Aug. 22 (Bloomberg) -- L’Oreal SA’s push into China’s $32 billion beauty market has a hidden cost -- if you’re a rabbit or a mouse.
The Paris-based maker of shampoos and lipsticks this month agreed to pay $843 million for Chinese cosmetics face-mask maker Magic Holdings International Ltd., accelerating expansion into the world’s second-biggest economy, where it got about 6 percent of sales in 2012. While L’Oreal is barred by European Union rules from testing on animals within the EU, China’s government requires such trials for every new beauty product.
China is the only major market where companies must test their mascaras and lotions on animals. Rabbits are killed or ingredients dripped into their eyes during Chinese tests, according to London-based animal-rights group Cruelty Free International.
China’s policies create a dilemma for companies like L’Oreal and Procter & Gamble Co. that want to sell in the country without alienating consumers in markets where public sentiment demands humane treatment of animals.
India last month banned animal testing for beauty products. The European Union, which has long barred such trials within its borders, this year tightened regulations to also prohibit products tested on animals elsewhere.
The EU’s new rules further complicate the issue for cosmetic makers. It would be against European rules to sell any product that has been tested on animals in China, so companies would need to reformulate their wares for the two markets.
And niche brands such as L’Oreal’s The Body Shop, and Boulder, Colorado-based skin-care maker Pangea Organics, which refuse to do animal tests, are blocked out of the Chinese cosmetic market. L’Oreal, the world’s biggest cosmetics maker, sells its namesake beauty products in the country, while P&G sells products such as Olay and Head & Shoulders.
In China, companies are required to submit samples of their products to be used for tests at local laboratories, according to advocacy group People for the Ethical Treatment of Animals. PETA estimates at least 72 animals are used for each product.
Market researcher Mintel says at least 4,249 beauty and personal care products were introduced in China over the past 12 months. That would translate into more than 300,000 animals used in tests over the past year, according to Bloomberg calculations based on the Mintel and PETA estimates.
China’s beauty and personal care market will expand to $34.8 billion this year, Euromonitor estimates, from last year’s $32 billion.
“We keep talking to the authorities with patience that the abolition is the world trend and that we would like to get approval by alternative methods,” Shiseido Co.’s Chairman Shinzo Maeda said in May about rules in China, where the Japanese company sells cosmetics. “Animals, especially small animals, are treated as something like a family member nowadays.”
Shiseido, which sells cosmetics globally, says on its website that it only does animal trials when mandated by law or when no other alternatives exist.
P&G chose China for the global launch of its Oceana skin- care brand in January, and has introduced new products under its Pantene and Head & Shoulders shampoo lines. L’Oreal has said it will introduce new lines for Chinese consumers this year including Arginine haircare products, L’Oreal Skindeep and Maybelline Baby Skin products. L’Oreal and P&G didn’t respond to questions on the number of products they introduce in China each year.
Chinese regulators require animal tests, and L’Oreal always abides with local regulations, the company said in a statement. L’Oreal says less than 1 percent of its total safety tests on cosmetics ingredients involve animals. It has set up a reconstructed skin facility in China specifically for Asian testing and is working with local authorities on alternative approval methods.
Procter & Gamble, the largest seller of beauty and personal-care products in China, said it does not test on animals unless required by law. P&G has discussed the benefits of non-animal trials with Chinese authorities, the Cincinnati- based company said in a statement.
P&G gets about 18 percent of its annual sales from Asia, while L’Oreal gets about 19 percent, according to data compiled by Bloomberg. The percentage of revenue the two companies get from Asia has been rising.
“Against Animal Testing” was one of Body Shop’s founding principles and the company can’t enter China because of the legislative rules, the brand said in a statement.
“We would love to open stores in China,” Body Shop spokeswoman Louise Terry said via e-mail. “We watch closely any developments in the legislation which would enable us to do that without compromising our core beliefs.”
Body Shop is popular with Chinese traveling outside the mainland, she said. Getting into China might help boost the brand, which reported a sales drop of 1.4 percent in the six months ended June.
While China isn’t averse to the idea of tests without animals, developing expertise will take time, said Xu Jingquan, secretary general at the All-China Federation of Industry and Commerce, Beautyculture and Cosmetics Chamber after a Shanghai conference in June.
“Our R&D isn’t as sophisticated, and the consumer here doesn’t think as much about ideals such as animal testing,” said Xu. “They care about the price, the brand and the product.”
China this year was set to approve its first non-animal test, said Brian Jones, a director at the Institute for In Vitro Sciences, a Maryland laboratory working with Chinese regulators to develop alternative cosmetic tests. But a spate of food scandals, including a crime ring found selling rat, fox and mink as mutton, have kept authorities busy. Premier Li Keqiang is planning to revamp the regulatory body responsible for food and drug safety, perhaps delaying approval of new cosmetic testing rules until next year, Jones said.
Animal advocacy groups, which often resort to demonstrations such as painting their bodies like rabbits or protesting semi-nude with lettuce bikinis, have taken a different tack in China, where the government frowns upon public protests.
The groups are instead training scientists at educational and government labs to test products using cell cultures or computer models instead of the shaved backs of rats and rabbits, who are killed after. Ultimately, science will help win the battle as alternative methods prove more accurate at predicting human reactions than tests on small creatures, said Nick Palmer, director of policy at Cruelty Free.
“In the end,” said Palmer, “you and I are not really rabbits.”
--Liza Lin, with assistance from Yuki Yamaguchi in Tokyo. Editors: Anjali Cordeiro, David Rocks