China’s cosmetics market overview

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china cosmetic market overview

First, China current market status

In recent years, with the rapid development of China’s economy, the cosmetics industry has also maintained rapid growth. According to Euromonitor, the retail sales of skin care products reached 212.2 billion yuan (RMB, the same below) in 2018, and the makeup price was 42.8 billion yuan. The year-on-year growth rates of skin care products and make-up products were 13.2% and 24.3%, respectively. According to the National Bureau of Statistics, the retail sales of wholesale and retail cosmetics above designated size in recent years are as follows:

sales data of cosmetics

Source: National Bureau of Statistics of China

The current consumption structure of Chinese cosmetics products:

• Skin care products: Skin care products are one of the fastest growing segmentation markets in the cosmetics market.

• Shampoo, hair care products: shampoo, hair care products market capacity is becoming saturated, growth rate began to slow down.

• Make-up products: The fastest growth of make-up, BB and CC creams are the most popular; the eye cosmetics market has seen significant growth in recent years.

• Children’s products: The children’s products market continues to heat up.

• Sun protection products: sun protection products make the traditional off-season not light.

• Anti-aging and anti-aging products: Retaining youth, anti-aging cosmetics will be more popular.

• Sports cosmetics: In order to show the overall beauty, many consumers who like sports and bodybuilding want to prevent the emergence of sports products such as water loss, deodorization, sweat resistance, portability, moisturizing and sterilization.

• Medicinal cosmetics: such as acne water, freckle cream, acne cream, etc., the so-called “cosmetic”, which means combining cosmetics and medicines, is also getting more attention.

• Green natural cosmetics: such as some natural nutritional cosmetics containing aloe vera, vitamins, or cosmetics using natural materials.

The high-end product is the development trend of the current skin care market in China. According to Euromonitor, although the retail sales of high-end skin care products in 2018 is still lower than that of popular fast-moving products, the market share of high-end skin care products has gradually increased, from 25.3% in 2013 to 32% in 2018. Consumers are more inclined to buy international brands of skin care products, and their consumption habits have also changed from the previous price-oriented to quality and brand-oriented.

At present, Chinese local makeup brands have performed well. According to reports, Chinese makeup brands have accounted for about 56% of the market share in the mainland. The reason is that local brands have adopted the market expansion of second- and third-tier cities, and secondly, they have actively used e-commerce to develop online sales. At the same time, they also strengthened advertising on new media platforms (WeChat, Weibo) to enhance brand awareness.

The growth of male cosmetics is strong. According to estimates by Euromonitor, the market for men’s beauty products increased by 7.8% year-on-year in 2018. Male consumers gradually accepted skin care products and cosmetics designed for men. For men’s skin care, the most important thing is to control oil and clean. In terms of skin care products, although the cleansing products occupy the vast majority of the country, the special needs of mask, sunscreen, whitening, moisturizing, etc. are gradually increasing, indicating that men have paid attention to the aging and meticulousness of the skin.

Medicinal cosmetics, especially Chinese herbal cosmetics, will open up new market territory. At present, China’s cosmeceutical sales account for only about 20% of the mainland cosmetics market, while the sales of cosmeceuticals in Europe, the United States, Japan and South Korea each account for about 50%-60% of the local cosmetics market; therefore, I believe that the development of the Chinese cosmeceutical market The space is huge. In recent years, young consumers have begun to pay attention to the ingredients and quality of products, and the consumption of cosmeceuticals has become younger. Although cosmeceuticals have medical functions, since there is no specific explanation for the term “cosmetic” in China, cosmeceuticals belong to the category of cosmetics. According to the “Regulations on Cosmetic Hygiene Supervision”, cosmetics must not promote the efficacy of the products and use medical terms in the packaging and instructions.

With the difference in cosmetics brand, quality, price and personal economic sustainability, the consumer groups are clearly divided into three levels: high, medium and low. The main consumers of high-end imported brand-name products are high-paying and high-income groups in large and medium-sized cities. They mainly choose famous cosmetics brands from Europe, the United States, Japan, etc. Most of these consumers are young and middle-aged women.

The safety of cosmetic products is increasingly valued by people, and a series of cosmetic product safety issues have alarmed consumers, manufacturers and regulatory authorities. As the country introduces specifications for cosmetic hygiene and safety technology, it is believed that both producers and consumers will behave in the cosmetics consumer market.

