According to Euromonitor, total sales of beauty and personal care stood at US$24bn in 2010, more than triple the size in 2000, attributed to the country’s large population and rapid economic development.
Over 2010-2015, the market analyst expects China to be one of the most valuable markets for beauty and personal care, with absolute value growth set to reach over US$10bn, accounting for around one fifth of global value growth for the world's beauty and personal care market.
“Beauty and personal care's value is anticipated to reach US$34 billion by 2015. The growth pattern will replicate the current trend, with skin care continuing to account for the bulk of value growth, while men's grooming and baby care products will continue to be the most dynamic categories,” commented Serena Jian, company analyst.
Internet boom to reach ‘untapped’ market
And Euromonitor believes that a rise in internet consumption will help drive the category in China.
There is reportedly a boom in internet retailing in China, which is having an influential impact on consumer spending patterns and is expected to drive up consumption in the interior of China, previously an untapped population.
The value share held by internet retailing within beauty and personal care products indeed expanded from under 1 percent in 2005 to 3 percent in 2010, as the number of Chinese internet users hit 419 million during the year, the highest globally.
The rapid adoption of smartphones and other mobile devices is also encouraging mobile-commerce in the country.
Expanding middle class
As well as the increase in popularity of digital technology, the fast-expanding middle class consumers in China has been highlighted as having a significant impact on spending patterns in beauty and personal care, particularly in the premium segment.
According to Euromonitor, rapid economic development in China has significantly increased disposable income levels per household, with consumers having nearly doubled the amount of disposable income per household compared to five years ago.
According to the company’s Countries and Consumers database, the number of households with disposable income of between US$5,000 and US$15,000 stood at 153 million in 2010, nearly triple the number of households with the same income levels in 2005.
In contrast to the US, Euromonitor highlights the middle class in China are typically young consumers (25-44) who are more brand conscious and less price sensitive.
More financial independency
In addition to the changing consumer perception of beauty and personal care products as daily necessities rather than luxuries, the growing number of women in the workforce has also made the Chinese female population a stronger target for beauty and personal care products, thanks to improved financial independency.
There have also been examples of sacrificing spending in other areas, or "trading-off", among Chinese urbanites where young professionals may spend their disposable incomes on the latest designer clothes or premium beauty and personal care products at the expense of essential food items.
Jian says this trend will positively impact the future growth of premium products in China, as these consumers, who have lower disposable income levels, will match the spending of more affluent consumers in China.