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Why cosmetics industry in China attracts foreign investements?

Prestige Cosmetics.

Cosmetics industry: the cash money machine for investors

China is the world’s second largest cosmetics market with 23 billion euros in size and an unstoppable growth.  This market generated 203 billion euros of revenue in 2014.

The cosmetic sector in China represents a huge opportunity to set up a successful business. 

With the e-commerce, opportunities are huge and a number of potential customers are endless. The big cities as Beijing and Shanghai but now mainly lesser-known cities have an increasing demand for cosmetics.

All the famous foreign brands are running the industry. That means they have gained the favour of Chinese customers. Indeed, over 80% of the Chinese cosmetics market is dominated by foreign brands. It’s a strongly competitive market.

[2] Watsons customers

Why is Watsons the leader in cosmetics in China?

Chinese consumers are changing

Today, one of the most promising field of business in China is the Industry. On the cosmetic market, there is a relevant gap between the Chinese brands and the foreign companies. The Chinese brands only account for 10% of the market! And this can be explained by the fact that the criteria of the Chinese consumers have changed.

They pay more attention to quality and health repercussion while buying cosmetics. The big and famous foreign companies are able to provide the safety required by the Chinese consumers. Their reputation is a selling weapon in China and it’s very important for them to keep it clean.

It is not surprising that the “cosmeceuticals”, products combining cosmetic and pharmaceutical effects, are rising dramatically. This market, traditionally dominated by foreign companies, have been recently successfully joined by Chinese brands (such as Tongrentang and Herborist). They promote the quality and the efficiency of the traditional Chinese medicine.

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The western multinational companies are not confident about the future as they used to be. They know that the Chinese consumers are more and more attracted by Korean brands, more suited to Asian complexions.

A seducing market

According to the China Cosmetic Market Report 2014-2017, there is a rising opportunity in the male cosmetics market, which is growing at a faster rate than the female market.

Today, around 75% of the China’s cosmetic products are distributed by the supermarket and big stores. However, there is an evolution of the Chinese purchasing habits, with the boom of e-commerce, they are always more and more buying products online rather than into brick and mortar shops. And this phenomenon is not only concerning the cosmetic sector, every kind of business is concerned. This mean that companies have to an emphasis on the e-commerce to attract the new generation and the following ones.

E-commerce 4

Choose your best e-commerce platform in China

The Chinese cosmetic industry, composed of foreign and Asian multinational companies but also by emerging domestic companies, can be a goldmine for foreign investors. The current annual growth rate is approximately 12% and the forecast predicts that the market will stay profitable.

The changes in consumers purchasing habits and the expansion of men’s cosmetics are the most promising trends for investment.

Mastering e-commerce platform and cosmetics industry is not such an easy task. We can help you to 

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