In recent years, homemade cosmetics have become increasingly popular. The so-called homemade cosmetics refers to the purchase of cosmetic raw materials by themselves and personally blended. It is an all-natural, tailor-made cosmetic. The original intention of homemade cosmetics is self-sufficiency, but now many merchants push it to commercialization, carry out large-scale production and sell on e-commerce websites such as Taobao and Tmall. However, the quality of self-made cosmetics sold online generally has quality problems, and even does not have the provisions of the Cosmetic Hygiene Supervision Regulations, and does not apply for cosmetics production and sales licenses.

The summary of major cosmetics imports in China in 2018 is as follows:

China’s major cosmetics imports in 2018

Co-production number Product name 2018 Year-on-year

Million dollars increase/decrease (%)

33030000 perfume and toilet water 404 57.2

33041000 Lip Cosmetics 647 47.1

33042000 Eye Makeup 209 59.3

33049100 powder, whether or not pressed 222 59.5

33049900 Others (including skin care products, sun products, etc.) 8,810 71.7

33051000 shampoo (shampoo) 265 44.7

33052000 Perm 4 48.9

33053000 Styling agent 11 115.1

33059000 Others 254 61.4

33072000 Human body deodorant and antiperspirant 12 92.0

Source: Global Trade Atlas

increasing signal

Second, the competitive situation

According to the National Drug Administration of the State Administration of Markets, as of the end of June 2019, there were about 4,933 enterprises qualified for cosmetics production nationwide. On the whole, mainland cosmetics brands are mainly concentrated in the low-end market, while overseas and joint-venture brands mainly occupy the high-end market.

Chinese cosmetics companies are growing rapidly, and the market share of mainland brands is gradually increasing, which brings competition to overseas cosmetics brands. In recent years, Chinese cosmetics companies have actively established brand image, such as creating marine skin care, natural plant skin care, modern Chinese herbal skin care and other brand image, and their popularity in the Mainland and overseas has been rising.

Mainland enterprises have gradually paid attention to product research and development and quality, making Chinese and American beauty products more and more diversified. Mainland enterprises have developed a cosmetics market with Chinese cultural characteristics, such as the introduction of Chinese style limited dressing gift boxes. In addition, mainland brands are actively using traditional Chinese medicine culture concepts and natural extraction methods to develop new skin care products and seek new sales growth points. Such as “Taiji Yangmei Series” and “Yu·Five Lines Rejuvenation Series”. In the past, the products of domestic-funded enterprises were highlighted by their low price and good quality, and they were concentrated in the second and third-tier markets. At present, some large mainland cosmetics companies have begun to develop high-quality products and enter the mid- to high-end market in the Mainland to cater to the increasing demand of Chinese consumers.

Overseas brands in the cosmeceutical market occupy a monopoly position. At present, the main cosmeceutical brands displayed in major drugstores are Vichy, La Roche-Posay, Fu Lifang, Qingyi and so on. Local brands like Rentang and Herborist are also involved in the cosmeceutical market and are gradually recognized by the market.

The market for children’s skin care products is huge, and more and more international baby brands are preparing to expand into the mainland market. At present, the frog prince, pigeon, Yu Meijing, Qichu, Johnson & Johnson are the main brands in the children’s skin care market, and I believe that the market competition will become more intense in the future.

Third, the sales pipeline

The sales channels of the mainland cosmetics market mainly include: integrated e-commerce platform, wholesale marketing, supermarket and department store marketing, counter marketing, chain store marketing, drug store marketing, beauty salon marketing and direct sales. Among the many sales channels, the most common ones are integrated e-commerce platforms, department stores and specialty stores.

Counter marketing is the mainstream of the traditional sales model of cosmetics, and most of the world famous brand cosmetics are sold in this way. According to Ai Media’s consultation data, brand and word of mouth are the most important factors for mainland consumers to buy cosmetics, and setting up counters has a great effect on brand image construction. Lancome, Estee Lauder, Chanel, Dior and other international first-line brands occupy most of the sales in the mainland counter market. Only a few brands such as Herborist in the mainland have entered the competition.

Some brands use a specialty store to expand their business, mainly in the form of direct sales stores and franchise stores. In the direct sales store, because it can better display the brand image, guarantee the advantages of service management quality, and ensure the unity and stability of the price system, this marketing form is favored by many multinational cosmetics giants. The franchise stores are recognized as the least invested, the fastest and the most successful marketing model.

