01.26.11
Online Exclusive: China’s Changing Beauty Market
While the U.S. limps out of the recession, China’s beauty industry takes off full speed ahead.
A cruise through the Sephora flagship on Beijing’s historical Qianmen feels a lot like visiting one of their stores in the West, with try-it-yourself stations, the latest Dior mascara and Benefit body goodies, and the store’s line of makeup in a rainbow of colors. But look a little closer and you’ll find the China-specific items, like cleansers and lotions boasting whitening properties, a nod to China’s increasing importance to beauty companies.
Like most industries in the country, China’s beauty market is expanding at an impressive clip, charged by increasing disposable income among the urban middle class. According to research firm TNS, the beauty care (skin care, makeup, and hair care) market was relatively small at just under $6 billion, compared to about $20 billion in the U.S., in 2007, but growing rapidly. Meanwhile, exports from China’s domestic beauty producers are expected to increase 20% in the next year, with an emphasis on emerging markets in Asia, the Middle East, and Russia, says a new report from Global Sources.
The Lay of the Land
Kline & Company, a management consulting and market research firm, found that sales in general stores, mass merchandisers, and food outlets accounted for about 60% of the market value in 2008. “General stores have historically played an important role in distribution, and there were over 2.5 million general stores in China in 2008,” says Rob Field-Marsham, an engagement manager at Kline.
But, he notes, general stores are losing ground to other outlets, including department stores and direct marketing. “Younger consumers, in particular, prefer to shop at cosmetics specialty stores, rather than at food outlets,” he adds.
Kline reports estimate that with 15% annual growth, the skin care market in China could soon surpass that of the U.S. According to TNS, whitening is the No. 1 consumer need for those buying a facial cleanser or moisturizer (other than cleansing/moisturizing). Also popular are products with built-in anti-aging or sun-protection elements.
What’s New
With urban men focusing more on their appearances as one more way to get ahead in a hyper-competitive business environment, they’re slathering on products tailored to them.
The organizers of Cosmoprof Asia, held in Hong Kong November 10¬-12, 2010, with more than 45,100 visitors, noted an increase in male grooming products.
“There was also a particular focus on organic products at the fair and a number of exhibitors displayed natural or herbal vitamin supplements, teas, or oils alongside more conventional skin care products,” adds Cosmoprof Asia senior event manager Ginnie Koay, pointing to China’s more holistic approach to beauty.
The natural and organic market is still relatively small and concentrated at the high end, but in China that can still add up to a lot of sales. “In 2009, China’s natural personal care market was the largest in Asia (ahead of Japan), accounting for almost 25 percent of the $7.5 billion worldwide natural personal care market,” says Field-Marsham, adding that the market in China is growing at almost 20% a year. “China has a very long history of traditional Chinese medicine (TCM), which has provided a credible foundation for many manufacturers to formulate herbal-based products.”
“The lack of consumer awareness, particularly of what an environmentally friendly product is, is a potential hurdle to growth,” Field-Marsham adds. “Perhaps more importantly, the lack of regulations in the market gives manufacturers a lot of leeway in their labeling and claims, making it hard for consumers to know which products are truly environmentally friendly.”
The market is still highly fragmented, with local products taking the lead. According to Kline’s research in the natural personal care market, skin care products accounted for 40% of sales in 2009 with hair care accounting for 30%. Leading brands include locals Herborist (which draws from TCM and is now available in Sephora internationally) and Sinoway Herb along with French brand L’Occitane.
Minnesota-based J.R. Watkins Naturals recently announced plans to expand into retail chains in Hong Kong, Japan, and Taiwan, after introducing their home and personal care items to South Korea in 2009. Estée Lauder’s Origins was introduced in 2010, one year after L’Oréal-owned Kiehl’s appeared.
Packaging Pointers
Packaging is undergoing an eco-friendly makeover as well. “Consumers want products that combine sustainability and wellness benefits without compromising performance,” says Sumarno Kartolo, cosmetics marketing manager, Asia Pacific, at DuPont Packaging & Industrial Polymers. “The reduction of excessive packaging and elimination of UV coatings, paints, and solvents not only saves resources and improves the environment, but can also encourage a greater sense of corporate social responsibility.” oekameall.jpg
For example, DuPont makes Biomax PTT 1100, a polymer made with ingredients derived from agricultural sources such as corn or beets. “Containing up to 37 percent renewably sourced content by weight, the biomaterial brings environmental benefits like being a partially renewably sourced material, having a high natural gloss and scratch-resistance so it’s possible to remove solvent-based coatings, and having regrind, can be reused in standard in-plant processes,” says Kartolo.
