The Chinese beauty industry experienced tremendous growth in the past decade, to say the least. At present, the country’s personal care market is the second largest in Asia-Pacific after Japan, and the third largest worldwide. Yet, it still has a huge potential for growth because of its largely untapped nature. Disposable income among the urban middle class has been increasing rapidly, and the country’s 1.3 billion-strong population offers a large consumer base. These factors, if nothing else, position China as a very attractive market for beauty brand owners, both local and international.
Within the domestic beauty market in China, skin care and hair care are the two largest segments in terms of revenue generation. These two sectors contribute more than 50% of total sales within the local beauty industry, and are expected to grow rapidly over the next few years. Here’s a closer look at the skin care and hair care markets in China, and the wealth of opportunities that are available for cosmetics and toiletries businesses looking to serve the ever-important Chinese consumer.
Skin care dominates the overall beauty market in China as it represents 36% of all personal care items that are available. The most popular items within this segment are facial moisturizers, followed by facial cleansers. And with the Chinese becoming more willing to invest in their appearances, the skin care product market is expected to reach $77.84 billion by 2012.
A number of trends have emerged in recent years. First, skin care products with anti-aging properties grew in popularity last year (2010), according to a report by Euromonitor International. These formulations claim to repair the DNA of damaged skin, thereby slowing down the process of skin aging and reducing wrinkles. When these products first appeared in the market, the primary consumers were mid- to high-income women in their 40s and 50s who were concerned about maintaining a youthful appearance. But with more young ladies becoming increasingly conscious about preserving their looks, the demand for anti-aging products has since shifted to include those in their 20s and 30s.
Skin-whitening solutions are also very much in vogue. In China, females are indeed the fairer sex, because a pale complexion is considered an attribute of beauty. Women of all ages strive to attain this standard, which has led to skin-whitening solutions becoming popular amongst both the young and old.
Industry experts agree that anti-aging and whitening products will continue to be in demand. Beauty brand owners should take advantage of these trends and develop innovative formulations that help whiten and nourish skin, or even do both. In addition, brand owners should consider exploring the market for such goods in China’s mid- to lower-end cities where women are becoming more cosmetic-savvy about keeping their skin looking young and fair, but have less access to global or larger brand names than consumers in top-tier cities.
Another key point to note is that consumers are not limited to women. A key area of growth within the skin care sector is men’s products, because Chinese males are now more concerned than ever about their appearances and the importance of projecting an image of success, which—some believe—starts with good-looking skin. As more men become accustomed to the idea of keeping up their appearances, the skin care product segment will no doubt continue on an upward trend. In fact, Euromonitor expects the Chinese domestic market for skin care goods to grow at a greater rate than that in North America and Europe. Skin care producers will want to continue investing in this area, developing and marketing products that are suited to the specific skin care needs of men.
Next to skin care, the largest segment of the Chinese beauty market is hair care. Research firm RNCOS expects the sector to grow at a compound annual growth rate of 15.5% between 2011 and 2013. And not surprisingly, shampoos and conditioners are the major products within this segment.
While the majority of Chinese previously bought dual-function, value-for-money hair care products, customers now seek out solutions that cater to their particular hair needs. According to Procter & Gamble, the driving factor is that consumer requirements have become much more specific. For example, specialized shampoos and conditioners for moisturizing, repairing, dandruff treatment or straightening effects are now widely adopted across the country.
With rising incomes, the market for shampoos is expected to grow as basic necessities become much more affordable. Consumer demand for conditioners will also rise as the Chinese population becomes increasingly sophisticated in their hair care routines. What is important then is for manufacturers to differentiate their products from others and demonstrate how their brands meet specific hair care needs.
A study conducted by P&G reported that 88% of respondents in Shanghai perceive their hair as damaged. The figures for Beijing and Guangzhou are 70% and 58%, respectively. These results concur with Euromonitor’s forecast that products with professional or cosmeceutical properties are likely to gain popularity, as consumers have a view that such products offer better results and improve hair health. Hair care companies should strike the iron while it is hot, by developing nutritional hair care products and marketing them as high-end goods.
The China beauty market offers skin care and hair care beauty brand owners a host of opportunities. The country’s large population with increasing levels of disposable income indicate that there is indeed much potential for growth.
The demands of the Chinese consumer are ever-changing, and companies must be aware of what is popular amongst the people at any point in time. With proper knowledge, brands will be able to respond accordingly and achieve business success in the country.