China represents one of the most dynamic and untapped cosmetics and markets in the world. The last several years have proved highly beneficial for the market since it has undergone a rapid expansion phase. The Chinese cosmetics market was the 2nd largest in the world after the United States in 2018. It increased by 4.2% sales year on year to RMB261.9 billion. Although the Chinese cosmetics market registered an impressive growth due to urbanization and higher income in China, the country still has high growth potential which is far from its saturation level. Relatively low penetration level and a vast consumer base are two key factors of cosmetics market in China.

Skincare dominates China’s cosmetics market

Skincare dominates the overall cosmetics market in China. In 2009, China’ s skincare segment acquired almost 40% share and showed no signs of slowdown, even in a recession. Other segments like hair care, color cosmetics, fragrances, etc have also experienced double digit growth over the recent years. 

The cosmetics market in China provides opportunities to both homegrown and international players. However, international companies like P&G and L’Oreal are currently leading the Chinese cosmetics market, with an 86% share of the total retail sales. Only 3 domestic Chinese brands, CHICMAX, Shanghai Pechoin and JALA Corporation, ranked among the top ten cosmetics brands in 2017. Foreign brands generate a majority of the industry revenue and are preferred by the consumers over the local companies. Wide product lines along with aggressive marketing strategies are considered the success mantra adopted by these international cosmetics giants. 

The penetration rate of online cosmetics shopping has exceeded 70%

The penetration rate of online cosmetics shopping in China has risen from 53.4% in 2014 to 74.2% in 2018. Online platforms have become the most important channel for Chinese users to buy cosmetics. International brands mainly occupy the high-end cosmetics market. Although their sales account for 60% of the overall Chinese cosmetics market, sales revenue accounts for 90%.

[Source: 16pic, Double 11 online shopping festival]

38.8% of Chinese cosmetics consumers who are willing to buy cosmetics online are from first-tier cities. 30.6% from second-tier cities, 15.6% from third-tier cities, and 15% from fourth-tier cities and other cities.

According to the analysis of the online popularity of the keyword “cosmetics” in different regions of China, netizens in Guangdong province are following cosmetics-related information the most frequently, followed by Zhejiang, Shandong, and Hubei. As for the purchase channels of cosmetics, 47.4% of Chinese cosmetics consumers prefer to buy cosmetics on integrated e-commerce platforms. 42.2% of consumers buy cosmetics at cosmetics specialty stores, and 39.7% of consumers directly purchase cosmetics at department stores.

Demographics of Chinese skincare consumers

Although women are the primary consumers of cosmetics, men’s skincare consumption in China is on the rise. The proportion of Chinese cosmetics consumers between 19 and 25 years old tends to buy skin care products; make-up and hair care products are 33%, 28% and 17% respectively. Consumers between 26 and 30 years old tend to buy skin care products. The proportions of bath products and hair care products are 33%, 13% and 22% respectively; consumers between 31 and 40 years old tend to buy skin care products, bath products and hair care products at 32%, 24% and 17 respectively.

Overall, the product preferences of online consumers of different ages for different categories of cosmetics are not obvious. However, Chinese cosmetics consumers aged 29 to 25 years old have a higher demand for online shopping.

Customer segments of cosmetics market in China

According to the analysis of Chinese cosmetics consumers, people born between the 1970s-1990s have the strongest consumption power. They account for nearly 90% of cosmetics consumption in China, of which nearly 40% is from those born in the 1980s alone. Cosmetics products, especially lipsticks, have become a new trend for gifts, which increases the sales volume by 76.5% year on year.

[Source: Shengri, AFU magic lipstick gift box]

As Chinese cosmetics consumers born between 1995 and 2000’s, also known as Gen Z consumers, start to enter universities and society, they increase their demand for cosmetic products. Hence, this group might become the new leading force of the Chinese cosmetics market.

Gen Z consumers have the following characteristics:

• They are addicted to online shopping and have diversified brand preference with changing demands.
• Culturally, they are nurtured by mixed culture of both China and western influence. Their Chinese culture gives them a sense of pride.
• They are more willing to try new products.

New opportunities for Chinese cosmetics market development and future hot spots

From 2014 to 2018, the scale of China’s social commerce market showed a rapid growth trend, and by 2018, the scale of the social e-commerce market reached 1,139.78 billion RMB. 61.0% of Chinese consumers indicated that social media platforms have become an important place for them to “plant grass (种草)” cosmetics. Chinse cosmetics consumers born after 1995 or 2000 stated that the probability of “pulling grass (拔草)” due to social e-commerce recommendations is 76.6%. Cross-border e-commerce companies such as Xiaohongshu, Princess Pea, and Koala Haigou provide power support for cosmetics consumption.

[Data source: data.iimedia.cn, drivers for online shopping in China]

In the Chinese cosmetics market, companies should pay more attention to makeup products which continue to gain popularity, like lipstick. On the other hand, the facial skin is still the main focus of skin care, with a large market foundation. In addition to the basic needs of moisturizing and using sunscreen, consumers will also have increasing demand for functional skin care products such as color-evening and anti-aging.

Three growing skincare categories

The explosive products in China’s skin care market are mainly divided into three categories: One is the long-term hot-selling products, usually some products of major international cosmetic brands, such as Estee Lauder‘s “small brown bottle” essence, Lancôme “Pink water” toners, etc. Second is a category of niche new products that have only appeared in the Chinese market in the past two years, such as the Spanish MartiDerm ampoule essence that was hot last year. Third are certainly innovative or interesting products, this year’s new “Black Sea Salt Bubble Mask” by Pleja. With the help of social networks, the latter “grown grass” and quickly became the first place in the “Douyin Beauty Skin Care List”, with monthly sales exceeding 100 million.

