LG H&H is operating three production subsidiaries in China and Vietnam and one sales subsidiary each in China, USA, and Taiwan to carry out its household goods and cosmetics business. The company has exported major products to 22 countries, including the above-mentioned countries plus Russia, Iran, etc. Our cosmetics brand entered the Japanese market through Ginza Stefany, the Japanese cosmetics provider, which we acquired in 2012. In newly explored markets like Colombia, the sales generated by the exportation of goods like raw materials were up 10% from 2012. Our activity boundaries in the overseas markets have been enlarged in a sustained manner. Our strategically focused cosmetics brand is ‘Whoo’, which is being advertised in the local market to enhance its brand awareness. The first shop was launched in a premium department store in Hong Kong in 2013, receiving positive responses from the customers. As for BELIF, it was first launched in Singapore with the natural-herb concept, and after that, we made every effort to open a brand shop and to enter a department store in Indonesia, Taiwan, and others. BEYOND provides good-quality products at low prices and with its cute animal shape and the spirit of anti-animal testing, the brand is expected to appeal to the overseas consumers as the representative brand in the low and middle-priced markets. THEFACESHOP, recognized as a practical and low/middle-priced brand in the home market, has a differentiated positioning strategy for each nation.
In 2013, THEFACESHOP established a subsidiary in China and Singapore, where an exclusive operation system had been used, to gain a foothold for business expansion in such countries. Additional launching of other brands, such as belief and VDL, has been being done since the founding of the Singapore subsidiary in April 2013. In September, a joint venture was established in Guangzhou, China and the acquisition of exclusive sales entities was completed, equipped with a direct management system to develop various business activities. In Canada, the management systems of three F&P shops taken over in July 2013 was changed into the direct control system, which leads to big achievements. The number of directly controlled shops will continue to grow for business expansion in Canada.
In terms of household goods, we have focused on raising oral and detergent brands. We have finished our entry into strategic- focus regions, including western Russia, Ukraine, and Kazakhstan, with the oral care brand PERIOE and are tightening marketing activities. We have concentrated on selling quality products to the consumers in Russia and Columbia, with the enriched detergent brand TECH. In Japan, the fabric softener brand Saffron has expanded its detergent product range, unveiling new products as a result of product renewal tuned to consumer needs. To improve the brand awareness, we plan to develop branding campaigns for large channels and customized promotions for small channels. In the local subsidiaries in China, Vietnam, and Taiwan, the number of local employees will continue to increase in an attempt to enhance customer satisfaction through a rapid and detailed grasp of the local consumers’ needs and its application to our products. Furthermore, considering the geographic conditions of the competitive local suppliers with quality subsidiary materials and competitive production costs, the ratio of local purchase has grown continually, accounting for 72% in 2013 (excluding THEFACESHOP).