Cosmoprof Asia organizers noticed an increase in packaging with plant-based plastics, recycled materials, and natural materials like bamboo.
Global Sources’ recent China Sourcing Report: Beauty & Cosmetics noted a trend toward more convenient packaging, like compacts that can be opened with one hand and lipstick tubes with a clip attached so they don’t get lost in a handbag.
“Living in a fast-paced modern world, consumers are more demanding of convenience and functionality,” adds Kartolo of DuPont. “Manufacturers are developing new concepts and innovative packaging to meet consumers’ needs—for instance, easy-open containers, refills, multi-purpose products, luxury on-the-go, and more.”
Kartolo points to its Surlyn 3D Technology. “The innovative technology involves the overmolding of a single or multilayer polymer inner container with glass-like transparent, highly-durable Surlyn resins,” explains Kartolo. Bormioli
Stumbling Blocks
Visitors to Cosmoprof Asia could attend seminars on the peculiarities of market as well as the distinct and often convoluted regulatory environment. “The Chinese market is still emerging and has huge potential to grow compared to mature markets such as the United States and Europe,” affirms Cosmoprof Asia’s Koay. “However, market access to China remains restrictive in terms of regulation, product testing, and licensing. Time-consuming product registration is one of the biggest challenges facing the international brands that want to enter the Chinese cosmetic market. Furthermore, the Chinese market is less sophisticated about product-safety measures and quality control when compared to the West.”
Still, the future looks bright. Estée Lauder recently signed Liu Wen, their first Chinese spokesmodel. “Liu Wen is one of the rising stars in the fashion industry, and we had noticed her on the runway and in fashion editorial,” explains Geri Schachner, senior vice president of global communications at Estée Lauder. “Estée Lauder’s goal is to choose the best models of every generation, and she certainly is one of the best. Liu Wen connects with women all over the world in terms of beauty and style but also in terms of her warmth, smile and personality.”
Her images will appear in ad campaigns globally, a fitting testament to China’s global stature in the beauty industry.
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A cruise through the Sephora flagship on Beijing’s historical Qianmen feels a lot like visiting one of their stores in the West, with try-it-yourself stations, the latest Dior mascara and Benefit body goodies, and the store’s line of makeup in a rainbow of colors. But look a little closer and you’ll find the China-specific items, like cleansers and lotions boasting whitening properties, a nod to China’s increasing importance to beauty companies.
Like most industries in the country, China’s beauty market is expanding at an impressive clip, charged by increasing disposable income among the urban middle class. According to research firm TNS, the beauty care (skin care, makeup, and hair care) market was relatively small at just under $6 billion, compared to about $20 billion in the U.S., in 2007, but growing rapidly. Meanwhile, exports from China’s domestic beauty producers are expected to increase 20% in the next year, with an emphasis on emerging markets in Asia, the Middle East, and Russia, says a new report from Global Sources.
The Lay of the Land
Kline & Company, a management consulting and market research firm, found that sales in general stores, mass merchandisers, and food outlets accounted for about 60% of the market value in 2008. “General stores have historically played an important role in distribution, and there were over 2.5 million general stores in China in 2008,” says Rob Field-Marsham, an engagement manager at Kline.
But, he notes, general stores are losing ground to other outlets, including department stores and direct marketing. “Younger consumers, in particular, prefer to shop at cosmetics specialty stores, rather than at food outlets,” he adds.
Kline reports estimate that with 15% annual growth, the skin care market in China could soon surpass that of the U.S. According to TNS, whitening is the No. 1 consumer need for those buying a facial cleanser or moisturizer (other than cleansing/moisturizing). Also popular are products with built-in anti-aging or sun-protection elements.
What’s New
With urban men focusing more on their appearances as one more way to get ahead in a hyper-competitive business environment, they’re slathering on products tailored to them.
