What are the opportunities for foreign companies in the Chinese cosmetics market?

For several years right now, China is becoming unavoidable in the cosmetics industry. The growth figures are impressive and China is becoming the world’s second-largest cosmetics consumer market after the American market.

According to Euromonitor, 2014 was the year when we saw the lowest growth rate since 2005. The growth rate for 2014 was 12,3 % which is still very good, obviously.

Why is this market so lucrative in China?

Right now, the major reason is the increase in the income of Chinese households. They are much more inclined to spend more now in these product categories. And this tendency is not only concerning the biggest cities but is also true in second and third-tier cities…

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What the Chinese consumers are looking for?

Chinese consumers are craving foreign companies’ products. Nowadays the market is dominated by major international companies and the domestic brands only account for 10 percent of the market.

Today, Chinese consumers are looking for qualitative products and they are much pickier than before when it comes to choosing their cosmetics products.

That’s why brand reputation is very important for Chinese consumers and brands must be aware of it.

Lancôme china

The active cosmetics segment is also on the rise in China. Brands such as Vichy, Lancôme, or Bioderma are doing very well here as well.

Natural and green cosmetics is also a tendency that is growing here and a lot of brands try to position themself on this segment as it should boom in the coming years.

But the most promising segment will be the male cosmetic market. The forecast for the coming year is really excellent and it should be growing at a faster rate than the female one according to Euromonitor. Actually, the male cosmetics market is accounting for 4,6 %.

What are the challenges for foreign companies?

Proya

Some domestic brands are more and more capable to compete with international brands. Let’s take the example of Shanghai Jahwa, Proya, and Marubi which are performing well here in China. Brands wanting to tap into the Chinese market will now need to compete with international brands as well as domestic bands. Then it’s very important for newcomers to have a distinctive approach and a competitive advantage. Thus, they’ll as well be able to adapt their products to Chinese consumers and complexions.

The crossborder website, a real opportunities for cosmetics brands?

Chinese Cross borders platforms are more and more popular among Chinese consumers and cosmetics products are one of the most bought products categories on this kind of website. Crossborder websites allow Chinese consumers to buy foreign products without paying taxes as if they were directly buying on the company’s own e-commerce website.

For foreign companies, it’s also a very good opportunity as they don’t need a Chinese business license to sell into these platforms. Thus, it’s nowadays the best way for them to access and test their products on the Chinese market.

How to promote a cosmetics brands?

Only being present on e-commerce platforms won’t help you to sell your products. You have to communicate, advertise and diffuse your brand values among Chinese consumers.

One of the best ways to do it is to use social media, which is going to be the best cost-effective way to do it. Nowadays in China, social media are part of the daily life of almost everyone. It’s, therefore, an incredible breeding ground to talk to your customers and reach them. But you need to have interesting content and be able to differentiate yourself from your competitors.

The cosmetic market in China is still full of opportunities but you need to implement a real strategy if you want to stand out and you need to be accompanied by professionals who have knowledge of the industry and who will be able to guide you. For more information on how to get into this promising market, you can have a look here.

We can help you to set up your strategy, don’t hesitate to contact us.

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