With its worth $26 billion a year cosmetics market, China ranks third largest market of the world. It is expected to grow 8% each year from now to 2017, according to Euromonitor, the market . This booming of the market has been helped by the growing part of Chinese customers coming from the third and fourth tier cities buying on the internet. The market is divided in two parts, foreign brands and local brands. Chinese cosmetics customers have a wide range of brands to make their choice when they buy products.
A market dominated by foreign brands
For years now the market leaders have been foreign brands, especially from France, Japan and the United States. Indeed, over 80% of the markets are controlled by well-known international brands especially in the luxury cosmetics sector. The key players on the Chinese markets are the French group L’Oreal, the American company Procter & Gamble, and the Japanese firm Shiseido.
Their success is mainly built on efficient marketing and advertising. They also developed a lot of products for the Chinese market. Chinese customers trust the foreign brand because they are recognized for their quality worldwide. A strong point knowing that China is the country where counterfeit is everywhere and even the cosmetics market has safety issues. The main weak point of foreign brands is their prices most of the Chinese women cannot afford to buy cosmetics at such a high price.
This is why popular Korean brands such as Laneige, Mamonde and Etude House are rising on the Chinese cosmetics market. They are cheaper, highly innovative and their packaging is appealing. So much that half of the Korean cosmetics exports are going to China.
Domestic brands are gaining ground
Apart from the international companies that are running the industry, Chinese companies are also earning their part of the market share with other arguments. Their major argument is that their products are more suitable for the Asian skin type. Indeed most of the Chinese women love western skin care products but think that they are too rich for their skin.
They sometimes prefer using Chinese products because they are composed of traditional ingredients and are more efficient on the whitening side. So that Chinese brands stand out as competitors to the international brands thanks to their smart mix of Chinese traditional medicine ingredients and modern cosmetic technology. Liushen and Herborist are now becoming two major Chinese brands on the domestic market.
Although the market is largely run by foreign brands, Chinese women are more and more interested in Asian and local brands because they feel the products will better fit their expectations and skin condition. Their offer is also cheaper and more innovative than the international cosmetics giants. The competition between the numerous brands on this fast growing market is harder than ever.