franchise counters in some 760 department stores over the country. Its product series for men, which will be endorsed by the Taiwanese entertainer Show Luo, will be put on the market in October. Chcedo and Maysu's make-up series will also enter the market in fall.

Euromonitor International, a leading strategy research firm for consumer markets, ranked Jala 12th in market share in overall beauty and personal care in 2010.

Euromonitor analysts said Jala slightly gained in market share in 2010, partly due to its heavy marketing investments, particularly for Chcedo, and also because of its 20 percent expansion that year in second- and third-tier cities of its already strong distribution network.

Zheng is confident his strategy focusing on first- and second-tier cities will be a success and so far the figures look good.

During the first five months of this year, Chcedo sales jumped by 76 percent year-on-year in Beijing, 60 percent in Shanghai and 40 percent in Shenzhen.

"The BB cream produced by Chcedo, one of the best sellers, saw all its stock in Beijing sold out within one week," said Jenny Chen, public relations director of Jala.

The dynamics Jala's products have shown in the market may be largely attributed to Zheng's managing philosophy: We don't need growth without safety.

Every product produced by Jala is repeatedly tested before it reaches the market.

Zheng said: "What people see now in our products are the successes. Few would have any idea how many products we abandoned at the very beginning because of some flaw in quality. With experts' help, we now test products first on a skin model, which is nurtured from skin cells, and then we proceed to clinical tests. I myself am a tester," Zheng said.

"If a company puts resources only into speedy development, I can assure you that the development will not be sound," he said.

"Moreover, it's immoral to exploit our countrymen's attachment to Chinese brands and count on them to forgive us for shortcomings. As a responsible company, we should first of all produce trustworthy products," he added.

Jala is in no hurry to be listed on the market. "In all honesty, Jala has never been short of money ever since it began. Quite a lot of investment institutions have expressed interest in our group. Of course we will consider an IPO when the time is right, but I always bear in mind that to be listed on the stock market is just the beginning of operations on a new level," said Zheng.

Jala's success can also be attributed to Zheng's clear orientation in his company's role. He describes himself as a strong believer in Chinese values and has clearly defined Jala's brands as the transmitter of Chinese aesthetics.

"It is our ultimate goal to create an international brand that will promote the essence of Chinese aesthetics and values," said Zheng.