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Economy

Because They're Worth It: How L'Oreal Creates Jobs In Brazil's Favelas

Brazilian hairdresser using L'Oréal Matrix products
Brazilian hairdresser using L'Oréal Matrix products
Dominique Chapuis and Florence Bauchard

RIO DE JANEIRO — The sign outside this modest hair salon in the Rio das Pedras favela, or shantytown, of Rio de Janeiro reads "Belos Fios" ("beautiful hair"). Inside, customers can find Matrix hair color products stacked behind the salon's two only chairs. This is just one of some 30 small salons, most of them undeclared, that Carlos Renato visits regularly. A former driver, he's now one of the 60 micro distributors L'Oréal supports to sell its most affordable professional hair care products in the poor neighborhoods of Rio and São Paulo.

Launched in 2012, this program is part of L'Oréal's corporate social responsibility strategy, and it has received support from Santander bank and Sebrae, the Brazilian micro and small business support service.

"The project is there to help those who want to get by while at the same time giving the population access to quality products," explains Tatiana Peczan, head of the program for L'Oréal. In total, almost 2,000 hairdressers are supplied this way.

Candidates are selected by the company, which prefers people with trade experience and who are well-integrated in their communities. L'Oréal then teaches them all they need to know about the products. Sebrae offers them management classes, while the bank provides them with microcredits to get their businesses started.


Giving management classes in a Rio favela — Photo: L'Oréal Matrix

In the beginning, Renato received a stock of 100 products, an investment worth 2,000 reais ($750). "Now I earn three times more than I did with my former job," the young entrepreneur says. Some haven't been as lucky, and the project has had about 10 failures, mostly caused by shops that ultimately didn't pay for the products.

"It doesn't happen a lot, though, because the whole system is based on trust," Renato explains. "And with word of mouth, everybody knows everything in favelas."

Hairdressers can order products by the unit. Prices are 10% to 20% cheaper than usual Matrix products, because micro distributors have fewer costs than traditional channels. Eduardo, who has a much bigger salon on the main street plus an employee, believes he has managed to keep his customers because of the high-quality products. And because there is fierce competition, he has capped his prices.

For now, L'Oréal has limited this strategy to Brazil's "pacified" favelas. But if the popular distribution method, which is still being evaluated, turns out to be viable, L’Oréal says it could easily export it to other developing countries.

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Economy

Lithium Mines In Europe? A New World Of Supply-Chain Sovereignty

The European Union has a new plan that challenges the long-established dogmas of globalization, with its just-in-time supply chains and outsourcing the "dirty" work to the developing world.

Photo of an open cast mine in Kalgoorlie, Australia.

Open cast mine in Kalgoorlie, Australia.

Pierre Haski

-Analysis-

PARIS — It is one of the great paradoxes of our time: in order to overcome some of our dependencies and vulnerabilities — revealed in crises like COVID and the war in Ukraine — we risk falling into other dependencies that are no less toxic. The ecological transition, the digitalization of our economy, or increased defense needs, all pose risks to our supply of strategic minerals.

The European Commission published a plan this week to escape this fate by setting realistic objectives within a relatively short time frame, by the end of this decade.

This plan goes against the dogmas of globalization of the past 30 or 40 years, which relied on just-in-time supply chains from one end of the planet to the other — and, if we're being honest, outsourced the least "clean" tasks, such as mining or refining minerals, to countries in the developing world.

But the pendulum is now swinging in the other direction, if possible under better environmental and social conditions. Will Europe be able to achieve these objectives while remaining within the bounds of both the ecological and digital transitions? That is the challenge.

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