L Capital looks to take Dr. Wu beyond Taiwan

"In China, it's a strong growth story - you help companies penetrate more Chinese cities, because the market is so large," says Frankie Chan, executive director at L Capital Asia. "Taiwan's skincare market is similar to South Korea. Of course they have growth, but they're more established. Taiwanese brands can benefit from overseas expansion by leveraging their high product quality and brand awareness to grow within Asia, especially China."

After one year's worth of discussions with the management team of Dr. Wu, a local clinical skincare brand, the PE firm paid NT$750 million ($25 million) for an approximately 20% stake.

It is L Capital's first investment in Taiwan, its last from Fund I - a $637 million vehicle that closed in 2011 - and its second bet on skincare in Asia, following a deal involving China's Guangdong Marubi Biological Technology last July.

Chan's criteria in picking a skincare player in Taiwan was that the company must not only be successful domestically but also have the potential expand into other regional markets. Dr. Wu has a 15% share of Taiwan's clinical skincare industry, which is worth about NT$6 billion. Last year the company generated revenues of NT$1 billion.

Most skincare and cosmetic products in Taiwan are distributed through pharmacies Watsons and Cosmed. In the face of fierce competition from the likes of France's Vichy and Avene, US-based Curel and local rival For Beloved One, Dr. Wu has already laid the ground for overseas expansion. It currently has 1,200 point-of-sales networks across seven cities, including Hong Kong, Singapore, and Canada.

The next destination will be in China, with Southeast Asia to follow. The company is also planning an IPO. 

Vivian Tien, a spokesperson for Dr. Wu, notes that the company will focus on China expansion in the second half of this year, distributing skincare products through Chinese e-commerce platforms and department stores. "We also plan to open flagship stores, but this is only in the preparatory stages and we haven't settled on which cities to open in," she adds.

Founded in 2003 by dermatologist Dr. Yin-Ching Wu, the company positions itself as a scientific and dermaceutical brand. Hyaluronic acid - a chemical widely used in cosmetic facial injection - is a key ingredient in the company's products, helping to moisturize skin and prevent wrinkles. Chan says the company will use the same marketing approach in China.

"L Capital will help us improve product design and packaging, as well as expanding our operations into other markets. This will help us transform ourselves into a global brand," Tien says.

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• Topics
• Consumer
• Greater China
• Consumer
• Taiwan (China)