The cosmetics industry in China: New Opportunities

The cosmetics industry in China: New Trends

The cosmetics industry in China remains one of the most promising investment fields in China. In fact, the Chinese brands account for only 10 percent of the cosmetics market, thus giving ample space to foreign investors. Chinese consumers are becoming more careful in the purchase, considering not only the quality, but also its effects in terms of health and safety. Large foreign companies enjoy a wide reputation for the safety of their products and perhaps that is what gives them an advantage over their Chinese brand. Another feature that shows the change of the Chinese consumer tastes is from Japan and it is the increasing use of products ‘cosmeceuticals’ (Okomp), ie products that combine cosmetics and pharmaceutical characteristics, such as lotions and ointments to cure acne . In the cosmeceutical market dominated by foreign brands, such as Freeplus, Simple and Vichy, but recently they have also added local brands such as Tongrentang and Herborist. These Chinese companies are mainly based on the use of traditional Chinese medicine, emphasizing the natural features of their ingredients. According to the China Cosmetic Market Report relating to the 2014-2017 period, they are also recorded increasing investment opportunities in the field of cosmetics for men. Retail sales of male cosmetics accounted for 4.6 per cent in 2013 and is expected to further increase in the coming years. It is interesting to note that the market of cosmetic products for men has a higher growth rate than that of female products.

The cosmetics industry in China: Booming in the e-commerce market

Until 2014, well-known foreign multinational brands have occupied a leading role in retail cosmetics in China, occupying 60 percent of the market share. Their success is due to several factors, including a wide range of products, well-established reputation and quality in the domain of cosmetics markets is medium that premium. However, Chinese companies such as Shanghai Jahwa, PROYA and Marubi, which dominate the low-end market, are proving to be able to compete with the big international brands in the cosmetics market in China. Large Western multinationals such as Unilever, L’Oreal and Procter & Gamble, no longer enjoy that historical advantage of benefiting for decades. Aware of the fact that foreign brand not necessarily satisfy their tastes and needs, Chinese consumers seem to prefer Korean famous brand, best suited to the Asian complexion.

The cosmetics industry in China, characterized by strong competition not only between foreign multinationals but also between Chinese and Asian companies, represents a great opportunity for foreign investors. The growing demand for cosmetics for men, the rapid changes in consumption trends and terms of sale retail are key elements for potential foreign investment. In fact, with a current growth rate of 12 percent and a future growth, the cosmetics industry in China is definitely an area of particularly promising investment.