Italian luxury fashion house Prada has appointed French cosmetics company L’Oreal to develop its fragrance business starting next month.

According to reporting in the South China Morning Post, the deal is “the first step of a licensing agreement to run the Italian fashion house’s luxury beauty products”. It follows the firm’s decision to decline to renew its existing license with Puig.

“We thought it was a good opportunity to select a new partner, also considering the possibility to develop new projects that today we are not ready to disclose,” read an email from Prada to the Post. “We chose L’Oreal because it’s the leading company in the beauty sector and we believe it will help us to further exploit our brand’s potential.”

Prada’s sales are currently in decline in China, compared to sales growth for L’Oreal.

“China is going to be an important target market for this Prada/L’Oreal deal in all aspects,” said global market research firm Mintel senior research analyst Alice Li. “China is now one of the most important luxury markets globally, with luxury beauty being the fastest-growing sector. Beauty products from Prada’s competitors, such as Chanel, YSL and Dior among others, and more recently Gucci, have resulted in a buying frenzy in China, especially among younger consumers. The expansion into beauty seems quite necessary now if Prada wants to further foster the young generation of Chinese luxury shoppers.”