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In My Opinion: Shanghai Rising

Peter Kelly

As one who has made numerous business trips to China and the Shanghai region in particular in the past two years, I have observed one sure thing—each time I return, the Chinese economy and the industry from which we craft our living has grown seemingly beyond limit: new malls, new high-rise buildings and, to the western cosmetics professional, new competitors with which to contend.

I recently attended Cosmoprof China’s inaugural show in Shanghai over four cold February days. Exhibitors and visitors at this debut event seemed unsure what to expect, but, upon reflection, it didn’t disappoint.

The quality displayed by exhibitors was good, organization was slick, transport to the show area easy to pick up, and, more importantly, we were whisked promptly away at the end of the day without having to contend with Bologna-length taxi queues. The organizers expected 7,000 visitors, but the final number was almost twice that. Fellow exhibitors I spoke with were happy with the traffic—except on Saturday which, in retrospect, may have been one day too many—putting aside any concerns that this show came too soon after Cosmoprof Hong Kong and would be a duplicate event. This coming year, however, will see tough decisions to be made as companies ask: “Do we show in Hong Kong or Shanghai—or both?”

As recently as three years ago, the stands for Chinese manufacturers of packaging and OEM fillers were mere basic offerings, staffed by the rude and inexperienced. Fast forward to February 2007, and you could only be impressed: Italian-style displays of pressed powders, great packaging, courteous and efficient staff, well-constructed stands with glossy brochures and 50-inch plasma screens displaying slick show reels of factory capabilities. Quite the contrast.

“Shanghai is the design center of Asia,” said one senior vice president of a U.S. global brand. So much so that his company will open an innovations center later this year just to monitor the Chinese market and track trends–and no doubt the competition, as well. I also met the CEO of a successful Munich, Germany-based design agency who had recently opened a Shanghai operation staffed with one of his own team, who had recruited “the cream of Shanghai” design graduates to build a Chinese platform for the business. He expects his new Shanghai operation to outstrip European revenues within three years.

Were one to walk the floor of Cosmoprof Shanghai and then take a trip into any new department store in the city, he’d be forgiven for thinking he had left the halls of HBA in New York or Cosmoprof Las Vegas only to wander into Macy’s or Bloomingdale’s. How many Chanel, Dior and Bobbi Brown counters are there in China now?  How many more new brands are preparing to enter the market? Unanswerable questions when these numbers seem to grow every day.

China is no El Dorado for the cosmetics industry, not when import duties are coming down and the product registration process is lengthy and complicated. There are still IP issues. But the Chinese market is tipped to double in size by 2012, and with a female population aged 16 to 45 whose numbers total nearly the entire combined populations of the U.S. and Japan, it’s one we cannot ignore.

Peter Kelly has 20 years’ experience working in contract manufacturing and supplying global brands. He is business development director of COSi Limited and also has his own brand, Taxi London.; or