[Source: Baidupai, Lancôme Tonique Confort (pink water)]

Although the Chinese cosmetics market has become highly competitive, there is still a plenty of room for new entrants. Provided, they adopt appropriate market entry strategies, find right manufacturing or distribution partners, use effective marketing strategies, and make suitable products for various customer groups at reasonable price points. 

With increasing disposable income, a surging working population (especially women) a appearance-conscious approach and strong promotional strategies, we anticipate that cosmetics market in China still has huge potential that can be unlocked.

The Chinese cosmetic market has a lot of untapped potential

The cosmetics market in China is still growing at full speed. To get a piece of the large Chinese cosmetics market, we suggest you start with consumer research and a digital strategy.

This means:

• Build yourself good brand awareness in China. No brand awareness means that you don’t exist in the Chinese business world.
• Knowing the right distribution channels for your brand
• Have a clear brand positioning, a strong identity
• Be active on digital platforms

Contact dx@daxueconsulting.com to start your project in China’s cosmetics market.

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With numerous ads and campaigns in China raising awareness against environmental pollution, organic and natural skincare products have started to become popular among the Chinese. Indeed, while in earlier years it wasn’t a priority for cosmetic brands to focus on its environment-friendly and green image; it’s slowly starting to change: L’Occitane en Provence, a French skincare brand that takes pride in producing made in France products such as their popular almond supple skin oil or their shea butter handcream, is becoming huge in China.

L’Occitane expansion in China

Launched in 2005 across Mainland China, Hong Kong and Taiwan, and having already opened shops in Japan and Korea, L’Occitane is today following its success story in Asia and planning to open a virtual store on Alibaba’s famous T-Mall. So how exactly did L’Occitane appeal to the Chinese clientele, and succeed in finding a name for itself between brands belonging to larger companies such as Origins, Aveda, and Kiehl’s ?

Adaptation of branding strategy in China

As opposed to more high-end brands like Lancôme, Laneige, or SK-II, L’Occitane decided to keep its original skincare line and image: simple, fresh and authentic; just like its official name, L’Occitane en Provence, translated phonetically as 歐舒丹（Ou Shu Dan). Instead of adapting L’Occitane’s brand image to fit the standards of Asian cosmetics, Geiger decided to keep the company’s authentic range of products and marketing strategy. Of course it was risky, seeing as how rival companies hadn’t taken this turn, but the risk proved to be worth taking in the end.

A museum to conclude the branding strategy in China

Today having Japan as its number one market and China not far behind, L’Occitane is growing ever so rapidly in Asia. It’s even attracting tourists to visit Provence and the large lavender fields used by L’Occitane’s usine to produce their famous lavender line, and of course to visit the L’Occitane museum.

Branding and image in China _ JX Paulin

This article Branding: L’Occitane in China: do organic and natural products appeal to Chinese consumers? is the first one to appear on Daxue Consulting - Market Research China.

Jiangzhong Pharmaceutical is part of Jiangzhong Group which holds 6,374.4 million shares and represents 43.63% of the total share capital.

Jiangzhong Pharmaceutical has national coverage, distributing its products across the entire country. The company’s net profits decreased by 24% in the first half of 2011, compared to the same period in 2010.

Jiangzhong Pharmaceutical is also taking part in the development of an anti-AIDS drugs in cooperation with the Chinese Military Academy of Medical Sciences.

Overview Indicators of Jiangzhong Pharmaceutical Co Ltd

Sectors within Jiangzhong Pharmaceutical

The company operates in multiple sectors of the Chinese pharmaceutical industry including herbal and traditional products, healthcare products and pharmaceutical distribution, as is shown by a related market research study in China.

The herbal and traditional products account for more than 50% of the company’s total profit.

The pharmaceutical distribution business and healthcare business bring in high returns for the company.

Production of Jiangzhong Pharmaceutical in China

Jiangzhong Pharmaceutical has set up a production centre, Jiangzhong Pharmaceutical Valley, covering an area of 1,100 hectacres in Nanchang.

• The company produces pharyngeal preparations such as Liang Sang and Cao Sshan Hu lozenges
• The Chueum Composite Peptide Specialized Diet grew 20% in 2011 compared to 2010, according to a recent market analysis in China.
• The company reduced supply of Taizishen because a rise in production costs, including the main raw materials, reduced margins for the company
• The company is trying to expand the production and market share of Shen Ling Cao Oral, a relatively new product at the end of 2010

Market Position of Jiangzhong Pharmaceutical in China

Jiangzhong Pharmaceutical, thanks to its years of advertising and accurate market positioning, has become one of the most recognized digestive remedy producing companies in China.

Jiangzhong Pharmaceutical offers a narrow products portfolio in OTC products, with the help of its two national engineering research centres in the pharmaceutical industry.

 Competitive Position of Jiangzhong Pharmaceutical in 2011

Adopted Strategy and Future Direction of Jiangzhong Pharmaceutical in China

• Jiangzhong Pharmaceutical has been concentrating on marketing and advertising to improve its brand awareness and reputation
• The company has been enhancing its production capacity
• To gain stronger market power in the Chinese pharmaceutical industry, Jiangzhong Pharmaceutical has been introducing new healthcare products, like Shen Ling Cao Oral
• By introducing innovative sales channels such as the Da Yu Program, the company has enabled consumers to buy its products more easily and conveniently
• Jiangzhong Pharmaceutical plans to respond to the profit decrease by raising prices and launching new products

Daxue China consulting (Mystery Shopping in China)

Picture source: baidu, baidu, baidu

This article Mystery shopping: Jiangzhong Pharmaceutical in China is the first one to appear on Daxue Consulting - Market Research China.