Nan Yuan Yin Fong Group Co Ltd, a Hong Kong-based cosmetics company, has invested 120 million yuan (US$14.5 million) on the mainland to try and regain the popularity of its brand in the early 1990s.

A Shanghai office will begin operation this month. The company now has a plant each in Shanghai and Guangzhou.

"We will make Shanghai our base because it is our birth place in the mainland. Then we will gradually expand to the whole country," said Lin Hai, a senior company official.

He also revealed the company will launch four types of skin care products for women and one for infants soon in local supermarkets. The firm aims to have its products in one third of the Shanghai supermarket outlets by June.

Yin Fong, a cosmetics brand which first entered the mainland in 1983, was the bestseller on the domestic market in the early 1990s. The company's sales hit 500 million yuan in 1992. Yin Fong F-Pearl Cream, its most popular product, is still etched in the memory of many Shanghai consumers.

In 1999, however, with the sudden death of Yew Mui Leong, then chairman of Yin Fong, the company's domestic business took a dive.

Yew's death was partly responsible for Yin Fong's decline as the firm suffered a great loss due to wrong investments. The company had eight Chinese factories at that time but none of them turned profitable in the late 1990s.

"Poor management should be blamed," said To Wai Tai, Yew's wife and the group's current chairwoman, who was once a housewife. "In the past we did not pay enough attention to develop new products. The running costs of the plants had been too heavy for us to bear."

Compounding the problem, Yew had also devoted himself to charity events and had sponsored various social organizations. He won praises for his generosity but the company's financial woes worsened.

Yin Fong was almost wiped out of the market when competition in the domestic cosmetics market heated up with the entry of foreign giants such as L'Oreal and P&G.

Although the business climate has changed greatly, Yin Fong is confident of its strength.

Sang Jingmin, an official with the China Flavor & Fragrance Cosmetics Industry Association, cautioned that the development of a brand will encounter more difficulties compared with a few years ago.

"But the market is still full of opportunities," Sang added.

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