The European Union's commerce relationship with China is ever-evolving. Last year, bilateral trade between the EU and China reached a never-seen-before high of $847.3 billion—with EU countries investing $12.1 billion into the Chinese market—an increase of 70% from 2021. Among the 27 countries within the EU, France has a strong trading relationship with China, with Alibaba Group CEO Daniel Zhang reporting over 5,000 French consumer brands selling $14.5 billion worth of products to Chinese consumers under the Alibaba umbrella in 2022. During President of France Emmanuel Macron's visit to China at the beginning of April 2023, to discuss trading among other subjects, Alibaba and L'Oréal signed a deal to encourage a greener beauty industry in China and promote a circular economy.
The partnership, which runs until 2025, focuses on three areas: low-carbon commodities and logistics, as well as marketing and consumer education. Through collaborative work, Alibaba and L'Oréal intend to make the beauty industry's supply chain increasingly more sustainable, focusing on warehousing, packaging, distribution, and recycling while advocating for both companies' consumers to lead a sustainable lifestyle. Zhang and L'Oréal's Chairman Jean-Paul Agnon signed the memorandum of understanding on April 6, 2023.
"Sustainable development has become a consensus and commitment across national borders, and it is also the common pursuit of every company with a sense of social responsibility," Zhang commented during a speech at Le Comité France Chine before the signing ceremony.
The signing of the memorandum is not the first time that Alibaba and L'Oréal have worked together to persuade greener consumption in China. In 2018, the two businesses signed a deal that saw them commit to using environmentally friendly packaging for all L'Oréal SKUs sold in China. As part of the agreement, L'Oréal China pledged to decrease the use of plastic materials across all its brands by switching to FSC-certified sustainable paper cartons or adhesives.
In July of last year, L'Oréal was one of 24 companies that adopted Alibaba's carbon ledger app that promotes sustainability by rewarding consumers with points for their eco-conscious shopping habits, which can be used to claim shopping discounts. "We hope to leverage our unique influence as a leading digital platform operator to mobilize sustainable behavioral changes and environment-friendly actions," Dr. Chen Long, Vice President of Alibaba Group, said at the time.
As well as striving for a greener future of e-commerce in China, Alibaba is also seeking ways to help the industry grow through elements such as AI. The company recently revealed its plans to roll out its own ChatGPT-style product, Tongyi Qianwen, which is set to be integrated across Alibaba's business soon. Beauty businesses using ChatGPT could expect benefits for customer service and loyalty; Alibaba's use of such technology is sure to enhance business and consumer experience of its platforms. Going forward, the use of Tongyi Qianwen could even open opportunities to engage with consumers, using the technology to further promote the company's sustainability goals.
Initiatives such as Alibaba and L'Oréal’s sustainability based contract agreement are a step in the right direction for lowering Chinese CO2 emissions, which currently account for 27% of the world's greenhouse gas emissions. As the France-China relationship evolves to tackle sustainability in beauty, it can be argued that its influence will echo through to businesses worldwide, leading to an increase in sustainability efforts across China and the beauty industry as a whole.