Direct sales is the purpose of selling products through the network of direct sellers’ relationships, and then the direct selling company issues bonuses based on how much the direct sellers sell products through the network. After the introduction of the Direct Selling Regulations in 2005, Avon became the first direct selling pilot. Amway, Perfect, Longliqi and others have become cosmetics companies with direct sales licenses.

The entry of cosmetics into Chinese pharmacies has become another major feature of cosmetics sales. At present, cosmeceuticals are the world of overseas companies, and many pharmaceutical companies in the Mainland have also entered the field of cosmeceuticals.

There are many types of marketing models in cosmetics and beauty salons: traditional, maintenance and therapeutic beauty salons; large and medium-sized high-end beauty living halls; franchised chain stores; beauty salons.

The cosmetics supermarket, the “one-stop” retail concept, has begun to emerge. With the landing of Watsons, Sephora, and Sasa, the cosmetics supermarket is no longer blank.

When many overseas brands entered the Chinese market, they acquired the mainland brands. For example, L’Oreal acquired the small nurses and the United States, the Coty Group acquired Ding Jiayi, Johnson & Johnson acquired Dabao, and used the mainland brand’s sales channels to sell overseas brands. On the other hand, many overseas brands also enter the mainland market through online shopping platforms.

The industry can also discuss the latest information on cosmetics in the Mainland and contact distributors from the exhibition. Some upcoming cosmetics exhibitions in 2019-20:

cosmetic exhibition in china

Mainland cosmetics exhibition

Time Exhibition Name Location

September 5-7, 2019 China (Guangzhou) International Beauty Fair China Import and Export Fair Complex (Guangzhou)

October 17-19, 2019 Chengdu Meibo Fair Chengdu Century City New International Convention and Exhibition Center

October 30-November 1st, 2019 Shanghai International Beauty Salon Cosmetics Expo (Autumn) Shanghai Everbright Convention & Exhibition Center

May 13-15, 2020 China (Shanghai) International Beauty Expo Shanghai National Convention and Exhibition Center

May 19-21, 2020 China Beauty Expo (Shanghai CBE) Shanghai New International Expo Center

Fourth, import and trade regulations

The Regulations for the Implementation of the Cosmetics Hygiene Supervision Regulations stipulates: For the first time imported cosmetics, foreign manufacturers or their agents must collect and fill out the “Application Form for Imported Cosmetic Hygiene Permit” at the local or municipal health administrative department of the importing place, directly to the Health Administration of the State Council. Department application. After receiving all the application materials, the health administrative department of the State Council organized the cosmetics safety assessment team to review the declared products, and the products that were examined and approved were issued to the “Imported Cosmetic Hygiene License” and the approval number. The “Import License for Imported Cosmetics” is valid for 4 years. It can be renewed from the health administrative department of the State Council for 4 to 6 months before the expiration date. Relevant regulations can refer to the website of the National Drug Administration.

When foreign investors consider entering the cosmetics market in the Mainland, they should pay attention to the relevant standards in the Mainland. The Standardization Law of the People’s Republic of China (Revised Draft 2017) divides the standards into five levels, namely, national standards, industry standards, local standards, group standards, and enterprise standards. The national standards are divided into mandatory standards and recommended standards. The standard codes are GB and GB/T. The industry standards are recommended standards. Cosmetics belong to the light industry. The standard codes are QB and QB/T respectively. The local standards are recommended. Standards; corporate standards apply within the enterprise. For related standard catalogue enquiries, please refer to the Standards Network and the National Standardization Administration Committee website.

In order to expand opening up and meet consumer demand, the State Council reduced the MFN tariff rate of 1,449 imported consumer goods from July 1, 2018, including clothing, shoes, hats, cosmetics and household appliances. Among them, the average import tariff rate on detergents and skin care, hairdressing and other cosmetics decreased from 8.4% to 2.9%.

Summary of major cosmetics tariffs for 2019

Tariff number, product name (abbreviation) (%)

33030000 perfumes and toilet waters 3

33041000 Lip Cosmetics 5

33042000 Eye cosmetics 5

33043000 Finger (toe) cosmetics 5

33049100 powder, whether or not pressed 5

33049900 Others (including skin care products, sun ray products, etc.) 1

33051000 shampoo (shampoo) 2

33052000 Perm 3

33053000 Styling agent 3

33059000 other 3

Source: Ministry of Finance of the People’s Republic of China, 2019

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