Best in France Case Study By: A. Calle, J. Chaussy, B. Chatila, F. Cheng, A. Gill 22 nd January 2004 EBEL Paris

PLEASE NOTE The contents of this presentation are confidential to Belcorp and Ebel Paris and we have been asked to ensure that the contents are not disclosed or used for any purpose

The parent company (1) BELCORP is a Peruvian cosmetic company Founded in 1987 Headquarters situated in Lima, Peru. Main production facility in Bogotá, Colombia Commercial presence in 11 Latin-American countries Corporate sales of $600 million worldwide Third largest cosmetic company in Latin America Principal competitors: Natura and O'Botocario (Brazil) Website

The parent company (2) Direct sales of cosmetics to consumers (B2C) 2 catalogues of products – mass market and luxury Products include facial treatments, body treatments, make-up, fragrances, personal care products, and well- being products Belcorp sells all products in Peru, Colombia, Mexico, Chile, Guatemala, El Salvador, Costa Rica, Dominican Republic, Ecuador, and soon Argentina

The French subsidiary Ebel Paris founded in France 4 years ago Wholly-owned subsidiary of Belcorp Manufactures range of luxury cosmetics using French sub- contractors Sole customer is Belcorp in Colombia Products then sold directly to consumers in Latin America French operations represent 5% of business of Belcorp group, equivalent to 20 million euros 6 full-time employees in France:  purchasing/logistics, manufacturing, quality, exports, administrative and general manager Website

Why Belcorp came to France (1) France considered a key location for four key reasons  Marketing – range of luxury cosmetics labeled “Made in France”  Access to cosmetic “know-how”  Access to up to 50 different key suppliers (best glass, pump and plastic suppliers; eg: Valois)  Access to best designers * (*) From Paris Eia arrives

Why Belcorp came to France (2) Belcorp wanted to market luxury range of products branded as “Made in France” Other Latin American cosmetic competitors do not have a French manufacturing presence Direct contact with 5-6 French sub-contractors for all production – company has no facilities of its own Competitive Advantage: IMAGE

Why Belcorp came to France (3) Same sub-contractors used by Chanel, Dior etc Quality is essentially the same as those products produced in the much larger Colombian facility Production costs are higher than those in its Colombian facility  For instance, labor costs are 20 times higher  Approximately, total costs for luxury products are 5 times higher However, “Made in France” label allows price premium  Approximately, 40% above standard pricing

Why Belcorp came to France (4) Plans to expand product range – 12 new products to be launched this year including 7 fragrances France provides access to considerable cosmetic “know- how” which can then be transferred globally Key suppliers are located in France, providing packaging suppliers for mass-market and luxury products (glass, pumps, caps etc) For example, Belcorp is the 7 th largest customer for the biggest pump manufacturer in the world (purchasing 20 million units per year)

Why Belcorp came to France (5) Internationally-renowned designers are based in France, and have been used by Belcorp for its products Examples include:  Design Studio Desgrippe & Gobbé (one of their client is BOUCHERON)  Thierry LECOULLE  Ateliers DINAND

Company values Belcorp has a global mission-statement Ebel Paris operates relatively independently from its parent company Some, but not all, employees Spanish-speaking 1 employee Peruvian Recruitment largely via existing contacts in the cosmetics industry in France

Difficulties in France Difficulties encountered with social charges Working culture – difficult to contact suppliers after 6pm Impossible to launch a new product in August 35 hour year week – Friday afternoon is “dead” Access to company financing, bank loans etc. difficult Labour costs are 20 x those in Colombia, products 5x more expensive to produce Generally, a lot of “detail” that had to be worked through in order to set up business in France

Essential Advice When coming to France and starting small operations for a larger corporation:  Easier when the parent company is strong financially  Lots of hard work  Important to know the industry and have lots of contacts (networking)  Find the “rare bird” to develop the business from scratch who knows the French system

We thank the managers interviewed Olivier Khuu (Gérant)   Stephane Bis (Master Planner)   20, Rue de Bucarest Paris France

Our Team A. Calle, J. Chaussy, B. Chatila, F. Cheng, A. Gill Residence Expansiel, 1 Rue de la Liberation, Jouy-en-Josas, France ( ) ( ) ( ) ( ) ( )