China’s cosmetic market has been experiencing significant growth over the past few years and retail sales in China are projected to exceed RMB 240 billion (US$ 36 billion) next year. Further, the market is forecasted to continue this growth trajectory for the next 5-6 years.
The Chinese cosmetics market is arguably the most competitive given the large variety of domestic and international brands, all vying for business from ever increasingly self conscious Chinese consumer.
According to the Chinese Ministry of Food and Drug Safety, France, South Korea, the United States and Japan are the top four cosmetics exporters to China.
Current structure of China’s consumer market of cosmetic products:
- Skincare products: skincare products represent the fastest growing sector in the cosmetics market.
- Shampoos and hair care products: the shampoo and hair care products market is becoming saturated and its growth has decelerated.
- Make-up products: the make-up market is far from saturated, particularly in rural regions and inland cities. Sales of eye make-up products recorded significant growth in recent years.
- Products for children: sales of cosmetic products designed for use by children continue to soar.
- Sunscreen products: sunscreen products ensure sales in traditional quiet seasons.
- Anti-aging products: cosmetic products that help consumers stay youthful and fight aging are increasingly popular.
- Sports cosmetics: many consumers who love sports and pursue body fitness are keen to maintain an attractive appearance as well. They need sports cosmetics that can help prevent the loss of moisture and are anti-odour, anti-sweat, anti-bacteria and of compact portable size.
- Cosmeceuticals: consumers have growing awareness of products which combine cosmetic and pharmaceutical features, namely “cosmeceuticals”, such as spot lightening cream, acne treatment lotion and acne ointment.
- Green/natural cosmetics: these cosmetic products contain natural or nutritional ingredients such as aloe and vitamins.
Source: HKTDC Research in 2016
Retail stores remain the major distribution channels in the overall market. However, revenues from eCommerce are on the rise and will continue to grow as consumers embrace Tmall and JD to purchase these types of products.
Although there are hundreds of cosmetics brands in China, the International leaders of this category include Clinique, Lancome, Sasa, Jumei, Yoka, Jurlique, and Lamer. Chinese mainland cosmetics producers include Chinfie, CMM, Houdy, Longrich, Herborist and Chando and are catching up fast with their international counterparts and have built up positive reputations in China.
Previously, Chinese domestic brands emphasised value-for-money in mostly second and third-tier markets but now we are seeing some of the larger Chinese domestic cosmetics brands starting to develop higher quality products, aiming to target the domestic mid and high-end segments.
Global brands need to adapt their offerings according to Chinese regulations governing the industry. China’s cosmetic regulations are complicated. Products are granted the Cosmetics Production Permit following approval by The China Food and Drug Administration (CFDA). Rising emphasis on protection of consumer rights has increased pressure on cosmetic companies to ensure product quality and safety. Retail and eCommerce channels are complicated to setup and establish and the established brands need to continually evolve and develop as their consumers are continually being temped away.