The cosmetics market is experiencing a significant growth since many years in China, but the potential of a high-end positioning is still not sufficiently exploited by foreign brands.
Here is an overview of this promising market.
Chinese consumers no longer consider beauty products and cosmetics as an unattainable luxury, reserved for wealthy people, but as goods of basic necessities. They love to take care of themselves and the market figures are here to prove it: today, the Chinese cosmetics market represent more than 134 billion yuan (over 17 billion), while it was worth only 200 million yuan (26 million euros) in the early 1980s.
International Brand are dominating the market
International brands are dominating the market: they occupy more then 55% of the Chinese cosmetics market right now. Procter & Gamble tops the ranking. L’oreal is also very well ranked as well as Shiseido and Unilever. Due to this incredible growth and despite the market access difficulties, the competition is fierce. The main foreign investors in the sector in China come mainly from the US, France, Japan, South Korea and Germany. South Korean products are more and more popular.
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Chinese consumers are fascinated by high-end Western brands and trust them. It’ a gage of quality. Then, it’s a good sale argument and this is the reason why western brand are so successful in China compared to the majority of Chinese brand.
However, the Chinese market is evolving very quickly, we assist right now at the emergence of local brand that are developing more and more products of high quality.
The high-end cosmetic segment
The French and foreign brands are well advised to enter the Chinese market claiming a high-end positioning: this strategy will allow them to develop in optimum conditions in China.
The makeup and perfume segment is still not enough exploited by international brands and the forecast expectations for this segment are excellent.
The tendency of the “green cosmetics”
More and more high-end brand tried to position themselves as green brand only using natural products. Chinese consumers love this kind of products.
At the last China Beauty Expo Tradeshow in Shanghai, many international and Chinese brand used this argument as their sales speech. You can have a look here.
What is L’oreal doing in China?
China is L’Oreal one of the most important markets in the world. L’Oreal is performing very well regarding its L’Oréal Luxe division. Several of its brands outperform like Armani and Lancome which are among the top ten brands most requested brand in the country.
Lancôme was launch in China in the early 90s and was a pioneer brand in its sector. The brand was quickly adopted by the new middle class looking for luxury products. Synonymous with luxury, quality and results, the brand is now the market leader in the skin care and anti-aging in China.
Do you know Osiao?
Estée Lauder launched last in 2012 a new brand, Osiao, for the Chinese market and the asian consumers. The strategy of the US group is quite amazing: They didn’t create a Chinese beauty brand with Western codes (which is for example L’Oréal’s strategy with Yue Sai), but created a beauty brand with Chinese essence. The brand was created and built on the foundation of beauty in China: external beauty is a reflection of wellness.
Thus, the brand is positioned as the brand of “brightness”, its signature is “to reveal the light of your skin” Its name has 5 letters and starting and ending with the same letter as to remembered that it’s a sign of harmony. The products range include care and food complement. The shops counters refer to traditional Chinese apothecaries, and we can give you your skin.
Estée Lauder with Osiao adopted the same approach as Hermes did with Shangxia: developing a high-end brand based on values and Chinese know-how.
The high-end segment is a promising segment and brand looking to tap into the Chinese market should understand it.
The way of marketing a brand in China is different from the way of marketing it in Western countries. Here everything happens online and a cosmetic brand should communicate on social media and popular forums to increase its brand awareness. It’s unescapable if you want to succeed on this challenging market.