The cosmetics market is one of the most flourishing markets in China, while it is developing only for thirty years. Today it has more than one billion consumers and generates a turnover of about 15 billion euros for 2014, according to the China Beauty Expo. It is the second-largest market in the world after the United States, although its growth rate for 2014 (12.3%) was the lowest recorded since 2005.
But before leaving to conquer this Eldorado, it’s essential to understand all the aspects of this market. Here is an overview of the trends in this unique and dynamic market:
A market dominated by large international groups
Actually, 86% of the market is in the hands of international groups or brands. To penetrate this market, the two leaders, the American Procter and Gamble and the French group L’Oreal have developed specific products for the Chinese market. They successfully apply the strategy of “Think global, act locally”.
L’Oréal has even opened a research center in order to meet the expectations of its consumers and be able to adapt more easily to the Chinese consumer’s needs while gaining market share.
Then if you’re a smaller company, the best thing to do is to position yourself in a niche segment, not yet occupied by major brands groups. You’ll find more information here, on how to penetrate the Chinese cosmetic market.
An evolution of the distribution channels
The share of online sales is increasing. Internet sales are now estimated at 6%, but this is the channel that has the highest growth.
It is therefore essential for brands to adapt their strategy to consumer trends and L’Oreal seems to have heard the message. In fact, the group distributes its products since 2012 through the Internet and is now realizing 17% of its sales via digital. That is why it is important to communicate online and use all the tools available like Chinese social media such as WeChat and Weibo.
Points of sale will have to evolve to attract more consumers, that is why Sephora since 2010 been working to position itself as an accessible but luxury shop and had adopted a logic of “premiumization “to attract more consumers. Some of its shops are now “digital” and you can look for some products details on Ipad. They also put some machines that allow you thank special software to find the perfect scent according to your tastes.
Excellent future prospective for the active cosmetic segment
China is one of the most receptive markets for active cosmetics in the world. This kind of product helped to resolve “skin problems” whether wrinkles, tasks, blemishes, dryness, or any other problem related to pollution.
But why such a predisposition?
This is most likely due to cultural factors. In fact, starting from 20 years old in China, young Chinese women will begin to pay more attention to their facial care while it appears much later in Europe for example.
In addition, residents of the biggest cities are much more receptive to pollution problems.
The segment is well supported by strong demand from consumers looking for products that combine safety, efficiency, and innovation. Indeed, security is important for 74% of Chinese consumers when buying a beauty product.
L’Oréal believes in this market and relies heavily on its brands such as Vichy and La Roche Posay deemed to be good quality products. However, this segment is very competitive. Foreign brands are directly in competition with Chinese cosmetics brands like Herborist, the premium brand of Shanghai Jahwa Group created 100 years ago, using traditional Chinese medicine techniques greatly appreciated by customers.
Managing your online reputation
Before buying a new product, Chinese consumers must have confidence in it and this is especially true in the cosmetics industry. Many of them are looking at reviews on products on the Internet before purchasing any new products. Kimiss, an online community platform with more than 1 million unique visitors a day has become a reflex for many consumers before buying a new beauty product. On this website, girls can rate all the products and find beauty tips.
A real potential for the men market
Chinese men are less educated than women when we talked about cosmetics. There is therefore real educational work to do if you want to reach your customers. But the good news is that Chinese people are more receptive to beauty products than European men, and the forecast for the coming year is very good and encouraging.
Today it is estimated that only 10% of men are using cosmetics.
The Chinese cosmetics market is one of the markets with the most promising future. The figures and forecast are here to confirm it; by 2017 the market should catch up with the United States reaching 245 billion RMB and becoming the first market in the world.
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