Johnson & Johnson buys out Dabao

Johnson & Johnson (China) Investment Co Ltd bought Beijing Dabao Cosmetics Co Ltd in a bid to further expand its presence in the Chinese market.

The subsidiary of the US -based consumer goods giant Johnson & Johnson acquired Dabao from Beijing Sanlu Factory and Beijing Dabao Co Ltd Staff Shareholding Committee. The deal is estimated at more than $300 million.

Johnson & Johnson won a bidding war with Avon and Unilever to acquire the company and will pay $337 million for Dabao.

"This transaction is an extension of our commitment to China, and to the continued development of China's consumer healthcare sector," said Jesse Wu, president of Johnson & Johnson (China) Investment Co Ltd.

"Dabao is a successful brand in the Chinese market. We are very pleased to add the well-known and respected Dabao brand to our growing portfolio of healthcare brands in China," he added.

However, there are concerns that international enterprises are invading China's household brands in the personal care industry. There are fears that China will lose more and more national brands in the future.

However, a source with Dabao said that the company's brand and brand-name products will remain.

Yang Zhigang from the Beauty and Cosmetics Chamber with the All-China Federation of Industry and Commerce told the Beijing News that the purchase of Dabao by Johnson & Johnson should not be regarded as a business failure, instead, it shows that China's household and personal care industry is gradually getting closer to reaching maturity and entering a capital era.

According to statistics, Dabao's sales reached 780 million yuan in 2005, accounting for 1 percent of the market share. Its sales declined to 676 million yuan in 2006.

"It is a wise decision for Dabao to get out of its current situation at a time when it still holds a renowned brand," Yang said.