The organizers of Cosmoprof Asia, held in Hong Kong November 10¬-12, 2010, with more than 45,100 visitors, noted an increase in male grooming products.
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Cosmoprof Asia opened strong, with more than 45,100 attendees eager to learn about the latest beauty industry trends. |
The natural and organic market is still relatively small and concentrated at the high end, but in China that can still add up to a lot of sales. “In 2009, China’s natural personal care market was the largest in Asia (ahead of Japan), accounting for almost 25 percent of the $7.5 billion worldwide natural personal care market,” says Field-Marsham, adding that the market in China is growing at almost 20% a year. “China has a very long history of traditional Chinese medicine (TCM), which has provided a credible foundation for many manufacturers to formulate herbal-based products.”
“The lack of consumer awareness, particularly of what an environmentally friendly product is, is a potential hurdle to growth,” Field-Marsham adds. “Perhaps more importantly, the lack of regulations in the market gives manufacturers a lot of leeway in their labeling and claims, making it hard for consumers to know which products are truly environmentally friendly.”
The market is still highly fragmented, with local products taking the lead. According to Kline’s research in the natural personal care market, skin care products accounted for 40% of sales in 2009 with hair care accounting for 30%. Leading brands include locals Herborist (which draws from TCM and is now available in Sephora internationally) and Sinoway Herb along with French brand L’Occitane.
Minnesota-based J.R. Watkins Naturals recently announced plans to expand into retail chains in Hong Kong, Japan, and Taiwan, after introducing their home and personal care items to South Korea in 2009. Estée Lauder’s Origins was introduced in 2010, one year after L’Oréal-owned Kiehl’s appeared.
Packaging Pointers
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Larger than life Harajuku Lovers figures greet visitors to the Sephora store on Qianmen in Beijing. |
For example, DuPont makes Biomax PTT 1100, a polymer made with ingredients derived from agricultural sources such as corn or beets. “Containing up to 37 percent renewably sourced content by weight, the biomaterial brings environmental benefits like being a partially renewably sourced material, having a high natural gloss and scratch-resistance so it’s possible to remove solvent-based coatings, and having regrind, can be reused in standard in-plant processes,” says Kartolo.
Cosmoprof Asia organizers noticed an increase in packaging with plant-based plastics, recycled materials, and natural materials like bamboo.
Global Sources’ recent China Sourcing Report: Beauty & Cosmetics noted a trend toward more convenient packaging, like compacts that can be opened with one hand and lipstick tubes with a clip attached so they don’t get lost in a handbag.
“Living in a fast-paced modern world, consumers are more demanding of convenience and functionality,” adds Kartolo of DuPont. “Manufacturers are developing new concepts and innovative packaging to meet consumers’ needs—for instance, easy-open containers, refills, multi-purpose products, luxury on-the-go, and more.”
Kartolo points to its Surlyn 3D Technology. “The innovative technology involves the overmolding of a single or multilayer polymer inner container with glass-like transparent, highly-durable Surlyn resins,” explains Kartolo. Bormioli
Stumbling Blocks
Visitors to Cosmoprof Asia could attend seminars on the peculiarities of market as well as the distinct and often convoluted regulatory environment. “The Chinese market is still emerging and has huge potential to grow compared to mature markets such as the United States and Europe,” affirms Cosmoprof Asia’s Koay. “However, market access to China remains restrictive in terms of regulation, product testing, and licensing. Time-consuming product registration is one of the biggest challenges facing the international brands that want to enter the Chinese cosmetic market. Furthermore, the Chinese market is less sophisticated about product-safety measures and quality control when compared to the West.”
Still, the future looks bright. Estée Lauder recently signed Liu Wen, their first Chinese spokesmodel. “Liu Wen is one of the rising stars in the fashion industry, and we had noticed her on the runway and in fashion editorial,” explains Geri Schachner, senior vice president of global communications at Estée Lauder. “Estée Lauder’s goal is to choose the best models of every generation, and she certainly is one of the best. Liu Wen connects with women all over the world in terms of beauty and style but also in terms of her warmth, smile and personality.”
Her images will appear in ad campaigns globally, a fitting testament to China’s global stature in the beauty industry.
