Johnson & Johnson acquires local rival (2)

"We see Johnson & Johnson as the best partner to bring in more resources to further develop the brand. Elsker will benefit from J&J's expertise," Chen said.

China's baby care market has ballooned in recent years, according to figures from Euromonitor International, a London-based consumer market research firm. The retail value of baby and child-specific skin care rose to 2.03 billion yuan by the end of 2011, up 17.35 percent year-on-year. This number is predicted to reach 4.71 billion yuan by 2016.

J&J's dominant position in the sector is being threatened as its market share of child-specific products dropped from 59.1 percent in 2007 to 49.2 percent in 2011, the consultancy said. The company's biggest decline is in the baby-related skin care segment, which witnessed a drop of 11 percentage points in the previous five years to 50 percent in 2011.

Elsker has spent about 10 million euros to establish a production base that meets the Council of Europe's Guidelines on Good Manufacturing Practice of Cosmetic Products, reaching a sales receivable of about 300 million yuan, a number substantial enough to make it as competitive as J&J.

"It's a wise choice for J&J since Elsker is said to have reached 500 million yuan in revenue last year and has penetrated distribution channels from international and local supermarket chains," said Sun Xicai, general manager of Hengmei Cosmetics Co Ltd, a chain makeup retailer in Shandong province.

"I think J&J will keep the Elsker brand as it is, following the acquisition of the Dabao brand in 2008, which has been quite successful," he said.